UPDATE 2-No Exxon bid for Gulf Keystone seen, shares soar

Mon Dec 19, 2011 3:38pm GMT

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* Source says no talks on 800p/share bid

* Shares jump as much as 24 percent

* Analysts, dealers doubt bid

* Companies decline comment (Updates with comments from source, shares)

By Tom Bergin

LONDON, Dec 19 (Reuters) - Explorer Gulf Keystone Petroleum is not in talks with U.S. oil major Exxon Mobil Corp about a 7 billion pounds ($10.9 billion) bid, a source familiar with the Kurdistan-focused group's thinking said on Monday.

The Independent on Sunday newspaper reported that Exxon was considering making an estimated 800 pence per share bid - five times Gulf Keystone's closing share price on Friday.

The report, which drove Gulf Keystone's shares up as much as 24 percent on Monday, said the company's board had discussed Exxon's interest a fortnight ago.

But a source familiar with Gulf Keystone's thinking said there were no talks with Exxon.

"If they had been in discussions, they would have had to have made an announcement," the source said.

Exxon and Gulf Keystone, which says it has found billions of barrels of oil in the semi-autonomous region in northern Iraq, declined to comment.

Analysts dismissed the prospect of such a high bid from the notoriously financially disciplined Texas-based oil giant, which made headlines with its recent entry into Kurdistan.

"We fear an element of yuletide wishful thinking may also be playing a part," said Richard Savage, oil analyst at brokerage Mirabaud.

Acquirers rarely make offers at more than a 50 percent premium to a target's pre-bid share price.

Nonetheless, Gulf Keystone shares opened 24 percent higher before giving up some of the gains to trade up 17.5 percent at 194.5 pence at 1526 GMT.

One dealer said they were especially surprised by the report's claim that Gulf Keystone's board would not accept the estimated 800 pence/share bid that Exxon was considering and instead the Chief Executive, Todd Kozel, wanted a price tag over 10 billion pounds in total.

"I bet the shareholders would jump for anything over 250 pence a share," the dealer said.

The Kurdistan Regional Government (KRG) said last month that Exxon had signed contracts for six exploration blocks, prompting criticism from the Baghdad government, which has challenged the regional government's right to issue licences.

The deal would make Exxon the first company in the top tier of the industry to move into the Kurdish region but Exxon has not confirmed it and declines all comment on the matter.

Industry sources said that many big western oil companies have been mulling an entry into Kurdistan, by either buying existing players in the region, many of whom are small independents, or by buying new licencing blocks.

Gulf Keystone said in September it was seeking a buyer for its 20 percent interest in the Akri-Bijeel block in Kurdistan in order to help finance ongoing development of other assets.

Industry sources said the company has mulled a possible sale of others parts, or all, of its interests in Kurdistan. (Additional reporting by Sarah Young; Editing by Jon Loades-Carter and Mike Nesbit)

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