Calgary sparks fears over oil boom

FEARS that the oil boom is fading increased today as Alternative Investment Market (Aim)-listed energy group First Calgary Petroleums indicated it may struggle to find a buyer willing to pay the premium given to the business by its stock market valuation.

Shares in the Canadian group, which put itself up for sale in December, plunged 13% or 97½p to 647½p as it said the board had received a 'number of complex proposals' for the company and its assets. Investors had been hoping for an outright bid close to its recent £1.3bn rating.

The City's concern was heightened by a statement from Premier Oil that Tony Durrant, one of three Lehman Brothers bankers handling the First Calgary auction, was joining it as finance director. One analyst said: 'It's like rats deserting a sinking ship.'

A spokesman for First Calgary insisted Durrant's move was a mere coincidence and the company had received 'an awful lot of proposals and an awful lot of interestî ahead of the bid deadline, which was at the weekend. But shares in the group are now 40% below their high of two months ago.

The auction has always been seen as a key test of the fundamentals underpinning the oil boom that has seen a host of exploration minnows cash in on the sky-high oil price to list in the City. First Calgary, led by Rick Anderson, claims to have found 18 trillion cubic feet of gas in Algeria but there are fears over how it will get it to market.

One analyst said: 'There is a fear that First Calgary may be the thing that pricks the bubble. If the sale does not go well, it might impact the racier end of the sector.'