Salamander Energy Plc (SMDR), Gulfsands Petroleum Plc (GPX) and Southern Pacific Resources Corp. would be the top acquisition targets for Asian companies seeking to bolster the region’s energy security, Mirae Assets Securities Ltd. said.
Oil and natural gas explorers from China, India and South Korea are pushing for overseas purchases to cut their dependence on Middle East crude imports, analysts led by Gordon Kwan wrote in a report today. Mirae listed 15 potential targets with market capitalization of between $200 million and $5 billion.
“The current depressed valuation environment presents an opportunity for cashed up oil giants to beef up their exploration and production assets with existing proven reserves,” the analysts said. “We see more deals coming, driven by insatiable energy demand from Asia’s oil titans.”
PetroChina Co., Cnooc Ltd. (883) and Reliance Industries Ltd. (RIL) are among Asian companies that may spend $150 billion in the next five years on acquiring assets after global energy shares fell 21 percent in the third quarter, the worst three months since 2008. Kinder Morgan Inc. is seeking to sell El Paso Corp.’s assets, including shale gas in the U.S., that may be valued at $7.3 billion, according to data compiled by Bloomberg.
PetroChina has $18.13 billion in cash and short-term investments and Cnooc $13.67 billion, the most among energy companies in the Asia-Pacific region, data compiled by Bloomberg show. Reliance reported last week it has 614.9 billion rupees ($12.5 billion) in cash.
Salamander, which has oil assets in Thailand and Indonesia, has dropped 25 percent in London trading this year, valuing the company at $495 million. Gulfsands, which has assets in the Middle East, North Africa and the U.S, has slumped 49 percent in London. Southern Pacific, a Calgary-based oil-sands explorer with leases in Alberta, has declined 25 percent in Toronto.
China Petrochemical Corp., the nation’s biggest refiner known as Sinopec Group, agreed this month to buy Daylight Energy Ltd. (DAY) for C$2.2 billion ($2.2 billion), giving it access to Canadian oil and shale gas reserves. Korea National Oil Corp. said it plans to resume acquisitions of overseas assets after a six-month hiatus, drawn by attractive valuations.
Reliance, the Mumbai-based explorer controlled by billionaire Mukesh Ambani, is targeting shale-gas assets in Canada to add to its acquisitions in the U.S. last year, a person with direct knowledge of the matter said on Sept. 23.
Declining Share Prices
Venoco Inc. (VQ), the Denver-based company with the second- largest oil-shale formation in California’s Monterey, has dropped 52 percent in New York trading this year, the biggest decline among companies listed by Mirae as potential takeover targets. Calgary-based NAL Energy Corp. has dropped 35 percent and Swift Energy Corp. has decreased 33 percent.
Plains Exploration & Production Co. (PXP), based in Houston, has 416.1 million barrels of oil and equivalent gas reserves, the highest on Mirae’s list. Energen Corp. (EGN) holds 302.90 million barrels and Bonavista Energy Corp. 222.9 million barrels.
Below is Mirae’s list of potential takeover targets:
Year-to-date Reserves+ Share Price Change (in mboe) Venoco Inc. -52% 85.1 Gulfsands Petroleum Plc -49% 56.8 NAL Energy Corp. -35% 63.9 Swift Energy Co. -33% 132.8 NuVista Energy Ltd. -30% 73.8 Southern Pacific Resources Corp. -25% 117.9 Salamander Energy Plc -25% 67.9 Pengrowth Energy Corp. -21% 220.3 Bonavista Energy Corp -16% 222.9 Plains Exploration & Production Co. -15% 416.1 Pioneer Southwest Energy Partners LP -13% 52.0 Energen Corp. -6% 302.9 Daylight Energy Ltd.++ -5.5% 95.3 Energy XXI Bermuda Ltd. -4% 116.6 Rosetta Resources Inc. +7.6% 79.9
Note: + Reserves are in million barrels of oil equivalent (mboe). The reserves data were taken from the Mirae report. ++ Sinopec Group said on Oct. 9 it agreed to buy Daylight Energy.
To contact the editor responsible for this story: Amit Prakash at firstname.lastname@example.org.