CNOOC to form joint venture with Bridas

CNOOC, China's biggest offshore oil explorer, will be buying 50 percent stake in Bridas Corp for USD 3.1 billion.

Since December 2008, Chinese company has made acquisitions worth $13 billion in energy sector. This deal is likely to increase its total investments.

Details of deal
CNOOC appointed Wall Street bank JP Morgan as their adviser, and Bridas Energy Holdings appointed Beijing based Hopu as adviser.

As per the deal, both the companies have planned 50-50 joint venture. Till the completion of the deal, both companies would take management decisions jointly.

CNOOC’s first Latin American deal would be in terms of cash. The completion of the transactions is expected to take place in the first half of 2010.

As per the 2009 statistics in CNOOC’s official website, on the completion of transactions of the deal, its proven reserves are expected to increase by 318 million barrels oil equivalent and the average daily production by 46,000 barrels.

Chairman and Chief Executive Officer of CNOOC, Fu Chengyu said, “BEH is one of the foremost companies in Argentina and a pioneer in the oil and gas industry. This joint venture is aligned with our philosophy of seeking partnerships to expand our global footprints. I trust this investment will bring value to our shareholders both in short term and long run.”

President, Mr. Yang Hua added, “Bridas, with a world-class oil and gas asset portfolio, is a very good beachhead for us to enter Latin America. Through this transaction, we’ll establish a fair presence in this region, which will further enable the Company’s production and reserve growth in the future.”- as mentioned in the official website of CNOOC.”

One of the biggest deals for CNOOC
This deal would be CNOOC’s biggest deal after it purchased a share in Nigerian Oil fields for $2.7 billion in 2006. The joint venture is expected to increase its production by 28 percent.

As per the 2009 statistics in CNOOC’s official website, on the completion of transactions of the deal, its proven reserves are expected to increase by 318 million barrels oil equivalent and the average daily production by 46,000 barrels.

Bridas Energy also has 40 percent stake in the country’s largest crude oil exporter, Pan American Energy LLC. It is a joint venture between Bridas and BP Plc, Europe’s largest oil company. Besides Argentina, Bridas also has its operations in Bolivia and Chile.

According to Sanford C. Bernstein & Co. analyst Neil Beveridge, “The offer values Bridas’s proven reserves around $10 a barrel, about half of what BP Plc paid Devon Energy Corp. last week for assets in Brazil, the Gulf of Mexico and Azerbaijan.”