Regal Denies $1.2 Billion Bid Approach from Shell

Ukraine-focused oil and gas explorer Regal Petroleum denied newspaper reports on Friday that it had received a $1.2 billion takeover approach from oil major Royal Dutch Shell.

"No such approach has been received," the company said, following reports in the Daily Telegraph and Financial Times.

Regal shares rose 36 percent at one point, before falling back to trade up 22 percent at 102 pence.

The reports had predicted a bid at 300 pence/share.

A Regal spokesman said while Regal staff did have regular contact with Shell staff in Ukraine, discussions had been only about operational matters such as the possibility of Shell using one of Regal's drilling rigs.

Regal believes it can add more value by developing its reserves independently, the spokesman said, and pointed to analyst target prices for Regal shares in excess of the reported 300 pence/share level.

Analysts at Fox Davies said Regal's sizeable reserves and low market valuation made it a bid target.

"We believe that at the current price at which the stock trade (below one quarter of our Target price of 3.70 pounds/share), the company is a very attractive target .. it would be a material addition to a large independent or even a major," the brokerage said in a research note.

Regal has previously received approaches from third parties proposing to buy part or all of certain of its assets, but the spokesman said none of these was at an advanced stage.

Shell declined to comment on the reports.

In November Regal agreed to sell Shell a 51 percent stake in its Ukrainian gas fields in return for funding the development of the assets, but days later former Shell executive David Greer was appointed as chief executive and ditched the deal.

Instead, Greer raised cash by selling shares so that Regal could fund the assets' development itself.

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