Norwegian independent North Sea oil producer DNO is on its way to gaining a foothold in Egypt’s Western Desert with a $396 million acquisition of London-traded Capricorn Energy. DNO outbid its joint venture (JV) partner in Iraqi Kurdistan, Genel Energy, to secure the deal, though a counteroffer could yet be made.
DNO’s interest in Egypt-focused Capricorn comes only weeks after it made an unsolicited offer to buy Genel, with whom it partners in the JV developing the Tawke and Peshkabir fields in Kurdistan. Genel, which rejected DNO’s offer, also holds exploration acreage in Oman and Somaliland.
Meanwhile, Genel had bid $360 million to buy Capricorn in July only to have DNO top the offer by another $36 million, causing Capricorn’s board to choose DNO and announce on 1 September it would recommend the DNO bid to shareholders, Reuters reported.
In response, Genel issued a Regulatory News Service (RNS) announcement on the London Stock Exchange (LSE) website suggesting that the bidding war may have only started.
“Following the DNO Offer, Genel is considering its position, and a further announcement will be made when appropriate. Capricorn shareholders are strongly advised to take no action in response to the DNO offer in the meantime,” the announcement read.
Windfall Profits Driving M&A
Wood Mackenzie, the global energy research, data analytics, and consultancy firm, noted in a 28 July news release promoting its Mid-Year Outlook: Oil & Gas, that windfall profits driven by war-related spikes in oil prices are creating opportunities for mergers and acquisitions (M&A).
“M&A has defied expectations,” Wood Mackenzie noted in its release. “Despite price volatility, H1 deal spend reached its highest total in 2 years. Shell’s $16 billion acquisition of ARC, Devon’s $25 billion merger with Coterra, and Mitsubishi’s $7.5 billion acquisition of Aethon were among the defining transactions.”
Earlier this year, Capricorn had attracted buyer interest from Saudi Arabia’s private corporate investment company Cafani Group and UK-based private equity firm Samos, which both withdrew their bids on 11 August.