DNO International, the Norwegian oil and gas producer that merged with the UAE's RAK Petroleum, has withdrawn its hostile takeover bid for Calvalley after it emerged that the Canadian producer was considering an increase of its stake in a Yemeni concession.
The Norwegian company had tabled an offer for Calvalley shares a week earlier after Calvalley's board had not responded to an earlier takeover offer.
DNO International "announced today that based on recent news from Calvalley, it has currently decided not to proceed with its proposed all-cash offer to acquire Calvalley at a price of C$2.30 per Class A common share", the company said yesterday.
Calvalley had disclosed that it was considering buying all or part of a 25 per cent stake held by a partner in the Block 9 concession in Yemen's Sayun-Masila basin.
The Canadian company holds a 50 per cent stake in Block 9, which yields about 3,500 barrels of oil per day.
It was informed in a notice from one of its partners that under the operating agreement, it has the right to match any offer for the partner's share.
"The opportunity by Calvalley to match the offer on Block 9 may help explain Calvalley's previous reluctance to enter into any meaningful dialogue," said DNO.
The Norwegian company remains open to a takeover of Calvalley. "DNO International looks forward to learning Calvalley's response to the notice before determining whether or how best to engage in a constructive dialogue towards any transaction," it said.
DNO last November merged with RAK Petroleum to create an oil and gas company that is either producing or exploring in Iraqi Kurdistan, Yemen, the UAE, Oman and Tunisia.
DNO's finances were boosted last year when it received payments for the crude it produced in Iraqi Kurdistan, where hydrocarbon producers are caught in the middle of a dispute between the regional government and Baghdad.
The bid to take over Calvalley fits into DNO's strategy of expanding by acquisition rather than growing organically.
iPad users can read the digital edition of business section as it was printed via our e-reader app. Click here