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CNOOC Ltd acquires 45% stake in offshore Nigerian oil block

  BEIJING, Jan. 9 (Xinhuanet) -- China National Offshore Oil Corporation (CNOOC) announced Monday that its subsidiary had signed an agreement with South Atlantic Petroleum Limited (SAPETRO) to acquire a 45 percent stake in an offshore oil mining license (OML) 130 in Nigeria for 2.268 billion US dollars in cash.

  The purchase will be funded from the internal resources of China National Offshore Oil Company Limited (CNOOC Ltd.), said Fu Chengyu, Chairman and Chief Executive of CNOOC Ltd.

  According to Fu, 1.75 billion US dollars will go to SAPETRO for the transaction and the other 518 million dollars will be paid for the earlier operation funds.

  Mainly owing to a possible change in operation funds, the bid is still of adjustment possibilities, said an interior of CNOOC Ltd.

  The purchase of OML 130 is a "rare" opportunity for CNOOC Ltd, said Fu.

  OML 130 is covered by both a Production Sharing Agreement (PSA)and a Production Sharing Contract (PSC), each of which governs a 50 percent interest in OML 130.

  SAPETRO is currently the sole contractor and 100 percent interest holder in the PSC. Under the agreement, CNOOC will be acquiring a 90 percent interest in the PSC and hence, a 45 percent working interest in OML 130.

  Located in Nigeria, one of the world's largest crude exporters, the Niger Delta region is one of the world's most prolific oil and gas basins. OML 130 covers an area of approximately 500 square miles in the Niger Delta and is a deep-water block with water depths ranging around 1,100 m to 1,800 m.

  OML 130 contains the Akpo field, which was discovered in 2000. Besides Akpo, OML 130 contains three other significant discoveries: Egina, Egina South and Preowei. The block also contains a range of further exploration prospects.

  According to estimates made by France-based Total, the operator of OML 130, Akpo's P50 liquid recoverable volumes are approximately 600 million barrels, with potential for an additional P50 recoverable oil in excess of the 500 million barrels for the whole OML130 area.

  Akpo is expected to come on-stream by end 2008 and reach peak production shortly after that. Total production is expected to increase sharply when Egina, Egina South and Preowei come on-line.

  At a price of some 4.6 US dollars per barrel oil equivalent, calculated based on the P50 recoverable volumes of Akpo and other additional volumes in the OML 130 area, the acquisition is also onhighly attractive terms when compared to other recent world-scale upstream transactions, said Yang Hua, the CFO of CNOOC Ltd.

  The purchase of this interest in OML 130 helps CNOOC gain access to an oil and gas field of huge interest and upside potential, located in one of the world's largest oil and gas basins. With one of the leading deep-water experts as the operator of the field, CNOOC is confident of the fast and efficient production of oil, said Fu Chengyu.

  He also said this transaction is aligned with CNOOC's long-term strategy of achieving growth through the exploration and development of offshore fields and achieving geographic diversification of the company's portfolio.

  The transaction is expected to close in the first half of 2006,and is conditional on, amongst others, Nigerian National Petroleum Corporation and Chinese government approval.

  Goldman Sachs (Asia) L.L.C acted as financial advisor to the Company in connection with this transaction.

  CNOOC Limited, incorporated in Hong Kong, is a 70.64 percent held subsidiary of China National Offshore Oil Corporation, China's largest offshore oil producer

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