Nautical accepts Cairn buyout offer

Nautical Petroleum has accepted a buyout offer from Cairn Energy with a cash value of £414 million.

Cairn is offering 450p per share in the independent oil and gas explore. This represents a premium of 51% on 12 June's 287.8p closing price.

This latest acquisition comes after Cairn's recent purchase of Agora Oil & Gas, another North Sea oil business.

The company said it is an attractive opportunity to expand its existing portfolio in North-West Europe and continue its strategy of balancing its portfolio.

Cairn's failure to find oil in Greenland, where it had been focusing its efforts, led to it announcing in March that it would be looking to diversify into more established projects.

The buyout will provide Cairn with an increased interest in UK fields Catcher, Burgman, Carnaby and Varadero, by 15%, taking Cairn's overall interest to 30%. It will also obtain a 25% interest in Kraken, another large, North Sea oil development project.

Commenting on the offer, Simon Thomson, chief executive of Cairn said: "We are pleased to reach agreement with the board of Nautical, which has unanimously recommended our proposed offer, and we look forward to building on what they have achieved with the business to date."

Analysts at FoxDavies said: "Nautical's portfolio of oil and gas blocks perfectly blends with Cairn's strategy of balancing its transformational exploration portfolio with appraisal and development assets.

"The latest acquisition complements [the] recent acquisition of Agora and will help Cairn in building a strong portfolio in North-West Europe.

Amongst all the Nautical assets we are particularity excited about the Catcher, Burgman, Kraken."

Shares in Nautical jumped 54% to meet the offer price on Thursday, while Cairn remained steady.

Other North Sea oil targets

FoxDavies had more to say on North Sea oil: "What the recent acquisition of Deo Petroleum and Nautical prove is that there is a growing gulf between the markets and trade buyers of assets."

The broker provided a brief summary of potential take-out prices for a selected number of companies (table below), stressing that Antrim Energy, Ithaca Energy and Premier Oil were of particular interest.

Will investment in oil and gas continue to rise? George Godber of Matterley Asset Management shares his views on this and highlights regions that should show strength during the year in: Oil and gas investment outlook.