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Just got this from BloombergSinochem to Buy 40% of Statoil Peregrino Field off Brazil Coast
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Vibeke Laroi and Meera Bhatia

May 22 (Bloomberg) -- Sinochem Group, Chinas biggest chemicals trader, agreed yesterday to pay $3 billion to Statoil ASA for 40 percent of the Brazilian offshore Peregrino field.

The companies also agreed to jointly seek more opportunities in Brazil and elsewhere, Statoil Chief Executive Officer Helge Lund said yesterday. Both companies see many opportunities for value creation through increased recovery and exploration for additional resources in the decades to come.

Statoil, Norways largest oil and natural gas company, said last year it was considering cutting its stake in Peregrino to reduce risk and raise funds to develop other projects. Chinese state-owned companies, including PetroChina Co., last year spent a record $32 billion on energy and mining acquisitions to meet rising resources demand in the worlds fastest-growing major economy.

Cnooc Ltd., Chinas biggest offshore energy explorer, was also in the bidding process for the stake estimated to cost as much as $3 billion, people with knowledge of the process said on April 15. Sinochem last year agreed to buy Emerald Energy Plc to boost revenue from oil and gas operations by tapping wells in Syria and Colombia.

This transaction will significantly increase Sinochems interests in the exploration and production business and consolidate our position as one of the leading global players in the oil and chemicals business, Han Gensheng, president of Sinochem Corp., said yesterday in a statement. The company made its first oil and gas investment in 2003 and operates 12 such projects in the Middle East, Latin American and Asia, according to the statement.

Profited Well

Statoil has profited well, said Trond Omdal, an analyst at Arctic Securities with a buy rating on the shares. The price works out to about $15.4 a barrel, compared with the $7.2 a barrel Statoil paid when it took full control in 2008, he said.

Statoils shares gained 0.9 kroner, or 0.7 percent, to close at 127.3 kroner on the Oslo exchange after earlier falling as much as 3.5 percent. Shares of Sinochems publicly traded arm closed unchanged yesterday at 10.88 yuan in Shanghai.

Stavanger-based Statoil, which has operations in 40 countries, took control of the field in March 2008 after buying the remaining 50 percent from Anadarko Petroleum Corp. The field, 85 kilometers (53 miles) offshore Rio de Janeiro, has an estimated 460 million barrels of recoverable oil, spokeswoman Mari Dotterud said on Oct. 20.

Better Than Fair

The price looks very strong actually, its better than fair, Oswald Clint, an analyst at Sanford C. Bernstein who has a market perform rating on Statoil shares, said by phone from London. This was signaled for some time.

Statoil will keep 60 percent ownership and remain the operator of the field, which is set to start production in early 2011. Brazil will continue to form a key part of the companys international strategy, and Statoil will explore further opportunities in the region, it said.

This stake sale will reduce Statoils equity production guiding for 2012 by 40,000 barrels of oil equivalent a day to 2.06 million to 2.16 million, the company said. Equity output was 1.962 million barrels of oil equivalent a day in 2009, while booked reserves of oil and gas totaled 5.4 billion barrels.

The transaction is subject to government approvals in Brazil and China.

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Last Seems like a lot of money for %40 of estimated 460 million barrels.Goes to show what the Chinese are willing to pay