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Regal denies reports of $1.2bn approach by Shell

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By Ed Crooks

Published: October 3 2008 03:34 | Last updated: October 3 2008 20:24

Regal Petroleum has denied it received a takeover approach from Royal Dutch Shell, rejecting reports it was sent a letter proposing a possible bid valuing the company at $1.2bn (£679m).

However, David Greer, the company’s chief executive, confirmed that he was in talks with a number of companies about joint ventures or other partnerships.

While it was possible one of those companies would bid for Regal, he said: “I am not aware of anyone who has that intention at the moment.”

He would not name those involved but speculation has centred around Lukoil and Gazprom of Russia, and GDF Suez of France.

The story of the letter is the latest twist in the chequered history of Regal, which infuriated investors after delivering disappointing results from its exploration in Greece in 2005. Frank Timis, the company’s founder and then chairman, stepped down, but remains the largest shareholder with about 12 per cent.

Regal has attracted interest because of its gas assets in Ukraine.

It has 170m barrels equivalent of proved and probable reserves, three-quarters of that in gas, and is likely to raise that figure in the first half of next year.

On Thursday, one person with knowledge of the company reported the existence of a letter from Shell to Keith Henry, Regal’s chairman, proposing a bid worth about 300p a share: almost four times that day’s closing price of 83p.

Yesterday morning Regal issued a statement saying: “In response to press speculation this morning regarding a possible approach by Royal Dutch Shell to acquire Regal, the company confirms that no such approach has been received.”

Shell refused to comment.

In spite of the emphatic denial, Regal’s shares rose 51 per cent yesterday, closing 42p higher at 125p. They are still less than half their peak for the year of 300p.

Mr Greer added: “Nobody in this company has received any letter from Shell of the type reported in the newspapers?.?.?.?The only letter I have received from Shell is my pension statement.”

He said the only contact Regal had with Shell was to look at ways of working together to assist each other’s operations in Ukraine.

Regal was talking to and sharing data with a number of potential partners, he added, saying that in the present financial conditions, it might make sense to do a deal with another company.

Mr Greer said having raised $205m, Regal had sufficient cash to back its drilling programme well into next year. Mr Greer bought 10,000 shares in Regal on Wednesday at 91p. Merrill Lynch, the company’s broker, has set a price objective of 460p for the shares.

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