Read more | Digg story
The company will pay $1 billion to buy 50 percent of a Kazakh field from its parent, gaining access to an estimated 364 million barrels of oil reserves, Citic Resources said in a statement today. A separate $150 million purchase of a Bohai Bay field adds about 550 million barrels of reserves.
The acquisitions advance Citic Resources' transformation from a metals producer to a supplier of oil in the fastest- growing major economy. The deals add to oil output in Indonesia, where the company bought its first energy asset last year.
``We continue to like Citic Resources, given strong production growth and long-term growth potential,'' Citigroup Inc. analysts Howard Pang and Graham Cunningham wrote in a research note today. They raised Citic Resources' stock rating to ``buy'' from ``hold'' and increased the target price to HK$4.8 from HK$3.55.
Bohai Bay, where Citic Resources bought a 90 percent stake in a field, holds some of China's richest oil deposits. PetroChina Co. last week gave details of a discovery in the area that is China's largest for half a century. The nation's biggest oil company plans to produce 10 million metric tons a year (about 200,000 barrels a day) of crude from the newly discovered Jidong Nanpu field by 2012, it said yesterday.
Shares Surge
Citic Resources shares surged as much as 14 percent to HK$4.20 and traded at HK$4 at 11:00 a.m. in Hong Kong. It was the biggest intraday gain since Feb. 8. The stock has surged 145 percent in the past year, more than the 21 percent gain in the benchmark Hang Seng Index.
China's economy expanded 11.1 percent in the first three months of this year, faster than the 10.4 percent growth posted in the final quarter of 2006. The country imported a recorded 3.3 million barrels of oil a day in March, the customs said last month.
Citic Resources, based in Beijing, will issue senior unsecured debt to help fund the acquisition of the Kazakh field from parent China International Trust & Investment Corp., a government investment arm, the company said in a third statement today, without giving details.
Dollar Bonds
The company hired Bear Stearns Cos. and Morgan Stanley to arrange an inaugural sale of U.S. dollar-denominated bonds and plans to meet investors in Hong Kong, Singapore, London, New York, Boston and on the U.S. West Coast starting today until May 14 to market the seven-year securities, according to an e-mail sent to investors yesterday.
China International Trust & Investment, or Citic Group, agreed to buy the Karazhanbas oil field in western Kazakhstan from Canada's Nations Energy Co. in October for $1.9 billion.
The listed company in February raised HK$1.72 billion ($220 million) from the sale of new shares to cover some of the acquisition costs.
PetroChina said May 3 its Bohai Bay discovery holds about 7.5 billion barrels of oil equivalent. The field may help stem an increasing reliance on crude oil imports. China shipped in 47 percent of its oil needs last year.
China pumped the first oil from the Daqing field, the nation's largest, in the northeastern province of Heilongjiang in 1959.
KazMunaiGaz
Citic Resources bought 51 percent of an Indonesia oilfield for $97 million, gaining access to 39 million barrels of gross oil reserves, it said in July.
Citic Group has granted KazMunaiGaz, an oil company owned by the Kazakhstan government, an option to buy a 50 percent stake in the project, part of an agreement to win the Central Asian government's approval on the transaction, two people familiar with the accord said Dec. 29. KazMunaiGaz will pay less than $950 million, one person said.
Kazakh President Nursultan Nazarbayev wants international companies that buy into the nation's oil industry to include KazMunaiGaz as a partner.
