Ithaca Energy: Endeavour's Bid Insufficient

On Sunday, Ithaca Energy (IACAF.PK)  rejected Endeavour's (END) unsolicited offer of C$3.25 per share, judging that the 13.2% upside was insufficient in light of the incoming catalysts for the oil and gas company.

"Ithaca has a number of ongoing initiatives that will be concluded in the near term which we believe will provide greater value for Ithaca's shareholders," said John Summers, Chairman of Ithaca's Board of Directors as he announced the unanimous rejection by the special committee set up to appraise the offer.

Among those catalysts, Fraser Mackenzie analyst Vic Vallance highlighted Sproule Associates' recent reserves upgrade for Ithaca 30-block operations in the North Sea. The oil consulting firm raised Ithaca's Proved & Probable reserves by 46%  and Proved, Probable & Possible assets by 66%.

Mr. Vallance upgraded his one-year target price from C$4 to C$4.85, noting that rising oil prices further lifted valuation.

Comments

[Steven Ward:]

Prior to eND's offer, IACAF was stuck at 2.45 with the LSE and the TSE not giving it any upside for the oncomming oil streams. The END offer based on Ithaca's closing price prior to the offer is a 44 percent jump in share price for Ithaca.

Both of these companies are very active and promising. END and IACAF would enhance anyone's 401K handsomely if held for 5 to 7 years. The two companies shouild merge and that merger would result in 40,000 BOE by 2012.
Unfortunately for END and good for ITHACA is that END's unsolicited offer woke the market up to Ithaca's great potential, that prior to this, the markets ignored. But that is what makes a market. END is also undervalued with a 2 P +P reserve in excess of $3.00 per share and free cash flow of about 5o percent of the stock price.

Buy both with both hands nomatter the takeover result. I am holding END shares.

2008 Jul 08 11:33 AM

[Steven Ward:]

Also, SE published my review of Endeavour in February. Check the archives, it is still available. What could happen here is someone swallowing both companies as North Sea consolidation is the jour du rigor.

2008 Jul 08 11:39 AM