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Imperial Energy in play

Created:
15 July 2008
Written by:
Jonathan Eley

Imperial Energy has received another bid approach - and this time, it's not from the Russians. India's Oil and Natural Gas Corporation (ONGC) is the likely suitor. This is both good and bad news.

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Good, because it's backed by the Indian government, so funding the bid should not be a problem. Bad, because ONGC has past form when it comes to making bid approaches but not following them through with formal offers. ONGC has plenty of refining and distribution capacity within India, but needs access to additional reserves, of which Imperial has a plentiful supply.

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SHARE TIP UPDATE:

Buy

Imperial's share price has been depressed by political risk worries, such as the periodic and unhelpful interventions from Oleg Mitvol, and the continuing bust-up at TNK-BP. We recently recommended buying Imperial Energy shares at 874p on the basis that the company's reserves were absurdly lowly valued. ONGC appears to agree with our analysis. The shares have zipped up to 950p, but with analysts suggesting £13 as a likely take-out price, the shares are still a buy.

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