Looking For The Next Oil Takeover

Published in Investing on 13 June 2012

Yet another takeover approach in North Sea oil. Who's next on the list?

So Nautical Petroleum (LSE: NPE) has received a cash offer of 450p per share from a subsidiary of Cairn Energy (LSE: CNE), which has been recommended by Nautical's Board.

This seems like great news for many private shareholders who've ridden the Nautical wave all the way up from 44p three years ago when flagged up here at The Fool. It's almost exactly a ten-bagger, and a better than 50% premium on Tuesday's closing price.

But when you consider that Nautical's share price reached the giddy heights of 547p in February of last year, it's understandable why not all investors are happy.

Nevertheless, the recent market woes and fall in the price of oil present a very different picture today. And if I was fortunate enough to still be holding the shares, I'd be content to take the money and run, given the market backdrop, and would be looking around the sector to try and spot a few bargains with the proceeds. But a counter bid is still a possibility.


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Where next?

This begs the question of 'where next?' in the sector, and specifically in the North Sea heavy oil business. There's an excellent debate going on right now on this very subject on the Fool's Oil & Gas – Companies discussion board.

The big pull for Cairn seems to be the Catcher licence and the prospects of further reserves, which could be good news for Premier Oil (LSE: PMO), which bought another Foolish favourite Encore Oil at the end of last year.

Meanwhile, Sterling Resources (YSX: SLG) is popular with many Fools, particularly due to its interest in the Cladhan North Sea prospect.

Shares in my own favourite, Serica Energy (LSE: SQZ), continue to languish at 24.6p, but I remain hopeful that a larger predator may see value in the ring-fenced tax losses, cash and assets that include licences in the North Sea.

Xcite Energy (LSE: XEL), whose Bentley field is one of the largest undeveloped fields in the North Sea, is also a potential target.

Looking further afield, Lansdowne Oil & Gas (LSE: LOGP) has already been flagged up by my Foolish colleague Roland Head, though he felt that an investment in SeaEnergy (LSE: SEA) might be the way to go as it is cash-rich and owns 24% of Lansdowne.

And elsewhere, Northern Petroleum (LSE: NOP), Petroceltic International (LSE: PCI), Aurelian Oil & Gas (LSE: AUL) and Bowleven (LSE: BLVN) have all been suggested as potentially tasty sprats for bigger fish. Place your bets please!

Let me finish by adding higher-risk shares such as those oil companies mentioned above can provide superb returns -- if things work out! If the likes of Bowleven and SeaEnergy interest you, then I feel you'd also like this special report:"Ten Steps To Making A Million In The Market". The report is free and is for ambitious investors only!

Further investment opportunities:

> David owns shares in Serica Energy and SeaEnergy. He doesn't own shares in any of the other companies mentioned.

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mrj111 13 Jun 2012 , 3:46pm

Valiant Petroleum (VPP) ?

Tax losses worth as much as company for the right buyer! No debt and production of 7,500bopd.


David any reason you never add VPP, do you see a problem with it that I'm missing?

RobinnBanks 14 Jun 2012 , 12:18am

And Dragon, Tullow, Socco, and Afren?

mrj111 14 Jun 2012 , 7:20am

These companies are in a different category, Dragon was trying to take out Bowleven in March.

tux222 14 Jun 2012 , 9:06am

Ithaca (IAE) which was in takeover talks until recently. The share price has slumped since the talks were terminated, but might one of the companies that they were talking to go hostile?

mrj111 14 Jun 2012 , 9:36am

A Ithaca/Valiant merger would be interesting. Take out high admin costs

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