FINANCIAL TIMES: First Calgary faces delay in bid process (ShellNews.net) 6 April 05

By James Boxell

Published: April 6 2005

Formal bidding for First Calgary, which put itself up for sale after a large gas find in Algeria, could be put back by two weeks as potential bidders consider whether the company is worth a premium to its £1.4bn market value.

Formal bidding for the biggest stock listed on Aim was scheduled to begin on the weekend of April 16 and 17. But a person close to the sale said interested parties had been "bitching about time and we might now lose a week or two".

News of the possible delay came as more details emerged on companies that have considered bids.

BG Group has accessed the data room, although it is uncertain whether this will lead to a formal offer. Eon, the German utility, Italy's Eni and Spain's Repsol - both oil and gas groups - have also taken a look.

Interest has also come from state-owned Chinese and Indian oil groups such as PetroChina and ONGC, which are eager to secure reserves for their energy-hungry governments.

Statoil of Norway, Total of France and Royal Dutch/ Shell have also been in the data room.

The person close to the sale process said 12 or 13 companies had expressed an interest and eight were considering bids.

First Calgary is understood to prefer a full sale at a premium to its market value, although some bidders would prefer to buy just the gas field. "It is impossible to tell who is the favourite until the bidding actually starts," the person said.

Lehman Brothers, First Calgary's bankers, are understood to be confident of a successful sale. But one London-based oil and gas banker said: "I think it's a challenge. I don't know anybody who is seriously able to match the value."

Concerns about whether First Calgary's high market value was deterring bidders have helped cut its share price by a quarter in the past month.

Yesterday, its shares rose 42½p to 787½p.

Last week, the company estimated that proved and probable reserves - the measure commonly used for industry valuations - from its Algerian gas and oil fields were worth about £690m when adjusted for possible future oil price changes and using a discount rate of 8 per cent. 

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