North Sea-focused Valiant Petroleum triggered speculation that it has put itself up for sale Thursday by announcing it has embarked on a "formal sale process" as set out by the takeover code of the London Stock Exchange.
Valiant, which also announced its half-year results, announced it was launching a strategic review of its options to maximize value for its shareholders. It said that parties with a potential interest in making an offer for, or merging with, the company should get in touch with investment bank Morgan Stanley – which it has appointed to conduct the review of options.
"Valiant has built a strong foundation as a full cycle exploration and production company and as a board we are keen to ensure we position this business to achieve its complete potential. This is therefore a timely review which we approach with a determination to assess the full range of our strategic options," said Valiant CEO Peter Buchanan in a statement.
Over the past four years, Valiant has developed what its describes as "a stable production foundation" with production volumes of 7,453 barrels of oil per day (bopd) delivering operating cash flows of $222 million in 2011. The firm added that it has also built a "broad and attractive" development and exploration portfolio in the UK and Norway.
Valiant has assets in the Norwegian and UK zones of the North Sea, as well as in the Faroe Islands, the Barents Sea, Norwegian Sea and West of Shetland.
Oil sector analysts at investment bank Macquarie commented: "We see a merger rather than a corporate sale as the likely outcome. We believe Cairn's Agora team and potentially EnQuest will look at these assets, as would Faroe [Petroleum] for UK tax losses and further Norway exposure."
Meanwhile, CEO Buchanan said that the firm is "on track for another strong year of production and cash flow".
The firm's first half operating cash flow came in at $62.3 million (1H 2011: $119.6 million), which it said was in line with expectations.
Average production during the first half period was 4,800 bopd compared with 8,225 bopd. But Valiant said it was on target to produce the equivalent of between 7,000 and 8,500 bopd for the whole of 2012.
The firm added that it is excited about its high-impact exploration opportunities, such as the Handcross project, located in the UK West of Shetlands zone.
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