What’s next for the Oil Search Limited share price?

Credit: Pieter van Marion

What: Unlike most oil and gas stocks which are trading near multi-year lows, the share price of Oil Search Limited (ASX: OSH) is actually trading near its 52-week high thanks to a takeover approach from energy giant Woodside Petroleum Limited (ASX: WPL).

Despite the board of Oil Search rejecting the proposal, the market has been alerted to the value an informed buyer is prepared to pay for the stock and the share price has maintained its recent highs.

So What: The plunge in oil prices which has seen the price of oil drop from over US$100 a barrel to its present level at around US$44 for Brent crude oil has been dramatic and caught many oil producers, oil explorers and service providers such as MMA Offshore Ltd (ASX: MRM) by surprise.

The market would appear to have taken something of a shoot first, ask questions later approach with many oil and gas stocks trading at levels which most likely reflect a continuation of current oil price levels rather than factoring in an eventual tightening of supply which should push prices higher.

Now What: In recent weeks Oil Search has released to the market a number of important announcements including presentation materials from conferences attended and a quarterly report. Perhaps one of the most intriguing announcements didn’t actually come from Oil Search but rather Woodside which corrected a media report regarding its bid. The correction appears to leave open the possibility of Woodside revising its $8.3 billion bid for Oil Search.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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