Bridas Corp., the oil company owned by Argentina’s billionaire Bulgheroni family and China’s Cnooc Ltd., agreed to pay BP Plc $7.06 billion for the 60 percent it doesn’t already own of Pan American Energy LLC.
Bridas and Beijing-based Cnooc will each pay $2.47 billion to finance the acquisition, with the remaining $2.12 billion to come from third-party loans or additional funds from the two companies, Cnooc said today in a statement. The deal will likely be completed in the first half of next year.
The Chinese company is building on the $3.1 billion acquisition of 50 percent of Bridas in March to expand its oil resources in Latin America. Pan American produces about 240,000 barrels per day and has proven reserves of 1.54 billion barrels. Since 2001, the company has invested $6.7 billion on exploration and production, enabling it to boost output by about 70 percent.
The sale price is “probably a fair deal for that asset base,” Jason Kenney, an Edinburgh-based oil and gas analyst at ING Commercial Banking, said in a telephone interview today.
BP is aiming to conserve capital and avoid risk after the spill at its Macondo well in the Gulf of Mexico left it facing a bill projected to reach $40 billion and forced the resignation of Chief Executive Officer Tony Hayward. The oil company said in July it was planning to sell $30 billion in assets by the end of 2011. Including today, it has sold about $21 billion’s-worth.
“Slowly but surely BP are doing the divestments as they said they would,” ING’s Kenney said. “That sets them on course to having a smaller business but more importantly a high-graded business.”
Latin America Entry
Cnooc’s acquisition of a stake in Bridas marked the company’s entry in Latin America and topped the $2.7 billion it paid in 2006 for a share in a Nigerian oilfield.
In July, BP agreed to sell assets in North America and Egypt to Apache Corp. for $7 billion, while in August the company disposed of fields in Colombia to Ecopetrol SA and Talisman Energy Inc. for $1.9 billion. BP has also sold operations in Vietnam and Venezuela to its Russian joint venture partner TNK-BP for $1.8 billion.
Pan American had sales of $2.8 billion last year and is Argentina’s largest oil exporter. The country’s largest producer is YPF SA, the local unit of Madrid-based Repsol YPF SA.
“This accord is a clear sign of the confidence that CNOOC and Bridas has in the Argentine energy sector,” Bridas President Carlos Bulgheroni said in the statement. The agreement will enable the company to “take on new challenges,” Bulgheroni said.
BP also agreed earlier this month to sell its fuels marketing businesses in Namibia, Botswana and Zambia to Puma Energy, as well as 50 percent interests in BP Malawi and BP Tanzania to a Trafigura Beheer BV unit for $296 million in cash. Last month, BP sold stakes in four Gulf of Mexico deepwater oil and gas fields for $650 million, following the sale of its role as operator of the Tubular Bells fields.
Bridas will pay BP a cash deposit of $3.53 billion and the remainder upon completion of the sale, BP said today.
“We now have agreements in place that should secure the majority of our divestment target,” Robert Dudley, who replaced Hayward as BP CEO, said in a statement today. “We will continue to identify further assets that may be strategically more valuable to others than to BP as we complete the program.”
Cnooc said last month third-quarter revenue rose 64 percent as the company stepped up acquisitions and output to meet fuel demand in the world’s fastest-growing major economy. The company spent more than $4 billion so far this year for oil and gas assets in Argentina and North America.
Overall production may reach 329 million barrels of oil equivalent this year, surpassing Cnooc’s target of as much as 290 million. Output growth in the third quarter benefited from contributions from Bohai Bay in northeastern China and overseas fields, Chief Financial Officer Zhong Hua said Oct. 28.
China’s oil demand may rise to 11.63 million barrels a day by 2015 from 9.16 million barrels a day this year, according to the International Energy Agency.
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