Perth-based Incremental Petroleum has recommended shareholders reject an $84 million takeover bid by Texan firm TransAtlantic, citing the current low oil price as one reason to rebuff the offer.
In its target's statement today, Incremental said independent expert KPMG had valued the company's shares at between $2.14 and $2.70 per shares.
Shares in Incremental closed down five cents to 95c today.
TransAtlantic is offering $1.05 cash for each Incremental share, and has so far acquired a 14.31 per cent stake.
Incremental chairman Chris Cronin said TransAtlantic's offer was neither fair nor reasonable and did not provide an appropriate premium for control of the company.
Additionally the offer had a number of conditions, including a minimum acceptance condition of 75 per cent, which has effectively been blocked by former suitor Cooper Energy which holds around a 26 per cent interest.
Cooper has previously said it will not accept TransAtlantic's offer.
TransAtlantic was not able to waive the minimum acceptance clause due to financing arrangements based on this condition.
TransAtlantic had already waived the oil price condition after the crude oil price fell below the $US50/bbl mark.
Incremental also advised that taking up the offer when oil prices are at three-year lows may not provide shareholders with a good return.
At around noon today, the oil price was trading at $US36.04 per barrel in New York.
Incremental had previously rejected Cooper's takeover bid which closed in early November.
Cooper managing director Mike Scott said it intends to digest Incremental target's statement.
"We do note the Incremental Directors' recommendation to reject the offer and the revised valuation," Mr Scott said.
"As Incremental's biggest shareholder with 27%, we are keen to understand how the Board proposes to secure this value for shareholders.
"We would expect to hear from Incremental's Directors on what they are specifically doing to realise this value.
"The incumbent board has set an aggressive target and we'll be keen to see them deliver this higher value."
