China's CNPC Secures $4.18 Billion Acquisition of PetroKazakhstan

Strategic Insights -

Chinese oil and gas producer China National Petroleum Corp (CNPC) has reached a $4.18 billion agreement to acquire Canadian-registered PetroKazakhstan Inc, outbidding an Indian rival, Oil & Natural Gas Corp. This deal marks China's largest overseas acquisition and follows a failed bid by China National Offshore Oil Corp Limited (CNOOC) for Unocal three weeks ago.

Key Takeaways:

  • CNPC agreed to pay $55 per share for PetroKazakhstan, a 21% premium over the company's closing share price on Friday.
  • The deal is expected to close in October, with CNPC paying a $125 million break-up fee to PetroKazakhstan shareholders.
  • CNPC is considering a proposal that would allow PetroKazakhstan shareholders to receive discounted shares in a spin-off of its newly formed venture with PetroChina, Newco.
  • The acquisition marks a victory for China in its rivalry with India for overseas oil and gas reserves.
  • CNPC produced 15.63 million tons of crude oil and 1.9 billion cubic meters of natural gas from its overseas fields in the first half of this year.
  • CNPC's net profit from overseas projects was $220 million in the six-month period, with $1.47 billion in oil and gas sales.

Statistics:

  • $4.18 billion: The purchase price for PetroKazakhstan.
  • $55: The per-share price agreed upon by CNPC for PetroKazakhstan.
  • 21%: The premium CNPC paid over PetroKazakhstan's closing share price on Friday.
  • $125 million: The break-up fee paid to PetroKazakhstan shareholders.
  • 15.63 million tons: The amount of crude oil produced by CNPC from overseas fields in the first half of this year.
  • 1.9 billion cubic meters: The amount of natural gas produced by CNPC from overseas fields in the first half of this year.
  • $220 million: CNPC's net profit from overseas projects in the six-month period.
  • $1.47 billion: The value of oil and gas products sold by CNPC in the six-month period.
  • 3,000 kilometers: The length of the pipeline being built by China and Kazakhstan to transport crude oil to China.
  • $3 billion: The estimated cost of the pipeline.

Sources:

  • Asia Pulse, "CNPC in $4.18 billion Kazakh oil bid"
  • PetroKazakhstan, "CNPC Reaches Agreement to Acquire PetroKazakhstan"
  • XIC, "CNPC overseas profits reach US$220 million in first half of 2005"