Enterprise gush on bid appraoch

THE oil exploration sector was galvanised by a bid approach for Enterprise Oil, the largest UK independent explorer. Enterprise soared 105p to 605p, valuing it at £2.9bn. The strong favourite bidder is Italy's ENI.

Enterprise's board, chaired by Sir Graham Hearne, said it had received 'an unsolicited approach' that 'has been rejected'. The shares fell to 426p at the end of the year, but climbed fast this week, prompting the Takeover Panel to seek clarification.

Enterprise regards the approach as opportunist. But the old British National Oil Company has been a possible target for some time. Middle East turbulence adds to the attractions of its North Sea assets, led by the Nelson field in the UK and Jotul in Norwegian waters. It has high hopes in Brazil.

ENI has been moving closer to Enterprise for some time. Its cash bid for Lasmo trumped Hearne's merger talks. It knows the worth of Enterprise's oil in Italy and exploration in Greece.

US group Amerada Hess also has links; its former boss, Sam Laidlaw, is the new Enterprise chief executive, but it has hefty debts. Shell, Repsol, Anadarko and Canada's Talisman could all afford a tilt. The really dark horse would be a Russian. Mark Redway at Teather & Greenwood says: 'A bid would need to top £7 a share to succeed.'

The spurt in world prices, taking Brent crude to $22 a barrel, makes bids more likely. Laidlaw has hardly had time to park his new company car at Enterprise, where he is due to unveil his strategy on 27 February.

With the shares still well below their 730p peak in 1998, big investors may need persuading that a bid should not be welcomed.