Roc Oil wary of predators as shares decline By Toby Shelley
Published: September 23 2008 00:05 | Last updated: September 23 2008 00:05
Roc Oil has declared itself a takeover target after its share price fell last week to levels unseen since it listed in London in 2004.
The fall in Roc’s shares comes as it is making the transition from exploration company with some production to cash-generating production company with some exploration assets.
Roc has acquired a majority of Anzon Energy and is attempting to acquire the balance of its only asset, Anzon Australia.
The Anzon move will increase its output from 10,000 barrels of oil equivalent a day to 14,000 boe/d, and if it wins Anzon Australia that figure will increase further, making it one of the biggest producers on Aim.
With the market currently putting little to no value on exploration assets and the oil price remaining high, the company’s transition would have been expected to prompt an upward rerating of Roc shares, according to analysts.
Yet the drop in the share price to 44p late last week took the company’s market capitalisation to about A$300m (£134m), a third of its value a year ago.
Roc suffered the death of founder and chief executive John Doran in June. According to Kevin Hird, general manager: “I would be surprised if we were not on people’s list” of takeover targets.
Earlier this month, company broker Oriel Securities calculated the net asset value at 137p a share with core value of 87p. Oriel said: “If the market fails to recognise the company’s fundamental value then a predator might”.
Analyst Tim Heeley at investment bank Daniel Stewart said that using multiples typical of other oil companies, Roc’s enterprise value could be calculated at as much as $1.7bn.
That valuation implies a market capitalisation of £850m, even ahead of the benefits of the Anzon move. He added that the company’s share price performance certainly made it a takeover target.
The Anzon acquisition takes Roc into the Australian gas market and rationalises the shape of the company, concentrating its output in Australia and China, with potentially disposable rumps in the UK and Mauritania.
The squeeze on credit limits the range of potential predators but analysts see one obvious category – larger Australian companies with a regional focus.
Roc’s shareholder base remains rooted in Australia and might be susceptible to an offer of paper rather than of cash. Copyright The Financial Times Limited 2008
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