Brightoil Petroleum (Holdings) Ltd. has stepped up its non-bunkering activities by entering into an agreement to acquire
Win Business Petroleum Group Ltd.
The soon-to-be-acquired company, which is wholly owned by Dr.
Sit Kwong Lam, chief executive officer of Brightoil Petroleum, holds the rights to develop and produce natural gas at the
Xinjiang Tarim Basin Dina 1 Gas Field for a consideration of HK$581,250,000 (approximately US$74.7 million).
The amount is said to represent a discount of approximately 25 percent on the value of the 'proved plus probable' reserves of Win Business for the Dina 1 Gas Field as at 1st October 2011, which amounts to US$100,000,000.
The Dina 1 Gas Field covers an area of 74.766 square kilometres, with proved plus probable gas and condensate reserves of 127.9 Bscf and 1.8 MMstb, from which Win Business is entitled to reserves of 73.5 Bscf and 1.0 MMstb.
Brightoil said it will be settling the consideration to Dr. Sit by allotting and issuing 322,916,666 consideration shares at HK$1.8 per share, which is equivalent to a premium of approximately 4.05 percent over the average closing price of HK$1.73 per share for the last thirty trading days up to the date of the agreement.
The consideration shares represent approximately 4.77 percent of Brightoil's existing issued share capital and approximately 4.56 percent of its enlarged issued share capital. Upon the allotment and issuance of the consideration shares, Dr. Sit will hold 68.45 percent of the group's shares.
Upon completion of the transaction, Brightoil will hold the rights to the exploitation, development and production of Dina 1 Gas Field in partnership with
China National Petroleum Corporation (CNPC). Brightoil said it will provide funding and the relevant expertise, whilst CNPC, which has development and production rights for the Dina 1 Gas Field, shall assist Brightoil in the development and production of the natural gas field.
Brightoil said it had decided to enter into this transaction due to four major considerations:
"Firstly, this project is in line with the group's upstream business development; the Dina 1 Gas Field is currently at development stage, and the potential upward trend of natural gas prices in the PRC would benefit the group.
"Secondly, Dina 1 Gas Field is immediately adjacent to the Tuzi Gas Field, which is another asset of the Group; this will create economies of scale and synergies that will result in costs savings and increase efficiencies associated with the daily operations for these two projects.
"Thirdly, the consideration was based on a discount of 25% on the proved plus probable net entitlement reserves of Win Business Petroleum, which is wholly owned by Dr. Sit as at 1 October 2011, and which is worth US$100,000,000. The Group believes that it is an attractive opportunity for the Group to further invest in the natural resources business. Fourthly, with the enlargement of the Group's equity base, the Group is not required to have any immediate cash outflow in settling the consideration and therefore, its cash resources can be retained for operations or other investment opportunities," Brightoil said.
Commenting on the acquisition,
Dr. Sit Kwong Lam, Chairman and CEO of Brightoil, said, "Brightoil is one of the largest integrated marine bunkering service operators in China with businesses in oil storage and terminal facilities, marine transportation and the development and production of natural gas. The acquisition not only further enhances our market presence in the oil and gas development and production business, but it also marks a significant step forward in our drive to become a leading integrated energy company. I believe that the acquisition will add a new dimension to the growth of our business and will create value to our shareholders."
Brightoil said a special general meeting will be held for independent shareholders to vote on the proposed transactions. A circular is expected to be dispatched to shareholders on or before 31 December 2011.
