Enterprise Oil of the UK is considering pulling out of the Gulf of Mexico and Iran as part of a restructuring as it faces a potential £3bn ($4.3bn) bid from Eni, the Italian oil group. Enterprise also plans a management and strategy shake-up which it will present to investors next month.
Last week, Enterprise said it had rejected an unsolicited approach from an unnamed company, understood to be Eni.
Eni executives spent the weekend studying ways of reviving the bid, maybe through an increased offer. Eni's initial approach is believed by some institutional investors to have been as low as 560p-570p a share, valuing the company at £2.7bn, compared with Friday's market price of 628p.
Eni is expected to unveil details of its strategy to investors in Milan on Monday. Vittorio Mincato, chief executive, will make the same presentation to UK shareholders in London on Tuesday.
Enterprise has already started strengthening its defences by bringing forward its 2001 results presentation by two weeks to February 5.
Sam Laidlaw, Enterprise's new chief executive, will aim to convince shareholders that his group has a viable future as an independent company. Mr Laidlaw is expected to outline an aggressive cost-cutting strategy which will include significant job cuts.
Mr Laidlaw, who is considered to be more hands-on than his predecessor, Pierre Jungles, will also tell investors the group is moving towards a flatter management structure, including changes at operational level.
One Enterprise executive said: "There is an acceptance that the business had become stale and Sam will be keen to show investors that there is now going to be a fresh injection of thinking."
It is understood the board is weighing up the risk and rewards of its deep water operations in the Gulf of Mexico and its recent move into Iran. Mr Laidlaw may decide to pull out and and reallocate resources to Brazil, where Enterprise has a successful partnership with Petrobras, the state-controlled oil giant.
Further joint ventures in Brazil are expected.
Enterprise is under pressure to explain why why it rejected Eni's informal offer for the company. Some shareholders have expressed anger that they were not informed about the bid or at the price of the offer.
Analysts argue Eni could justify raising its offer to around 700p based on a per-barrel-of-oil price of $6.50. This is in line with other recent deals and values Enterprise at around $5.8bn including debt.