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Sinopec acquires Addax for $7.2bn
SINOPEC, an acronym for China National Petroleum Corporation has paid C$8.27
billion (US$7.24 billion or N1.06 trillion) for Addax Petroleum after the
Canadian-based outfit gave the nod to the Chinese giant’s C$52.80 per share
takeover offer.
It was also gathered that Sinopec is set to drill its first exploration well
in the Nigeria-Sao Tome and Principe Joint Development Zone in July after a
lengthy delay caused by a shortage of deepwater rigs.
The offer for Addax is a 47 per cent premium to the company’s closing price
on the Toronto Stock Exchange on June 5, the day before it announced it was
in talks with a number of companies regarding a potential takeover. Talk of
several bidders for Addax have been touted in the market over the past month
including China National Petroleum Corporation, China National Offshore Oil
Corporation and Korea National Oil Company.
India’s Oil & Natural Gas Corporation and Reliance Industries.
The agreement between Sinopec and Addax is still subject to approval from
the Chinese government.
The deal involves a break-up fee of C$300 million, Addax said in a
statement.
To drill in JDZ:
Meanwhile, efforts to speed up exploration in Block 2 come as Sinopec moves
to takeover Addax Petroleum Ltd., one of its partners in the joint
development zone, or JDZ.
The Trans Ocean SEDCO-702 deepwater rig is due to arrive at Block 2 around
July 1 and drilling will start immediately afterwards, said an official with
the JDZ.
Sinopec secured the production and sharing contract on the block in 2006,
but hasn’t been able to drill up to now due to a shortage of deepwater rigs,
a Sinopec official and the JDZ official said.
They declined to speculate on the Sinopec-operated block’s potential
reserves, but industry reports point to a pre-drill resource estimate of
about 275 million barrels.
China, the world’s second largest oil consumer, is keen to find more oil and
gas reserves, especially when asset valuations are low due to the sharp
decline in oil prices since July last year. Light, sweet crude on the New
York Mercantile Exchange is currently trading more than 50% below its peak
above $147 a barrel.
Much of its overseas activity has been focused on Africa, with China
offering soft loans and aid to governments on the continent in exchange for
its state companies having access to resources.
Sinopec executives traveled to London this week to meet with Addax Petroleum
to discuss a potential takeover bid, two people familiar with the matter
said.
London and Toronto-listed Addax Petroleum has a 14.33% working interest in
Block 2, along with stakes in three other blocks in the JDZ.
It is the operator of Block 4 via a 45.5% stake and also holds interests of
40% and 15% in Block 1 and Block 3, respectively, according to the company’s
2008 annual report.
Sinopec Group is the parent of Hong Kong-listed China Petroleum & Chemical
Corp. It has been aggressively pursuing oil assets overseas to reduce its
reliance on refining for revenues and profits.
Sinopec is particularly interested in assets in South America and Africa,
company chairman Su Shulin said in May.
Equity oil and gas output from overseas fields, mostly located in Russia,
Angola, Syria, Australia and Kazakhstan, totaled 9 million metric tons last
year, up from 6.87 million tons in 2007, Su said in March.
