For big “medvedev” – big journey…

For big “medvedev” – big journey…

(Continuation the ‘Wire’. Between us I told you what: Paботящая ваша Валя…)

Addax agrees C$8bn offer from SinopecJune 24 2009 15:03.Sinopec agreed a C$8.3bn ($7.3bn, £4.4bn) takeover of independent oil company Addax Petroleum on Wednesday, in a move that accelerates Chinese investment in Africa as well as the booming oil frontier of Iraqi Kurdistan. Chinese state-owned Sinopec, one of the country’s biggest oil companies, will pay C$52.80 per share to acquire Addax, a Switzerland-based small oil producer active in Nigeria and Gabon, which would cancel its Toronto and London listings if the deal completes. The deal is the strongest sign yet of an investment boom gripping Iraq’s northern autonomous region of Kurdistan, which could contain over 40bn barrels of oil, according to the US geological survey. Addax is one of the longest-established players in Iraqi Kurdistan, operating the Taq Taq oil field and refinery at the centre of a patchwork of oil concessions. The development of these concessions was until recently stalled by a political dispute between Iraq’s central government and Kurdistan’s regional government. On June 1 representatives from both governments declared the official start of oil exports from Kurdistan, seemingly resolving the impasse, and Addax was one of three companies including Turkey’s Genel Energy that started producing the first 100,000 barrels of oil per day. A week later Genel agreed an all-share merger with Heritage Oil, another operator in Iraqi Kurdistan, in a deal worth over $5bn. Expectations of further consolidation continued when Addax said that week it was in preliminary talks. The suitors were understood to be both Sinopec and the Korean national oil company, which owns a licence adjacent to Addax’s. Sinopec’s offer today was a 16 per cent premium to its closing price on Tuesday and an almost 50 per cent premium to its price before it announced the talks. Jean-Claude Gandur, Addax’s Geneva-based chief executive, said, “The efforts and accomplishments that Addax Petroleum has achieved thus far will be built on through increased investment in the business.” Mr Gandur’s stake in Addax is worth C$296m ($259m) at Sinopec’s offer price. According to Dealogic Sinopec’s acquisition would be China’s largest ever outbound investment in the oil and gas sector. If it succeeds the deal will avoid the fate of other thwarted foreign acquisitions by Chinese state-owned industrial champions. The most recent was this month’s failed $19.5bn fundraising deal between Rio Tinto, the global miner, and Chinalco, the Chinese miner selected by the government to spearhead foreign acquisitions. It also comes after Cnooc’s failed bid for Unocal, the US oil company, in 2005. Sinopec is also competing for oil licences that will soon be awarded by Baghdad in its next licensing round, in sign that perceived political risk that has led large foreign oil companies to not invest in Kurdistan may be lessening. If the multiple deals underway in Iraqi Kurdistan succeed HeritaGE, the proposed name of the combined Heritage Oil and Genel Energy, and Sinopec will be joint venture partners developing Iraqi Kurdistan’s Taq Taq oil field and refinery. Shares in DNO, a Norwegian company that also produces oil in Iraqi Kurdistan, have risen 10 per cent today in Oslo. Addax shares in London rose 14 per cent to £27 per share. RBC Capital Markets advised Addax. Addax last year produced 137,000 barrels of oil per day, all of which was from Africa, although the group’s Taq Taq field in Kurdish northern Iraq began production earlier this month.