By Agency Reporter

Wednesday, 1 Dec 2010

BEIJING: Bridas Corporation, has agreed to pay BP Plc $7.06bn for the 60 per cent it does not already own of Pan American Energy LLC, Bloomberg reported on Tuesday.

Bridas Energy Holdings Limited and Cnooc, which each own 50 per cent of Bridas Corporation, will pay $2.47bn apiece to finance the acquisition, with the remaining $2.12bn to come from third-party loans or additional funds from the two companies, Cnooc said in a statement on Monday.

The deal will probably be completed in the first half of next year.

The Beijing-based company is building on the $3.1bn stake purchase in Bridas in March to expand its oil resources in Latin America as demand surges. Pan American, Argentina’s largest crude exporter, produces about 240,000 barrels a day and holds 1.54 billion barrels of proven reserves.

A Hong Kong-based analyst at Sanford C Bernstein & Company, Mr. Neil Beveridge, said, “The valuation is fairly attractive. They are buying fairly mature oil and gas assets, so the question is how much Cnooc can squeeze out of these in the coming years.”

The Pan American reserves will last about 16 years, said Beveridge, who estimated that Cnooc was paying about $9.10 a barrel of oil equivalent. That compares with about $10.60 a barrel that the Chinese energy explorer paid for the Bridas stake.

Cnooc takes into consideration the prospect of a “reasonable” return on investment when acquiring overseas assets, Chief Financial Officer, Mr. Zhong Hua told reporters on Tuesday.

Shares of Cnooc advanced 1.7 per cent to close at HK$17.16, compared with the 1.3 per cent increase in the benchmark Hang Seng Index.

 

Source: Punch