China Petrochemical Corp., the nation’s biggest refiner, is considering an acquisition of French oil explorer Etablissements Maurel (MAU) & Prom, three people with knowledge of the matter said.
China Petrochemical, also known as Sinopec Group, has held informal discussions with Maurel in the past year though hurdles to a deal remain, said two of the people, who asked not to be identified as the deliberations are private. A deal could value Maurel at more than $2 billion, the people said. Maurel shares rose the most in four months in Paris today.
Chinese refiners are seeking assets overseas as domestic earnings are depressed by state-controlled prices for processed fuels. Buying Maurel would allow Sinopec Group to boost oil production in African countries including Gabon, while avoiding the regulatory scrutiny that’s held up Chinese deals in the U.S. and Canada.
“It’s in the right kind of price range of a couple of billion dollars, not too small with rich international assets, while not too big that it attracts a lot of attention,” said Neil Beveridge, a Hong Kong-based energy analyst at Sanford C. Bernstein & Co. “Its oil and gas resources in Africa look attractive to Sinopec Group.”
Maurel Chief Executive Officer Jean-Francois Henin said in August the explorer isn’t big enough to remain independent and partnering with another company or being acquired would allow development of oil and natural-gas projects.
Two phone calls to Lv Dapeng, Sinopec’s Beijing-based spokesman, went unanswered. An official at Paris-based Maurel declined to comment.
At 1.3 billion euros ($1.7 billion) before today, Maurel’s market value is less than a 50th of that of Sinopec Group’s Hong Kong-listed unit. Maurel climbed 8.3 percent to 11.64 euros at the close of trading in Paris. Sinopec rose 2.1 percent in Hong Kong.
Maurel shares had fallen 9 percent in the past year before today, cutting its market value by more than 500 million euros. The explorer had been in acquisition talks with India Oil Corp. “on and off” for years, and failed to attract a reasonable offer for the entire company, said Henin, who owns 24 percent of Maurel.
China’s state oil companies have spent more than $100 billion acquiring assets over the past decade to supply the world’s second-largest economy, which is also the biggest energy importer, according to data compiled by Bloomberg. Sinopec in January said it plans to produce 50 million metric tons of crude a year overseas by 2015, up from 22.9 million tons last year.
The company agreed in July to spend $1.5 billion for a 49 percent stake in Talisman Energy Inc. (TLM)’s U.K. unit, gaining access to oil and gas fields in the North Sea. The 2009 acquisition of Addax Petroleum Corp. for $8.8 billion brought Sinopec operations in Gabon.
Maurel has been in Gabon since 2004, and the country has been a “major growth engine,” according to its website. The company also has assets or operations in Congo, Tanzania and Mozambique.
Cnooc Ltd. (883), China’s biggest offshore oil and gas producer with no refining operations, has proposed the nation’s biggest overseas acquisition, offering $15.1 billion for Canada’s Nexen Inc. (NXY) Canadian and U.S. regulators are reviewing the takeover, which prime minister Stephen Harper has said raises “difficult policy questions” as members of his ruling Conservative Party criticize asset sales to state-owned entities.
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