Hayward Oil Firm In £2bn New Age Merger Talks

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The oil company headed by Tony Hayward, the former BP boss, is in talks about a merger with an Africa-focused exploration group.

Sky News has learnt that Genel Energy, which Mr Hayward has chaired since stepping aside from the chief executive’s post this year, is in the early stages of discussions about a tie-up with New African Global Energy (New Age).

Chairman Tony Hayward of mining and commodity trading company Glencore Xstrata is seen during the company's company's annual shareholder meeting in the central Swiss town of Zug May 20, 2014. REUTERS/Arnd Wiegmann
Chairman Tony Hayward of mining and commodity trading company Glencore Xstrata is seen during the company’s company’s annual shareholder meeting in the central Swiss town of Zug May 20, 2014. REUTERS/Arnd Wiegmann

Sources said on Tuesday that the talks were at an early stage, and were just one of a number of conversations taking place between Genel and other oil groups as the industry readjusts to the protracted slump in oil prices.

Genel’s oil production is currently focused on Kurdistan, but it has a string of exploration assets in Somaliland, Morocco, the Ivory Coast and elsewhere in Africa.

One banker described the company as a “good fit” with New Age, which has a similar geographic profile, operating across Africa and in Kurdistan.

The structure of any potential deal is unclear, with one possibility that Genel could use its shares as part of a consideration to acquire New Age.

The two companies are said to be of roughly comparable size.

New Age is owned by a group of private shareholders, including the Wall Street investment manager Och Ziff, the oil trader Vitol and an undisclosed group of sovereign wealth funds.

A merger of Genel and New Age would come as oil explorers examine ways to dilute the impact of the downturn in oil prices, with many analysts and executives anticipating that it may continue for another 12 months.

On Tuesday, Rockhopper Exploration agreed to buy Falkland Oil and Gas for £57m in a deal partly motivated by the growing need to identify potential cost savings by combining with rivals.

The Financial Times reported that hedge funds’ bets against the oil price had risen to the highest level this year ahead of an Opec meeting next week, underlining market expectations that there will be limited moves to curb supply.

If Genel and New Age do strike a deal, it is unclear whether Mr Hayward would seek to remain involved in the combined group.

He floated a vehicle called Vallares in 2011, backed by the wealthy financier Nat Rothschild, following his departure from BP in the wake of the Gulf of Mexico oil spill a year earlier.

Mr Rothschild continues to sit on Genel’s board, although the third founder, former Goldman Sachs banker Julian Metherell, has since left.

Genel’s share price has fallen by two-thirds during the last 12 months, reflecting the difficulty it has had extracting payments for oil exports from the Kurdistan Regional Government as it seeks to finance the fight against Islamic State militants.

Mr Hayward’s return to mainstream corporate life was cemented with his appointment as chairman of Glencore, the FTSE-100 mining and commodities group which has been forced to embark on an urgent exercise to slash its debts by billions of dollars.

A Genel spokesman declined to comment on its merger talks with New Age.

Source: Sky News

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