State-run Oil India Ltd and Indian Oil Corp (IOC) has pulled out of the race to acquire Gulfsands Petroleum Plc after the UK-listed firm refused the Indian firms' request for due diligence before making a firm offer.
"The Board of Gulfsands has not agreed to OIL-IOC doing a focused due diligence (based on which a revised offer could be made). In view of this, OIL-IOC will not make a revised offer," OIL Director (Finance) T K Ananth Kumar told PTI here.
OIL-IOC combine had asked Gulfsands to respond by today on their request for conducting "focused due diligence." Gulfsands' response has been negative, he said.
Gulfsands had last week rejected a 381-million-pound offer made by OIL-IOC combine. The Indian firms, which had offered 315 pence a share in an initial indicative takeover proposal on March 18, reiterated the offer on April 27.
He said OIL-IOC wanted to conduct due diligence of Gulfsands particularly its Syrian assets before making a firm revised offer. "But since that has been disallowed, we have no choice but to walk away for now."
Gulfsand last week went to the UK's takeover watchdog seeking direction to OIL-IOC to put a firm formal offer or walk away for six months.
Gulfsands, on April 30, had said the 315 pence offer by OIL-IOC combine was "wholly inadequate and materially undervalues the company." The company may be seeking 400 pence per share and wanted OIL-IOC to raise the offer.
A day before that the UK's Takeover Panel had set OIL-IOC a deadline of May 11 for making a formal offer or walking away for a minimum of six months.
Gulfsands's main asset is its 50 per cent stake in Block 26 in north-east Syria which includes the Khurbet East and Yousefieh fields. Oil production is expected to rise to about 20,000 barrels of per day this year from 11,000 bpd currently. It also owns interests in 44 blocks, including 30 producing blocks, off the coast of Texas and Louisiana.
IOC and OIL were in December 2005 allowed by the government to jointly bid for oil and gas properties abroad. The two formed a 50:50 joint venture and have been pursuing acreages in Africa, the Middle East, South-East Asia, South America, CIS countries and Russia.
For Gulfsands, the two firms were being advised by Seymour Pierce. They approached several of Gulfsands' large UK institutional shareholders, including Schroders, which holds 22 per cent stake in Gulfsands, before making its bid.
IOC and OIL have a portfolio of exploration blocks in Gabon (one onshore exploration block), Iran (one offshore discovered oil and gas block), Libya (three onshore exploration blocks), Nigeria (one onshore exploration area) and Yemen (two exploration blocks).