(Adds details, background)
Jan 26 (Reuters) - Hedge fund Sandell Asset Management Corp asked pipeline operator SemGroup Corp to explore a sale among other options as energy companies look to pick up assets amid a steep fall in oil prices.
The company’s shares were up more than 7 percent at $68.54 in early trading on the New York Stock Exchange.
New York-based Sandell said it believed SemGroup was worth $104 per share.
Oil prices have declined by more than half since June last year, primarily driven by a global supply gut.
The plunge in prices could lead to a rash of M&A activity in the North American oil and gas sector as companies look for attractive deals at lower prices, analysts have said.
Sandell said it believed there were a number of potential buyers who could be interested in the company’s assets in the Montney and Duvernay Canadian shale basins and its U.S. mid-continent gas gathering and processing facilities.
Sandell’s estimated value of the company is more than double the stock’s intrinsic value of $42.58, according to Thomson Reuters StarMine.
The value is calculated using analysts’ five-year earnings estimates and modeling the growth trajectory over a longer period of time.
Shares of the Tusla, Oklahoma-based company have lost nearly 17 percent of their value in the last six months. (Reporting by Narottam Medhora in Bengaluru; Editing by Saumyadeb Chakrabarty)