Canada, October 11th, 2011 - China Petrochemical Corp., the nation’s biggest refiner, agreed to buy Daylight Energy Ltd. for C$2.2 billion (US$2.1 billion) in cash, gaining Canadian oil and shale-gas reserves in its largest acquisition this year.
The state-owned company known as Sinopec Group offered C$10.08 a share, Calgary-based Daylight said in a statement yesterday. That’s 70 percent higher than Daylight’s average price during the past 20 trading days and more than double the average 32 percent premium for comparable cash bids for North American energy explorers, data compiled by Bloomberg show.
The takeover would give the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, adding to its expansion outside Asia after falling crude prices made valuations attractive. Sinopec Group and Cnooc Ltd. are among Chinese companies that have bought almost $30 billion of Canadian assets in the past five years to meet energy demand in the world’s fastest-growing major economy and gain access to drilling methods to help unlock Asian resources.
“Sinopec made a number of oil-sands acquisitions, and this is probably the most gas they’ve acquired in western Canada,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by telephone today.
The oil and gas industry accounts for the second-biggest volume of mergers worldwide this year after telecommunications, with $127 billion in transactions, Bloomberg data show.
Daylight’s Assets
Two other energy deals were announced today. Superior Energy Services Inc., a U.S.-based oilfield services provider, will pay $2.6 billion in cash and stock for Complete Production Services Inc. In Australia, Everyday Mining Services Ltd. said it will merge with Hughes Drilling Pty Ltd.
Daylight’s proven and probable reserves rose 46 percent to the equivalent of 174 million barrels of oil at the end of 2010, the company said March 1. Beveridge values Daylight’s reserves at $16.70 per barrel of oil equivalent, saying Sinopec Group is paying a “fair price” for those assets.
Sinopec Group will join rival China National Petroleum Corp. and Cnooc in seeking technology through partnerships as China, estimated to hold more gas trapped in shale rock than the U.S., opens new areas to exploration. The world’s biggest energy user, which currently doesn’t produce any shale gas commercially, has brought in foreign partners including Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. to assess its potential.
Chinese Shale
China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas, more than the estimated reserves in the United States and Canada combined, according to an April report by the U.S. Energy Information Administration.
The U.S. and Canada produced 26.2 trillion cubic feet of gas in 2009 compared with 2.9 trillion cubic feet in China, according to EIA data.
China Petroleum & Chemical Corp., Sinopec Group’s Hong Kong-listed unit, fell 4.4 percent to close at HK$7.16. Daylight closed at C$4.59 on Oct. 7 in Toronto. The company’s shares have declined 56 percent this year. Canadian markets were closed today because of a national holiday.
Collaboration with overseas companies will help boost the search for shale-gas resources, and “future growth will mainly come from unconventional gas,” Chairman Fu Chengyu said Aug. 30. China Petroleum finished drilling its first shale-gas well in Hubei province July 15, Sinopec Group said July 26. - Bloomberg
The state-owned company known as Sinopec Group offered C$10.08 a share, Calgary-based Daylight said in a statement yesterday. That’s 70 percent higher than Daylight’s average price during the past 20 trading days and more than double the average 32 percent premium for comparable cash bids for North American energy explorers, data compiled by Bloomberg show.
The takeover would give the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, adding to its expansion outside Asia after falling crude prices made valuations attractive. Sinopec Group and Cnooc Ltd. are among Chinese companies that have bought almost $30 billion of Canadian assets in the past five years to meet energy demand in the world’s fastest-growing major economy and gain access to drilling methods to help unlock Asian resources.
“Sinopec made a number of oil-sands acquisitions, and this is probably the most gas they’ve acquired in western Canada,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by telephone today.
The oil and gas industry accounts for the second-biggest volume of mergers worldwide this year after telecommunications, with $127 billion in transactions, Bloomberg data show.
Daylight’s Assets
Two other energy deals were announced today. Superior Energy Services Inc., a U.S.-based oilfield services provider, will pay $2.6 billion in cash and stock for Complete Production Services Inc. In Australia, Everyday Mining Services Ltd. said it will merge with Hughes Drilling Pty Ltd.
Daylight’s proven and probable reserves rose 46 percent to the equivalent of 174 million barrels of oil at the end of 2010, the company said March 1. Beveridge values Daylight’s reserves at $16.70 per barrel of oil equivalent, saying Sinopec Group is paying a “fair price” for those assets.
Sinopec Group will join rival China National Petroleum Corp. and Cnooc in seeking technology through partnerships as China, estimated to hold more gas trapped in shale rock than the U.S., opens new areas to exploration. The world’s biggest energy user, which currently doesn’t produce any shale gas commercially, has brought in foreign partners including Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. to assess its potential.
Chinese Shale
China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas, more than the estimated reserves in the United States and Canada combined, according to an April report by the U.S. Energy Information Administration.
The U.S. and Canada produced 26.2 trillion cubic feet of gas in 2009 compared with 2.9 trillion cubic feet in China, according to EIA data.
China Petroleum & Chemical Corp., Sinopec Group’s Hong Kong-listed unit, fell 4.4 percent to close at HK$7.16. Daylight closed at C$4.59 on Oct. 7 in Toronto. The company’s shares have declined 56 percent this year. Canadian markets were closed today because of a national holiday.
Collaboration with overseas companies will help boost the search for shale-gas resources, and “future growth will mainly come from unconventional gas,” Chairman Fu Chengyu said Aug. 30. China Petroleum finished drilling its first shale-gas well in Hubei province July 15, Sinopec Group said July 26. - Bloomberg
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