1,290 pence a share offer may rise to 1,500 pence if Sinopec bids.
An empowered committee of secretaries has approved a plan by ONGC Videsh Ltd (OVL), the wholly-owned subsidiary of government-owned Oil & Natural Gas Corporation Ltd (ONGC) Ltd, for a $3-billion bid for Imperial Energy Corporation, a London Stock Exchange-listed oil exploration and production company.
Investment banking sources said the company has already submitted initial bids of $2.96 billion for Imperial Energy, which has proven and possible reserves of 920 million barrels of oil equivalent (this includes 864 million barrels of oil and another 56 million barrels of gas). The assets are located in Russia and Kazakhstan.
The Chinese oil major Sinopec is also likely to join the fray, sources confirmed. OVL’s initial bid is 1,290 pence per share but it is expected to increase to 1,500 pence a share if the Chinese major decides to bid.
“At that price, the implied valuation for Imperial Energy would be around $3.5 billion,” said a leading investment banker close to the development.
The company’s share currently trades at around 1121 pence, which values the company at $2.6 billion.
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Imperial Energy has confirmed that it has received a bid offer at 1,290 pence (about $24) per share. "The board of Imperial confirms that it is in discussions in relation to a possible cash offer for the company at a price of 1,290 pence per share," it said in a statement.
Officials said the acquisition might be made through a special purpose vehicle depending on economic and legal considerations. Approval from an empowered committee means the decision does not require Cabinet clearance.
| CHINA'S ENERGY SYNDROME Oil assets to which China pipped India | |
| Asset | Country |
| Yadavaran oil field, Iran | Sinopec signs 25-yr deal with Iran |
| Encana's oil fields, Ecuador | Chinese consortium beat OVL with $1.42 bn bid |
| PetroKazakhstan | CNPC beat OVL with $3.6 bn bid |
| Block 18 in Angola | Angola preferred China over OVL |
| Gas from Myanmar | Petrochina beat ONGC, GAIL to the gas |
| * The two countries signed an agreement last year to co-operate to jointly bid for oil blocks | |
| * China National Petroleum Corp and OVL have been working together in an oil block in Sudan since 2002 | |
Imperial Energy’s proven and possible reserves are equivalent to 11 per cent of the consolidated reserves of ONGC, which has 38 oil and gas projects in 18 countries.
The transaction also needs Russian government approval, which has recently moved aggressively to nationalise its oil and gas industry. Sources said OVL has already spoken to the Russian authorities and has received a favourable response.
OVL also owns 20 per cent in Sakhalin I and is negotiating with the Russian government for a minority stake in Sakhalin III.
Imperial Energy currently produces 7,000 to 10,000 barrels per day and projects daily production of 80,000 barrels by December 2011.
The company owns three pipelines that connect to the Russian government-owned Transneft pipeline system.