UK's Melrose to buy Egyptian partner for $265 million

LONDON: Britain s Melrose Resources Plc said on Thursday it was buying partner Merlon Petroleum Company for $265 million in cash to gain full control of the pair s oil and gas discoveries in Egypt, boosting its shares. Melrose s shares rose as much as 16 percent to 403 pence. We believe that this deal enables Melrose to add production and significant upside at a very good price, especially in light of frothy asset markets, analysts at Numis said while raising their price target on Melrose shares to 540 pence from 470p. Melrose, an oil and gas explorer, said the deal was conditional on approval by both its and Merlon s shareholders and would be funded by a $320 million loan. Merlon is Melrose s partner and the operator of its properties in the Nile Delta region of northern Egypt, where the pair have discovered over 1 trillion cubic feet equivalent of gross recoverable reserves. Melrose posted a swing to annual profit after tax in March of $22.4 million following substantial increases in production, revenue, earnings and cash flow. Shares in Melrose, which have underperformed the UK oil and gas sector by three percent over the last 12 months, were up 11.1 percent at 385 pence by 0830 GMT, valuing the group at around 311 million pounds ($546 million). Reuters