Share liquidity move pushes Caithness Petroleum towards flotation

By GARETH MACKIE
Published on 29/07/2012 00:00

PLANS for a flotation of North Sea oil explorer Caithness Petroleum appear to have shifted up a gear after the privately-owned company boosted the liquidity of its shares.

The firm – which operates in the Moray Firth, Morocco and Texas – has given shareholders ten new shares for each one they previously held.

Caithness had considered a flotation in the third quarter of last year, to raise funds for a drilling programme in Morocco, but it is understood the plans were put on hold because of the Arab Spring.

A source said that the sub-division of shares enhanced Caithness’s position ahead of a possible flotation, which could come before the end of the year. “If they wanted to go for one, they’d have to do something like that,” the source said.

London-based Caithness is chaired by David Donnelly, a former chief executive of the private equity arm of wealth manager Fleming Family & Partners.

Last year it appointed Shell veteran Yves Merer as chief executive, replacing Robert Kennedy, who founded the firm in 2006.

Kennedy, who previously ran Aim-quoted Anglo Siberian Oil before its acquisition by Russian state-owned energy giant Rosneft in 2003, remains as commercial director. Foreign & Colonial Investment Trust, which owns about 10 per cent of Caithness, wrote down the value of its investment in the firm after fighting broke out in Libya last year.

The trust said a “forced seller” of shares in the company also gave other shareholders the opportunity to add to their holdings at a “much lower price” in December, and it used that transaction price to revalue its stake, which fell from £34 million to just £3m by the end of 2011.

Fund manager Jeremy Tigue has said that he is “very confident” that the trust’s stake will rise in value this year and he believes a flotation would be “the most ideal situation”.

Last week it emerged that Caithness had been forced to delay drilling two wells in the inner Moray Firth because of concerns that seismic surveys could affect the resident dolphin population. The firm has a 65 per cent interest in the prospects, while partner Trap Oil holds the remaining stake.

The wells had been due to be drilled by the end of this year, but Caithness told Trap Oil that it considers the delay to be a force majeure – an event outside its control – and it has received permission from the UK Department of Energy and Climate Change (DECC) to carry out the drilling next year.

The two companies are in talks over the force majeure notices but a source said there was no suggestion of a break-down in relations. “Oil companies have to do the right thing,” the source said. “They have to be very environmentally aware and responsible.”

A study carried out with DECC and the University of Aberdeen found the seismic surveys, which use sound waves to locate hydrocarbon reserves, had no effect on 
dolphins.