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Sinopec rivals OVL for Imperial Energy

Sinopec rivals OVL for Imperial Energy
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First Published: Mon, Aug 04 2008. 01 53 PM IST
Updated: Mon, Aug 04 2008. 01 53 PM IST
New Delhi: Chinese firm Sinopec is believed to have joined ONGC Videsh Ltd (OVL) in a race for taking over Russia-focused oil company Imperial Energy.
Just when OVL, the overseas arm of state explorer Oil and Natural Gas Corporation, entered the final stages of talks with Imperial, China Petroleum and Chemical Corp or Sinopec is believed to have made a counter offer.
Imperial Energy confirmed interest by one more firm when it said: “The board of Imperial confirms that it has received another approach in relation to a possible cash offer for the company.”
The company’s statement on its website, however, did not identify the new suitor.
Last week, OVL was close to making a $2.5-billion bid for London-listed Imperial Energy but the entry of the Chinese firm may hot up the price war.
Indian and Chinese firms have rivalled each other for prime oil and gas properties overseas and wherever there is a direct competition, its the latter which has emerged winner.
OVL lost out on Canadian firm Encana’s properties in Ecuador when a Chinese consortium bid $1.42 billion. It also lost PetroKazakhstan to China National Petroleum Corp’s $3.6 billion bid. In Angola, it lost out on taking 50% in BP-operated Block 18 when the African nation preferred China.
The relatively small British oil and gas company based in Leeds in UK, Imperial, had on 15 July stated that it is in discussions in relation to a possible cash offer for the company at a price of 12.90 pound sterling per share (about $2 billion).
Though Imperial did not identify OVL as the possible suitor, bankers associated with the deal said the Indian flagship acquirer was the company in talks with the British firm.
ONGC officials remained tight-lipped and did not say if they would make a counter offer.
Rich reserves
Imperial Energy is an upstream oil and gas exploration and production company focused on the Commonwealth of Independent States, and has oil producing blocks in Tomsk region of western Siberia in Russia and Kastanai in north-central Kazakhstan.
It produced about 10,000 barrels of oil per day in December 2007 and is targeting to raise this amount to 80,000 barrels per day (4 million tons a year) by year-end 2011.
The Russian Ministry of Natural Resources said Imperial’s Russian Registered Reserves amount to about 450 million barrels of hydrocarbons. Independent assessment of the reserves by DeGolyer and McNaughton in December 2007 suggested in-place reserves of 920 million barrels of oil equivalent.
OVL currently has 38 oil and gas projects across 18 countries. It got 6.811 million tons of oil in 2007-08 from its six producing assets in Sudan, Russia, Vietnam, Syria and Colombia.
Bankers said Imperial, which last month announced its biggest find that potentially adds to its reserve base and increased the potential value of the firm, was unlikely to accept a bid below 12 pounds per share.
The company has a market capitalisation of 789.31 million pound sterling.
Imperial founder-chairman Peter Levine and the company’s largest non-institutional shareholder, holds a little over six per cent in the company.
Institutional investors include Schroder (10%), Deutsche Bank (over 5%), Baille Gifford, Fidelity, Blackrock, S R Global Fund and J P Morgan Chase.
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First Published: Mon, Aug 04 2008. 01 53 PM IST
More Topics: ONGC Videsh | Sinopec | Imperial Energy | Russia | Oil |