"Third World discount for companies in volatile regions may have evaporated........"
Also, another quote from below: "I think the market has gone overboard in discounting non-North Sea and non-North American reserves," said Martin Molyneaux of FirstEnergy Capital.
Let's hope this is true....
ND9
*********************************************************
Centurion Energy stock up 8% on deal to be acquired by UAE firm for C$1.25B
18:45:57 EST Nov 13, 2006
Canadian Press: JUDY MONCHUK
CALGARY (CP) - The C$1.25-billion purchase of Centurion Energy International Inc. (TSX:CUX), a Canadian company operating in North Africa, suggests the so-called Third World discount for companies in volatile regions may have evaporated.
Little-known Dana Gas PJSC of the United Arab Emirates acquired the Calgary-based natural gas producer and its substantial Egyptian assets Sunday in a pact signed in Cairo. Under the deal, a subsidiary of Dana will pay $12 cash for each share of Centurion and assume $99 million of the company's debt.
"We've set a new high-water mark in what they're paying," Warren Verbona of Octagon Capital Corp. said Monday. "There doesn't appear to be the same Third World discount that there used to be."
A few years ago, shares of Calgary-based Talisman Energy Inc. (TSX:TLM) traded at a discount on the stock market because of the company's operations in war-torn Sudan, where Talisman was a partner in a major oil extraction and pipeline project and came under fire from church groups and other critics.
However, the company sold its stake in the Sudanese development in late 2003 and has since focused its operations on North America, the North Sea, Asia and elsewhere.
Today, with energy reserves in short supply, some of the biggest discoveries are coming in some of the world's poorest countries. And prices for those assets are rapidly approaching amounts paid in richer, more stable regions - a move that's long overdue, says another analyst.
"I think the market has gone overboard in discounting non-North Sea and non-North American reserves," said Martin Molyneaux of FirstEnergy Capital.
While some break for political risk is justified, "there's too much of a discount out there," Molyneaux said.
In trading on the Toronto Stock Exchange on Monday, Centurion shares jumped 89 cents to close at $11.97, a gain of more than eight per cent, on the sale of more then 22 million shares.
The deal, which has been endorsed by a special board comittee set up by Centurion, is slated to close in early January. The agreement allows for a C$34.75 million break fee if Centurion accepts a rival bid.
Molyneaux says he expects other major players operating in the wider Middle East will be closely studying the deal.
"There's no way of replicating the Centurion assets, so everybody who is a player in that region will have to have a really good look to see if they can beat that bid," said Molyneaux.
"What will be very interesting to see in the next few weeks, now that a big chunk of undeveloped acreage in the Nile Delta is essentially for sale, is if someone else comes out of the woodwork: if there's a topping bid," he said.
Centurion announced Oct. 30 that it was in talks on a possible corporate transaction, but many in the industry were expecting the suitor would be a supermajor in liquified natural gas such as Royal Dutch Shell Group or Italy's ENI.
The transaction gives pipeline company Dana Gas, based in Sharjah in the United Arab Emirates and established in 2005, access to a Centurion's gas production and exploration in Eygpt, Tunisia and off the coast of Nigeria.
Besides its current pipeline and processing operations and expansion into exploration and production, Dana wants to grow into liquefied natural gas trading and petrochemicals.
The Egyptian government has been pressuring the majors to become more than just the shippers of gas and develop exploration and production in the so-called upstream side of the business.
The Centurion deal could make other Calgary-based companies operating in the Third World ripe for takeover. First Calgary Petroleums Ltd. (TSX:FCP) struck a long-term deal last week with Algeria's national oil company - a major move towards developing its natural has fields in North Africa. The company failed to find a deep-pocketed larger partner two years ago to help develop its Algerian fields and is trying to operate on its own after a major financing earlier this year fattened its treasury.
Verbona says both TransGlobe Energy Corp. (TSX:TGL), and Rally Energy Corp. (TSX:RAL) are also potential targets if their Egyptian operations bear fruit.
TransGlobe is about to begin drilling for oil in the Nuqra Block in the Komombo Basin, while Rally has a 100 per cent operating interest in the Issaran Oilfield, an 8,000-hectare site on the west shore of the Gulf of Suez, which is considered to have strong growth potential.
Last year, PetroKazakhstan, with key operations in Asia, was sold to China National Petroleum Corp. for US$4.2 billion. PetroKazakhstan was formerly known as Hurricane Hydrocarbons and had been based in Calgary, although its main operations were in Kazakhstan, an energy-rich former Soviet republic in central Asia.
© The Canadian Press, 2006
AI
