Novus sees profit increase in 2004

Australian takeover target Novus Petroleum Ltd said on Wednesday it expected net profit to rise sharply in 2004, and released a report valuing the oil and gas producer at well above the price offered by two suitors.

Novus said it announced its preliminary, unaudited 2003 net profit as part of a formal response to an unsolicited A$326 million ($245 million) takeover offer by Indonesia's PT Medco Energi Internasional Tbk .

This has since been topped by a management buyout offer, priced at a slightly higher A$331 million, although analysts have suggested the MBO is aimed at flushing out rival bidders.

Novus said it expected net profit to jump to A$46.3 million in calendar 2004 from A$11.4 million in 2003, due to new acquisitions, growth in its U.S. and Indonesian assets and an absence of write-downs.

Its 2003 profit, up 35 percent on a year earlier at an operating level, was depressed by A$17 million due to the write-off of an unsuccessful exploration well in Queensland and a lease in Texas, and the write-down of an Omani field.

Novus also released a report by Grant Samuel & Associates which valued the company at A$368 million to A$516 million and concluded that Medco's bid was neither fair nor reasonable.

Analysts have said Australia's Santos Ltd would be a logical buyer for Novus, which has production and exploration areas in Australia, the U.S., Oman and Indonesia. It also has exploration programmes in the United Arab Emirates and Pakistan.

There is also speculation UK-based Paladin Resources is eyeing Novus.

Sydney-based Novus, which listed in mid-1995, has previously criticized the Medco bid as conditional and not reflecting the underlying value of the company.(*)