UPDATE 1-Lone Star asks Penn Virginia to consider "all credible proposals"

Fri Jun 26, 2015 2:26pm EDT
 
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June 26 (Reuters) - Penn Virginia Corp shareholder Lone Star Value Management LLC asked the U.S. oil and gas producer to consider strategic alternatives to explore "all credible proposals".

Lone Star's statement on Friday comes a day after financial news website Proactive Investors reported that BP Plc had offered to buy company for $8 per share.

"If it is true that Penn Virginia could be sold for an 80 percent premium or more to a credible buyer, the board has a fiduciary duty to fully explore such an offer," said Lone Star, which has a 2.8 percent stake in Penn Virginia.

Penn Virginia shares closed up 12 percent at $4.98 on Thursday after news of BP's offer was reported, valuing the company at $356.9 million.

Lone Star said Penn Virginia was an attractive takeover target because of its acreage in Texas' Eagle Ford shale.

The company had proved reserves of about 115 million barrels of oil equivalent as of Dec. 31 and produced 24,721 barrels of oil equivalent per day in the January-March quarter.

If Penn Virginia rejects an offer with a substantial premium, Lone Star said it may seek shareholder representation on the board.

Penn Virginia declined to comment.

Lone Star said on Friday Penn Virginia shares had "significant upside potential" in the event of an oil price recovery, but criticized the company for its "history of poor performance, its stale board, and its high cost of capital." (Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza)