Maurel & Prom seeks merger partners among national or independent oil groups
Ecopetrol, Petroperu, Pemex suggested as ideal partners
Independent companies such as Tullow, Afren, Lundin could be good fit
Maurel & Prom (M&P) [EPA:MAU] the French oil and gas group, is continuing its hunt for a merger partner, according to Jean-Francois Henin, chairman of Maurel & Prom. A national group looking to expand its global footprint or a similar size peer would be the preferred options, Henin said in an exclusive interview with this news service.
The sudden drop in oil prices - down nearly 30% since the summer – has prompted “everybody to talk with everybody” in the industry, in relation to potential mergers or partnerships. “There are companies that will no longer be able to finance their development plans at present prices,” he said.
Henin said his favoured choice for a deal would be a national oil company that needs to become more international in its focus, such as the Latin American companies Colombia’s Ecopetrol [TSE:ECP], Pemex in Mexico and PetroPeru in Peru.
Maurel & Prom could bring its expertise to such a partnership. “They would like to conquer the world but are still ill equipped,” Henin added.
Teaming up with one of the London-listed, independent oil and gas groups is another option, he said. A second source at M&P suggested Tullow Oil [LON:TLW] which operates in Ghana, Uganda and Kenya and had revenues of USD 1.3bn in the first half of 2014.
Afren [LON:AFR] an independent oil company with operations in Africa and the Kurdistan region of Iraq, was also suggested by the source. The group recently dismissed its CEO and other senior management for gross misconduct.
Premier Oil [LON:PMO] and Ophir Energy PlC [LON:OPHR] were also suggested by the source. Ophir Energy, however, has just made a "conditional" takeover approach for Salamander Energy [LON:SMDR], the South East Asia oil and gas explorer.
Tullow, Premier and Ophir are regularly touted as bid targets or potential buyers of smaller peers, whilst Afren is seen as vulnerable to a takeover following its recent woes.
Scottish group Cairn [LON:CNE], which operates in North West Europe, the Mediterranean (Gulf of Valencia), North West Africa and India, is a further option. Cairn reported group cash at the end of June 2014 of USD 1.1bn.
Maurel & Prom also talked about Lundin Petroleum [STO:LUMI SDB] an independent Swedish oil and gas exploration company with principal businesses in Norway and South East Asia.
Henin does not want to see a partnership with a major oil company that is likely to break up the business. Previous rumours of Shell’s [LON:RDSA] interest were unfounded, Henin said. He added he had had no contacts with Sinopec [HKG:0386], which was also tipped as interested. Recent reports that Pertamina [OTCHKTS:PPAY] was a potential suitor were also unfounded as the Indonesian company wants to invest in other endeavours, Henin said.
In any event, Henin does not have the intention of selling separately his own stakes, 23% in M&P and 25% in MPI, the group created after the spinoff of M&P Nigeria in 2011. “I will only sell in the framework of a merger,” he said.
If the quest for a merger partner does not materialize, Maurel & Prom will seek partnerships, Jean-François Henin said.
However, chances of success for a merger have been considerably enhanced following the 2003 agreement with the government of Gabon, which surrendered its veto rights to changes in the company’s shareholder structure, Henin pointed out.
The issue of governance has been resolved, he added. On May 26, 2014, Jean-Francois Henin, 70, stepped down as CEO, remaining as Chairman of the Board. Michel Hochard, CFO, became executive officer.
For the first half of 2014, Maurel & Prom posted revenues of EUR 295.5 and earnings of EUR 53.3m.