Medco bids for Novus at A$326 million

JSX-listed PT Medco Energi International on Monday unveiled a A$326 million takeover bid for junior Australian oil and gas producer Novus Petroleum Ltd, Dow Jones Newswires reported from Sydney, Australia on Monday.

Medco said in a statement that its A$1.74 a share bid - a 35 percent premium to Novus' closing price of A$1.29 on Dec. 19 - should be attractive as the offer price is in cash and provides certainty for shareholders.

Novus has an attractive mix of assets that are complementary to Medco, Medco said.

"The Novus assets are attractive to us as they expand our interest in Indonesia and give us the potential for geographic diversification of our asset base," said Medco Chief Executive Hilmi Panigoro.

"We believe we have reflected this in our offer price, which represents a significant premium to the prevailing share price prior to the announcement being made," he added.

Medco's intention at least in the near term is to broadly maintain Novus' asset portfolio and existing employees including senior management, Medco said.

Should the offer be successful, Medco would undertake a thorough review of the company and its operations.

Medco said it has significant cash reserves, which will enable it to fund the A$326 million takeover.

Medco's off-market takeover bid is conditional on securing at least 90 percent of Novus securities. The bid is also conditional on regulatory approvals including the Australia's Foreign Investment Review Board.

Under Indonesian law, Medco's offer is conditional on the approval of more than 50 percent of its shareholders. Medco's biggest shareholder is New Links, with an 85 percent stake. New Links is owned by three shareholders, which are Encore, PTT E&P and Credit Suisse First Boston.

Novus last week announced that it, together with operator Lapindo Brantas, had commenced development drilling campaign in Brantas PSC, East Java with the spudding of Wunut-7 well.

The aim of the drilling campaign is to further develop the Wunut field and to appraise the southern extent of the Tanggulangin discovery. Under the terms of a Gas Sales Agreement signed earlier in the year, the Brantas joint venture can supply up to 80 million cubic feet per day of gas. Wunut has recently been producing at record rates of over 60 million cubic feet per day of gas.

Each Novus and Lapindo Brantas has 50 percent working interest in Brantas PSC. (*)