Conoco eyes UK oil group

 

British oil exploration group Lasmo is being targeted for a £1.5 billion takeover bid by American oil and petrol retailing giant Conoco. The US group, which has extensive operations in North Sea fields, has carried out a detailed analysis of Lasmo's operations and assets in preparation for a possible bid, according to senior industry executives. It has also been taking discreet soundings in the City to gauge investor sentiment about its target.

An industry expert in regular contact with Conoco said: 'It is pretty clear that they have deep knowledge about Lasmo and have looked at it closely. I would not be surprised if they were preparing to take a pop at it.'

Lasmo has long been regarded as a prime takeover target and has been looked at by several big oil companies. Five years ago it escaped a hostile bid by UK rival Enterprise Oil. Last year they held protracted merger talks as the price of crude oil plummeted on the world market. But they failed to agree terms partly because both companies' top managers wanted to stay on in the enlarged business. Since then, gas pipeline giant BG has also run its slide rule over both companies, but decided not to bid.

Despite soaring oil prices this year Lasmo's shares have failed to bounce back because of investor disenchantment with its over-ambitious corporate strategy. Last week managing director Chris Wright abruptly left the group after a long-running boardroom clash with chief executive Joe Darby. It is believed that Darby had been in favour of a merger with Enterprise, but Wright had opposed the move. Relations were further strained after Lasmo replaced Deutsche Bank with Warburg Dillon Read as its financial adviser about three months ago.

Several big Canadian and US oil explorers have again looked at Lasmo this year, but this is the first time that Conoco has emerged as a likely bidder. The other potential suitors include Phillips Petroleum and Anadarko. However, Conoco, with a £9 billion market value, is in a stronger position to clinch Lasmo as it has the financial resources to offer cash to Lasmo shareholders. The UK company would be a good fit as its activities stretch from Venezuela and the UK to the Middle East, Pakistan and Indonesia.

Conoco is known to be interested in expanding its operations out-side the US, particularly in Latin America and Indonesia, though strained diplomatic relations between the US and Libya means it would probably sell off Lasmo's interests there. Lasmo shares were 2 1/4p higher at 119