Africa-focused Tullow Oil surged to the top of the FTSE 100 risers board amid speculation that the exploration firm could be a bid target for Norway’s Statoil.
Reports emerged that the Norwegian energy giant was considering major acquisitions that would dilute the state’s stake.
The firm is also thought to be looking to diversify its mainly Norwegian portfolio, while the government is seeking to cut its stake from 67% to 51%.
Tullow emerged as the target because it has been among the worst-performing stocks in Europe’s oil and gas sector, with its shares falling 38% over the past year.
Yesterday its shares closed up 7.6% to 909.5p.
But politicians and analysts downplayed the speculation claiming that Norway’s minority government would face an uphill battle to push its privatisation agenda in parliament.
Joerund Rytman, trade and industry spokesman for the ruling Progress Party, said: “Diluting the state’s stake has not been a topic for discussion by parliament so far but I’m sure it will be as part of the upcoming white paper on ownership. This is not something that will happen overnight.”
Statoil and London-listed Tullow both declined to comment.
The government plans to present a white paper by the middle of the year on state ownership in firms such as Statoil, aluminium producer Norsk Hydro, bank DNB, and telecoms firm Telenor in what it said would be the first concrete move to cut stakes.
“There has been no decision on the sale of shares and we have no further comment on this speculation,” the oil ministry said.
Bernstein analyst Oswald Clint played down talk Tullow could be on Statoil’s shopping list given the Norwegian firm’s own success at discovering oil and gas fields in recent years.
“They aren’t as in need of purchasing assets at this point as they were in the past decade so it feels a little bit unlikely to me,” he said.
Statoil’s hand is also limited in making very large acquisitions as its post-dividend free cash flow is negative because of high investments and the firm has been selling assets in recent years to raise cash.