Having written about Lukoil making moves for a stake in Spanish oil company Repsol (NYSE – REP), (Russian Energy Bears) I thought it may be interesting to have a look & see what else is going on with regards to securing oil reserves & rights. It would seeem that India’s Oil & National Gas Corporation – Videsh ONGC is in the final stages of acquiring London based Imperial Energy for $1.9Bn.
As Imperial is a Russian focussed player, ONGC had to jump the bureaucratic hoops with the Russian Competition board, which it successfully concluded in mid-October. ONGC agreed to buy Imperial in August, valuing the company at 1.3 billion pounds ($1.9 bln).
Analysts at JP Morgan said in a research note on Wednesday that the shares offered a potential 236% annualized return. The bid is conditional on ONGC receiving acceptances in respect of 90% of the shares and ONGC is expected to pull out if this threshold is not met by the close of the offer period. Imperial and its advisors are therefore working around the clock to ensure that all investors tender their shares by the 1300 GMT Dec. 30 deadline.
“We’re leaving no stone unturned,” a source close to the company said. “It’s going to go right down to the wire”.
This follows a long & exhaustive battle earlier this year with Chinese state controlled Sinopec (NYSE – SHI) where the offer had been pushed as high as £12.90 rather than todays price of £12.50. Sinopec is China’s largest oil refiner, which is thought to have carried out due diligence on Imperial and to have requested clearance for a possible bid from the Russian authorities. Some analysts had suggested that a bid proposal from Sinopec might encounter resistence within Russia from officials nervous about ceding oilfield interests to a company controlled by the Chinese State.
The sale means that Peter Levine, the chairman of Imperial Energy, is heading for a cash windfall. The former corporate lawyer, who owns 6 per cent of the company, stands to collect about £90 million if the sale goes through. The grandson of Russian émigrés, Mr Levine, a fluent Russian-speaker, has transformed Imperial from a £2 million minnow listed on the Alternative Investment Market in London four years ago into a £1.27 billion group. Last year he successfully negotiated his way through a dispute with the authorities in Russia that had threatened to jeopardise Imperial’s future in the country.
Having been spurned, the Chinese have played a waiting game, watching as the oil price has heavily declined from $147 a barrell to near $43 a barrel in the last few weeks. On Wednesday, it emerged that China has made an offer to Brazilian oil major Petrobras (NYSE – PBR) of $10Bn in “aid” to assist the company in developing its recent offshore find.
“Conversations with a number of funding sources, including the Chinese development bank, are ongoing,” Petrobras investor relations manager Theodore Helms said today in an interview in New York, without giving more details. The company plans to invest about $30 billion this year, with about half that amount going to Brazilian exploration and production projects, he said.
The Chinese bank has offered Petrobras $10 billion in loans for development of the offshore pre-salt fields known as the Tupi Cluster, a spokesman at the energy ministry in Brasilia, who asked not to be named under ministry rules, said today. This follows State owned CNPC in the securing of oil development rights in Iraq, as reported in November by The New York Times. The United Arab Emirates sovereign wealth fund has also approached Petrobras about financing oil projects in Brazil, he said.
Petrobras on Nov. 21 said it found light oil in two wells off the coast of Brazil’s Espirito Santo state, expanding its pre-salt discoveries. The company in November 2007 said that Tupi, off the coast of Rio de Janeiro, may hold an estimated 5 billion to 8 billion barrels of recoverable oil, making it the largest oil discovery in the Americas since 1976.
So, along with my forecasted long on REP, I am now also looking at PBR as an interesting destination for investing some beer vouchers.