Energy Report Wade Cherwayko's Mart Resources Inc. (MMT) added three cents to 60 cents on 14.2 million shares. It has agreed to a non-binding takeover offer of 80 cents a share from one of its joint venturers in Nigeria, Midwestern Oil and Gas. Midwestern and another Nigerian company, SunTrust Oil, own the Umusadege field, with non-owner Mart providing services in exchange for a share of production averaging 65 per cent. All three companies are also trying to acquire an interest in Shell's producing OML 18 block. This acquisition was announced in October, at which point Mart advanced $134-million for its 10-per-cent share, but the deal has yet to close. Mart's stressed finances, along with crashing oil prices, infrastructure delays, and a dividend reduction and then cancellation, have helped send the stock down from over $1.50 in June. Some of the selling pressure came from the CEO himself. Mr. Cherwayko sold five million of his 8.75 million shares in December, likely because of his divorce. He did not file the SEDI reports until Feb. 19. On Feb. 20, Mart announced that it was putting itself up for sale and also investigating Mr. Cherwayko's conduct. Three days after that, it hired FirstEnergy to review an unspecified takeover offer. Investors were curious as to whether FirstEnergy thought the offer was fair. Just a few weeks earlier, on Jan. 29, FirstEnergy started covering Mart with an "outperform" rating and a price target of $1.30. It is now content with the 80-cent offer from Midwestern. Mart has spent the last three years above 80 cents, reaching a high of $2.31 in early 2013, so many investors are looking at a loss. Yet FirstEnergy can still say it has done well by its clients. Those who bought after the January recommendation, when the stock was just above 50 cents, will enjoy a pleasing profit.
FirstEnergy seems confident that the takeover will go through; its clients bought one million shares today and sold none. Based on the closing price of 60 cents, however, others are not as sure. The offer is conditional on Midwestern closing a private placement by mid-June.