By Bloomberg News March 15 (Bloomberg) — Cnooc Ltd. may step up overseas acquisitions after buying 50 percent of Argentina’s second- largest oil producer to help achieve its goal of boosting production 28 percent this year and meet Chinese demand. “Cnooc’s targets are very aggressive,” Wang Aochao , head of China energy research at UOB-Kay Hian in Hong Kong, said by telephone today. “The company is aware of the limitations of domestic reserves and knows it will have to secure a global production base. The percentage of output produced outside China is increasing and that will continue as demand increases.” China’s biggest offshore oil explorer said yesterday it plans to buy a 50 percent stake in Bridas Corp. for $3.1 billion in its first Latin American deal. The purchase would be the Beijing-based company’s largest since it paid $2.7 billion for a share in a Nigerian oilfield in 2006. Overseas production will account for a sixth of Cnooc’s targeted output this year, with the bulk coming from offshore China, President Yang Hua said today. Chinese companies have spent at least $13 billion on energy acquisitions since 2008. Cnooc and parent China National Offshore Oil Corp. are bidding for assets in Ghana, Nigeria and Uganda. “Cooperation with Bridas would be an important step in our plan to go global,” Yang told reporters on a conference call. “The deal will add long-term value for shareholders.” Cnooc shares have risen 78 percent in Hong Kong trading over the past year, outpacing the 62 percent gain in the main Hang Seng Index . The stock fell 0.8 percent to HK$12.78 at 12:10 p.m. local time, matching the decline in the benchmark gauge. ‘Attractive Valuation’ 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, according to Sanford C. Bernstein & Co. analyst Neil Beveridge . “This seems like a relatively attractive valuation and the acquisition is entirely in keeping with the Chinese government’s policy of increasing oil reserves,” Beveridge said today. China relied on imports for more than half its crude oil needs last year, with monthly shipments reaching a record 20.9 million tons in December. The country may post a new all-time high for crude imports this year as a resurgent economy drives fuel-demand growth, an estimate from China National Petroleum Corp. showed on Feb. 4. Bridas, controlled by Argentine businessman Carlos Bulgheroni , owns a 40 percent stake in Pan American Energy LLC, the country’s largest crude oil exporter, and also has oil and gas assets in Chile and Bolivia, Cnooc said yesterday in a statement to Hong Kong’s stock exchange. BP Plc , Europe’s largest oil company, owns the remainder of Pan American. Cnooc Reserves China is the world’s second-biggest energy consumer, after the U.S., and Cnooc estimates the Bridas investment will add 318 million barrels of reserves, an increase of about 12 percent, and also boost its average daily production by 46,000 barrels. Devon’s assets may add 40,000 barrels a day for BP starting next year, based on current output, BP said March 11. Cnooc had total proven reserves of about 2.52 billion barrels of oil equivalent at the end of 2008, and average daily production was 530,728 barrels of oil equivalent, according to the company’s Web site . Pan American Energy was formed in September 1997 through the merger of the Argentine units of Bridas and Amoco Corp., acquired by BP in August 1998. Repsol YPF SA is the country’s biggest oil producer. Cnooc was interested in buying a minority stake in the Argentine YPF unit of Repsol, three people familiar with the talks said in July. Carols Bulgheroni Bulgheroni has dual Argentine and Italian nationality and resides in Madrid, according to the Web site of the Center for Strategic & International Studies, of which he is a trustee. In addition to being president of Bridas, he is president of Energy Developments and Investments Corporation, which explores for oil and gas in North Africa, Russia, Central Asia and the Middle East, according to the Washington, DC-based CSIS. About 94 percent of Pan American’s total crude production comes from Argentina’s San Jorge basin, straddling the remote Patagonian provinces of Chubut and Santa Cruz. The basin is home to Cerro Dragon, Argentina’s most productive field. Pan American produces about 17 percent of the nation’s crude and about 15 percent of its gas, according to the company’s Web site. In August 2005, Cnooc dropped an $18.5 billion offer for Unocal Corp., the largest overseas acquisition attempted by a Chinese company at the time, after meeting resistance from U.S. lawmakers on grounds the takeover would threaten national security. The company was subsequently bought by Chevron Corp. JPMorgan Chase & Co. advised Cnooc on the proposed purchase. — John Duce , Chua Baizhen . With assistance from Cathy Chan in Hong Kong, Wang Ying in Beijing, Helen Yuan in Shanghai, Rodrigo Orihuela in Buenos Aires, and Grant Smith in London. Editors: Amit Prakash , Ryan Woo . To contact the reporters on this story: John Duce in Hong Kong at jduce1@bloomberg.net ; Baizhen Chua in Beijing at bchua14@bloomberg.net
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Cnooc May Step Up Overseas Acquisitions After $3.1 Billion Bridas Purchase
