Summary
Sunday Telegraph THERE have been two important pieces of news this week from oil and gas group Venture Production (771.5p). Firstly, the Takeover Panel issued a "put up or shut up notice" to Centrica. Secondly, the company has sold a number of assets to Dutch utility group Nuon for pounds 96.5m, plus pounds 10m for back costs on the Kew appraisal well - a price per barrel which the company says is significantly more than Centrica paid for its stake. In March, Centrica bought a 22.3% stake in Venture at 725p a share, although Venture said it thought this substantially undervalued its business. Centrica now has until 5pm on July 13 to make a formal offer for the group. Although the assets sold to Nuon are at the quality end of its operations, it is clear that the board would not recommend a sell-out to Centrica unless the offer price is raised substantially. However, there may be pull-back if Centrica walks away and an offer is not forthcoming, but this would be an opportunity to buy on the dip.
Gas from the North Sea is strategically important for the UK, and Venture has lots of expertise in developing the difficult assets nearing the end of their life, and the forward curve on gas prices is still pretty healthy, implying price rises ahead. Venture shares offer good value, even without the catalyst of a potential acquisition. Buy.See the full content of this document
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