CNOOC to sell nearly $2 billion in shares
April 27, 2006 03:37:00 (ET)
HONG KONG (MarketWatch) -- CNOOC Ltd., China's largest offshore oil company, will sell between $1.95 billion and $1.98 billion worth of shares in a placement to finance additional exploration, according to a term sheet seen by MarketWatch.
CNOOC shares were suspended from Hong Kong trading Thursday morning at the company's request, according to a press release, which said that announcement of "a top-up placing of shares" was forthcoming.
State-owned CNOOC (CEO, Trade) plans to sell 2.5 billion shares at HK$6.05 to HK$6.15 (78 to 79 cents) each, according to the term sheet.
The pricing range comes at a 5.4% to 6.9% below discount to Wednesday's closing price of HK$6.50. New shares will make up 90.9% of the placement.
The offering comes as the company pushes forward with an aggressive international expansion policy. Last week CNOOC announced it had completed the $2.7 billion purchase of a 45% stake in a Nigerian oil field.
Earlier this month, it bought a 25% stake in an Australian natural gas exploration project with BHP Billiton (BHP, Trade).
CNOOC's overseas investments are part of China's push to secure oil supplies as domestic demand surges. Chinese President Hu Jintao is currently on a tour of oil producing countries, with stops in Saudi Arabia, Nigeria, Morocco and Kenya.
Last year, CNOOC's bid to buy U.S. oil company Unocal was thwarted by opposition in Washington.
Analysts were not surprised by the stock offering, and said it was consistent the company's previous fund raising approach and recent expansion moves.
"They seem to raise capital at appropriate times, so it's not a huge surprise," says David Hurd, an oil industry analyst and managing director at Deutsche Bank in Beijing.
Brokers think investors will be keen on the new shares.
"They're taking advantage of high prices and a strong market to cash out," said Francis Lun, general manager of Fulbright Securities in Hong Kong.
"With oil prices set to stay at a high level I think the CNOOC prices still have room to rise." He predicts CNOOC's stock will reach $7 after trading resumes.
The company announced Tuesday that first-quarter revenue rose 45.1% to 16.66 billion yuan ($2.08 billion), with production up 9.5% to 450,000 barrels of oil equivalent a day during the quarter. Capital expenditure rose 24% to 430 million yuan.
Last week, it revealed plans to invest 100 billion yuan ($12.5 billion) in oil and gas exploration by 2010.
Company official Tan Dongling said that more than 50 new oil and gas fields will enter production by that time. The new fields are expected to raise CNOOC's production capacity to 374 million barrels per year, compared to 292 million barrels at present.
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