Oil firm Valiant’s ‘strategic review’ could see sale or merger

By DOMINIC JEFF
Published on 07/09/2012 00:00

NORTH Sea-focused oil firm Valiant Petroleum put itself on the market yesterday, announcing a surprise strategic review that could also see it expand its portfolio.

The firm, which has had a poor run of luck with the drill bit this year, launched a “review of options” aimed at value for shareholders and invited interested parties to contact it to discuss a merger or sale.

It said other options may include a strategic transaction such as a “farm in” or “farm down”, acquisitions or disposals of assets, or a strategy of organic growth.

Chief executive Peter Buchanan said: “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.”

Valiant, which is chaired by Kevin Lyon, the former head of venture capital company 3i in Scotland, was formed in 2004 to develop assets in the northern North Sea, an area which it believes is under-exploited. It also has interests in the relatively new fields west of Shetland, and in waters off Norway and the Faroe Islands.

Relatively small oil and gas companies like Valiant have persisted with operations in the North Sea despite declining production levels, as they hope to realise value out of fields which are too small for the majors to be interested in.

However, the recent trend has been towards consolidation, with Parkmead buying Aberdeen-based driller Deo Petroleum and Edinburgh-based Cairn Energy taking over Nautical earlier this summer.

Peel Hunt analyst Werner Riding said Valiant’s move had not been expected by the market, but the company had been looking “very cheap”. He cited larger rival Enquest among potential suitors.