Energy

Bridas buys rest of Pan American

By Kari Lundgren and Rodrigo Orihuela (China Daily)
Updated: 2010-11-30 13:36

LONDON - Bridas Corp, the oil company owned by Chinese crude producer CNOOC Ltd and Argentina's billionaire Bulgheroni family, agreed to pay BP Plc $7.06 billion for the 60 percent it doesn't already own of Pan American Energy LLC.

Bridas Energy Holdings Ltd and Beijing-based CNOOC, which each own 50 percent of Bridas Corp, will pay $2.47 billion apiece 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 in a statement on Sunday. The deal will probably be completed in the first half of 2011.

The company is building on the $3.1 billion acquisition of 50 percent of 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 has proven reserves of 1.54 billion barrels.

The Pan American reserves will last about 16 years, said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co.

CNOOC takes into consideration the prospect of a "reasonable" return on investment when acquiring overseas assets, Chief Financial Officer Zhong Hua said on Monday.

Shares of CNOOC rose 1.4 percent to HK$17.12 ($2.21) at 3:48 pm local time, compared with the 1 percent gain in the benchmark Hang Seng Index.

BP is aiming to conserve capital and avoid risks after the spill at its Macondo well in the Gulf of Mexico. The oil company said in July it was planning to sell $30 billion of assets by the end of 2011. Including Pan American, it has sold about $21 billion of assets.

Pan American E&P Bolivia Ltd, a branch of the company which operates gas fields in the South American country, wasn't included in the sale announced on Sunday, Bridas said in a statement. Bridas also owns rights over fields in Turkmenistan and Northern Africa.

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CNOOC's acquisition of the stake in Bridas earlier this year marked the company's entry into Latin America and topped the $2.7 billion it paid in 2006 for a share in a Nigerian oilfield.

The latest acquisition takes total Chinese investments in the South American oil industry to more than $13 billion this year after Sinopec in October agreed to pay $7.1 billion for a 40 percent stake of Repsol YPF SA's Brazilian unit.

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.

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.

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