sinopec deal in yemen

Sinopec paid US$465 for a net proven and probable reserves of 18.7 million barrels (¡°mmbbl¡±) and 29.6 mmbbl of oil respectively in Yemen.

The agreement was reached on 1/2/2008 and the deal was final signed on 10/3/2008.





SOCO Announces Proposed Disposal of Yemen Assets
Monday, February 04, 2008

SOCO International plc announces that it has entered into a conditional sale and purchase agreement (the ¡°Agreement¡±) for the sale of its wholly owned subsidiary SOCO Yemen Pty Limited (Australia) (¡°SOCO Yemen¡±), the entity that holds the Company¡¯s interest in the East Shabwa Development Area in Yemen, to Sinochem Petroleum Limited (¡°Sinochem¡±) for an enterprise value of US$465 million, subject to certain financial adjustments (the ¡°Disposal¡°). The consideration for the Disposal is payable in cash on completion.

Sinochem is a wholly owned subsidiary of Sinochem Corporation, a state-owned Chinese enterprise established in 1950 and one of the four major national oil companies of China. Sinochem Corporation¡¯s core businesses include petroleum (upstream and downstream), chemicals, finance, insurance and property development. It is also the largest fertiliser importer and distributor in China.

Background
SOCO has a track record of realising value at the appropriate stage of an asset¡¯s life-cycle and re-investing the capital to build significant shareholder value. The Board believes that the Disposal is in the best long-term interests of the Company and represents an excellent opportunity to realise value from a mature producing non-core asset.

As described further below, the proceeds from the Disposal will strengthen the Company¡¯s balance sheet and provide funding for existing exploration and development opportunities and exploration prospects that may arise.

SOCO Yemen
SOCO Yemen holds an indirect interest of 16.785 per cent. in the East Shabwa Development Area of Yemen through its 58.75 per cent. equity interest in Comeco Petroleum Inc. (¡°Comeco¡±). Comeco, in turn, has a 28.57 per cent. interest in the East Shabwa Development Area in Block 10 in Yemen. The East Shabwa joint venture is operated by TOTAL E&P Yemen under a production sharing agreement with the government of Yemen.

As at 31 December 2006, it was estimated that SOCO Yemen¡¯s interests in Yemen had net proven, and net proven and probable reserves of 18.7 million barrels (¡°mmbbl¡±) and 29.6 mmbbl of oil respectively.

Production in 2006 from East Shabwa averaged 40,300 barrels of oil per day (¡°bopd¡±) and SOCO Yemen¡¯s working interest share was 6,766 bopd. During the first half of 2007 production, net to SOCO Yemen¡¯s working interest, was 6,341 bopd.

For the 12 months ended 31 December 2006, on an IFRS basis, SOCO Yemen generated revenues of US$76 million and profit before taxation of US$55 million. Gross assets of SOCO Yemen, as at 31 December 2006, were US$65 million.

Approvals and consents
Completion of the Disposal is subject to, amongst other things, various regulatory approvals (the ¡°Regulatory Approvals¡±) including the approval of the National Development and Reform Commission of the People¡¯s Republic of China. Additionally, due to the size of the transaction, the Disposal is conditional upon the approval of SOCO shareholders at an extraordinary general meeting (¡°EGM¡±) of the Company. Sinochem also has the right to terminate the Agreement on or prior to 28 March 2008 (the date on or by which SOCO expects to post its notice of EGM to its shareholders) in the event that Sinochem has not by such date received such consents and approvals (other than the Regulatory Approvals) as it requires in relation to the Disposal. In the event that Sinochem terminates the Agreement in accordance with that right, Sinochem has agreed that it will pay to SOCO a fee of US$3 million.

A circular containing further details of the Disposal and including the notice to convene the EGM is expected to be posted to SOCO shareholders on or before 28 March 2008. The Disposal is expected to complete early in the second quarter of 2008.

Use of proceeds
The majority of the Disposal proceeds will be used to fund the Company¡¯s exploration and development programmes. In particular, capital will be deployed in order to further develop SOCO¡¯s assets in Vietnam, a key area of operation for the Company. The remaining proceeds will provide the financial flexibility necessary to participate in future opportunities as and when they arise.

Ed Story, President and CEO of SOCO, said:
"The Disposal will enable SOCO to generate greater long-term value by re-investing the proceeds in the development of its core assets, particularly in Vietnam. This transaction is another example of the Company¡¯s strategy of realising value for shareholders at the appropriate stage of an asset¡¯s lifecycle and illustrates our ongoing co-operation with Chinese industry participants who have interests in expanding their international role."

Mr Han Gensheng, Vice President (E&P) of Sinochem Corporation, said:

"Sinochem is pleased with this transaction that diversifies its E&P portfolio with immediate production and increases its footprint in the Middle East, an area of focus for Sinochem."