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Cnooc, GNPC Said to Bid $5 Billion for Jubilee Stake

Cnooc Ltd., China’s largest offshore oil producer, and Ghana National Petroleum Corp. made a $5-billion bid to buy Kosmos Energy LLC’s assets in the West African country, including its stake in the Jubilee field, according to three people with knowledge of thematter. Photographer: Paul Hilton/Bloomberg
Cnooc Ltd., China’s largest offshore oil producer, and Ghana National Petroleum Corp. made a $5-billion bid to buy Kosmos Energy LLC’s assets in the West African country, including its stake in the Jubilee field, according to three people with knowledge of thematter. Photographer: Paul Hilton/Bloomberg

Oct. 22 (Bloomberg) -- Cnooc Ltd., China’s largest offshore oil producer, and Ghana National Petroleum Corp. made a $5-billion bid to buy Kosmos Energy LLC’s assets in the West African country, including its stake in the Jubilee field, according to three people with knowledge of the matter.

The all-cash, fully financed bid, the first from the Cnooc-Ghana National group, was received about two weeks ago, said the people, who declined to be identified as the talks are private.

The offer tops an earlier, failed bid of about $4 billion from Exxon Mobil Corp. for the Kosmos assets, which include a 23.49 percent stake in Jubilee. The field holds an estimated 1.8 billion barrels of crude, enough to supply all U.S. East Coast refineries for more than four years. State-owned Ghana National also is holding preliminary talks with Statoil ASA, seeking to interest Norway’s largest oil company in becoming a third partner in a Kosmos bid, said the people.

“Compared with the Exxons and the BPs, China’s oil companies have a relatively short history in terms of operating overseas and sometimes they have to pay a premium for the quality assets that they want,” said Wang Aochao, head of China Energy Research at UOB-Kay Hian Ltd. in Shanghai. “Sellers know that they have good financial support from the Chinese government and the real desire to acquire these assets because oil demand is growing very strongly in China.”

Stock Performance

Cnooc fell 0.9 percent in Hong Kong trading to HK$15.94, while the Hang Seng index declined 0.6 percent. The stock has gained 31 percent this year, outpacing the 8 percent advance in the benchmark gauge.

Ghana National, which wants a Western company in the group, is leading the talks with Statoil without its Chinese partner, said one of those people. BP Plc had originally been part of the group and backed out earlier this year to pursue other investments, said people familiar with the matter.

Dallas-based Kosmos, which is backed by private-equity firms Blackstone Group LP and Warburg Pincus LLP, is at the same time working with Credit Suisse Group AG and Citigroup Inc. to study a possible initial public offering of the assets, the people said. A Credit Suisse spokesman declined to comment. Citigroup couldn’t immediately be reached for comment.

Since Ghana National and Cnooc made their bid, there has been little progress in the talks, said one of these people, as Kosmos and its advisers also study the IPO as an alternative to an outright sale.

IPO Pressure

Sellers typically line up an IPO to pressure a potential buyer, said a person familiar with the deal. Any transaction between the parties is at least several weeks away, this person said.

“Statoil is considering opportunities around the world, but we won’t comment on which ones specifically,” spokesman Baard Glad Pedersen said on the phone from Stavanger yesterday.

Jim McCarthy, a spokesman for Kosmos, couldn’t immediately comment. Jiang Yongzhi, Cnooc’s Beijing-based spokesman, declined to comment.

“Kosmos has stated they are staying on to pursue their activities in Ghana, that is the situation,” said Nana Asafu-Adjaye, managing director of Ghana National. He declined to comment on whether Ghana National had bid with Cnooc.

Edward Bawa, spokesman for Ghana’s Energy Ministry, said he would look into the matter and declined further comment.

Exxon Deal

Kosmos said on Oct. 12, 2009, it agreed to sell its Ghanaian assets, including the Jubilee stake, to Irving, Texas-based Exxon. Kosmos also owns stakes in the Mahogany Deep, Odum, Tweneboa and Teak prospects offshore Ghana.

The next day, Ghana National said it was still in talks with Kosmos about acquiring the assets for itself. Kosmos and Exxon canceled their deal in August.

Ghana, which is set to become Africa’s newest oil exporter at the end of the year, may pump as much as 240,000 barrels of oil from its offshore Jubilee field by 2014-15, Ghana National Petroleum said this month. Ghana expects to pump 500,000 barrels of oil a day by 2014.

U.K.-based Tullow Oil Plc, the field’s operator that holds a 34.7 percent stake, and other partners including Ghana National and Anadarko Petroleum Corp. are investing about $3.35 billion to develop the Jubilee field.

Anadarko rose $2.45, or 4.2 percent, to $61.24 as of 12:27 p.m. in New York Stock Exchange composite trading. Tullow, which yesterday fell to the lowest in six weeks after an exploration offshore well in Ghana failed to find oil, rose 0.7 percent, to 1,236 pence in London.

Cnooc’s Acquisitions

The Chinese oil explorer has said that overseas acquisitions will help drive future growth. Record output helped more than doubled profit in the first six months of this year, with crude production outside China increased more than two times to 17 million barrels during the period.

About 69 percent of Cnooc’s revenue comes from oil and gas fields in China, according to the company’s annual report. The energy producer has assets in Latin America, Nigeria, Kenya, Indonesia and Australia. Chinese oil demand is expected to rise 27 percent to 11.63 million barrels a day by 2015, the International Energy Agency said in June.

“This potential acquisition fits into Cnooc’s strategy,” said Wang of UOB-Kay Hian. “This process of acquiring assets overseas will continue, particularly in Africa and Latin America, given China’s growing need for oil.”

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Jacqueline Simmons in Paris at jackiem@bloomberg.net; Brett Foley in London at bfoley8@bloomberg.net.

To contact the editors responsible for this story: Jeff St.Onge at jstonge@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net.

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