Enterprise Oil's Unpredictable Journey: A Cautionary Tale of the Oil Industry

Strategic Insights -

Despite plunging into losses, Enterprise Oil managed to increase its share price by 6% on the day it announced it would forego its dividend, coinciding with a general rally in the oil price. The price of oil rose to a four-month high of over $13 a barrel after Opec and non-Opec producers agreed to reduce production by two million barrels a day. However, for Enterprise, even at $13 a barrel, it struggles to make a profit. The company's merger with Lasmo is seen as a fall-back plan, with Enterprise chairman Sir Graham Hearne claiming "significant synergies" between the two companies.

Key Takeaways:

  • Enterprise Oil's share price rose 6% on the day it announced it would forego its dividend, coinciding with a rally in the oil price.
  • The oil price increased to a four-month high of over $13 a barrel after Opec and non-Opec producers agreed to reduce production by two million barrels a day.
  • Despite this, Enterprise Oil is barely profitable at the current oil price.
  • The company is attempting to merge with Lasmo to create a more credible and profitable independent UK oil exploration and production group.
  • Sir Graham Hearne, Enterprise chairman, claims there are "significant synergies" between the two companies.
  • The merger talks have been ongoing for two months, despite the history between Enterprise and Lasmo.
  • Joe Darby, Lasmo's chief executive, is a key figure in the talks, which are expected to conclude by the end of the month.

Statistics:

  • 6%: increase in Enterprise Oil's share price on the day it announced it would forego its dividend.
  • $13: the four-month high oil price reached after Opec and non-Opec producers agreed to reduce production by two million barrels a day.
  • 2 million barrels: the reduction in oil production agreed upon by Opec and non-Opec producers.
  • $9: the low oil price Enterprise Oil experienced not so long ago.
  • 1994: the year Sir Graham Hearne attempted to acquire Lasmo in a failed bid.

Sources:

  • "Enterprise Oil's share price rises 6% after it announces dividend cut" ( no source provided)
  • "Oil price hits four-month high on Opec cuts" (no source provided)
  • "Enterprise Oil struggles to stay profitable despite rising oil price" (no source provided)