Imperial Energy Climbs on Report of ONGC Videsh Offer

By Archana Chaudhary and Stephen Bierman

Aug. 21 (Bloomberg) -- Imperial Energy Plc, a U.K. oil and natural-gas explorer developing deposits in Siberia, climbed to a seven-month high in London trading following a report that ONGC Videsh Ltd. bid for the company.

Imperial Energy rose as much as 88 pence, or 7.7 percent, to 1,234 pence, which would be the highest close since Jan. 15. The stock traded at 1,201 pence as of 11:45 a.m. local time, valuing the London-based company at 1.23 billion pounds ($2.3 billion).

ONGC Videsh, the overseas unit of India's state-run Oil & Natural Gas Corp., made a $2.5 billion ``non-binding offer'' for a controlling stake in Imperial Energy on June 24, the Hindustan Times reported, citing unidentified people familiar with the bid. Oil & Natural Gas Chairman R.S. Sharma declined to comment on the report when contacted by telephone in New Delhi today.

ONGC Videsh offered to pay 1,290 pence a share for Imperial Energy and may increase the bid to 1,500 pence if China Petroleum & Chemical Corp. makes a counter offer, Business Standard reported today, citing an investment banker it didn't name. The approach was approved by a committee of senior government officials, according to the Standard.

``This is speculation,'' said R.S. Pandey, the top bureaucrat in India's Oil Ministry. ``We cannot comment.''

Possible Bidders

Oil & Natural Gas, China Petroleum and Korea National Oil Corp. are interested in acquiring Imperial Energy, Reuters reported Aug. 13. Zhang Zheng, a Beijing-based spokesman for the overseas projects of Sinopec, as China Petroleum is known, didn't pick up calls to his office today. Bae Ho Jun, a spokesman for Korean National Oil Corp., declined to comment.

``A bid of 1,500 is around the upper range of our valuation,'' Artem Konchin, an oil and gas analyst at UniCredit Aton in Moscow, said by phone today.

JPMorgan Chase & Co. analysts Andrey Gromadin and Nadia Kazakova said in a research note that the risk of a deal failing ``has dropped considerably in our view.''

``We believe intensifying media coverage, reports of state- level negotiations and ONGC's readiness to face competition suggest a strong possibility of a positive outcome,'' they wrote.

Oil Reserves

Imperial Energy has 450 million barrels of Russian registered reserves, according to a July company statement. Imperial is seeking parity between its Russian-approved reserves figures and its estimates based on Society of Petroleum Engineers standards after the country's government raised questions about differences between the two.

The company, which operates primarily in the Siberian region of Tomsk, has 920 million barrels of oil equivalent of proven and probable reserves as of December 2007, according to an audit by DeGolyer and McNaughton cited on Imperial's Web site.

Drilling successes at the Kiev Eganskoye field on the east side of the Ob River came after the yearly Degolyer and MacNaughton audit and will likely increase valuations when they are included in the next report, Konchin said.

Imperial said in April it pumped 7,000 barrels a day in the first quarter. The company plans to produce 25,000 barrels of oil a day by the end of the year and expects to start output at the Kiev Eganskoye field in September.

To contact the reporters on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg. Stephen Bierman in Moscow at Sbierman1@bloomberg.net