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CNOOC Apparently Mulling Rival Bid for Unocal
China National Offshore Oil Corp. (CNOOC) apparently is still mulling whether to make an offer for Unocal Corp., which could challenge the $16.4 billion offer made by ChevronTexaco Corp. in April (see Daily GPI, April 5).
ChevronTexaco beat out a host of suitors, including CNOOC, in winning Unocal, the ninth largest U.S.-based producer. However, when questioned by the Chinese press about possible acquisitions this week, the Chinese national oil company said it “is continuing to examine its options with respect to Unocal. These options include a possible offer by the company for Unocal, but no decision has been made in this respect.”
CNOOC added, “No assurances can be made that the company will ultimately make an offer for Unocal.” It has hired investment bank Rothschild to help in its decision.
ChevronTexaco won the bidding for Unocal in a cash-and-stock deal after an all-cash offer from CNOOC fell through. Also in the hunt for the El Segundo, CA-based producer was Eni SpA, which is headquartered in Italy.
Following the news that CNOOC could issue a rival bid, Standard & Poor’s Equity Research wrote, “Our main concern would be that CNOOC overpays for Unocal in outbidding the pending acquisition of Unocal…We take some comfort from an apparent move by independent directors to appoint Rothschild to provide independent advice on such a bid, while CNOOC’s management has appointed its own set of bankers for advice.”
Motley Fool said in a research note that “time and time again, the market reminds us that ‘it ain’t over ’til the fat lady sings.’ So while Chevron might like to think it has its acquisition of Unocal all wrapped up,…CNOOC might yet have something to say about it.”
On the surface, Motley Fool wrote, “a CNOOC takeover of Unocal makes a lot of sense. Unocal’s biggest strength is its Asian deepwater assets — right off CNOOC’s front porch, as it were. What’s more, adding Unocal’s 1.75 billion boe in reserves would come close to doubling CNOOC’s current reserves.
“The biggest question, though, is whether the company can actually pull it off…CNOOC isn’t that much larger than Unocal (with an enterprise value of about $23 billion compared with about $16.7 billion for Unocal), and while the balance sheet is pretty clean, I don’t know whether it could raise enough debt to pay for the deal.”
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