TNK-BP to acquire BP's Vietnam, Venezuela assets

Russian oil company TNK-BP said on Monday it had agreed a deal with its part-owner BP to acquire the troubled British oil giant's assets in Vietnam and Venezuela for US$1.8 billion.

TNK-BP, Russia's third-biggest oil company, is owned 50 percent by BP and 50 percent by a group of Russian billionaires including banking magnate Mikhail Fridman known collectively as Alfa Access-Renova (AAR).

The divestment is in line with a plan by BP to sell up to $30 billion (€21.2 billion) of assets by the end of 2011 to help meet its financial obligations from the Gulf of Mexico oil spill.

"Today's agreement is further evidence of the rapid progress BP is making towards the divestment target we set out in July," BP's new chief executive, Robert Dudley, said in a statement

Dudley, who replaced Tony Hayward after the oil spill catastrophe, said that the acquisition would give TNK-BP a solid foundation to build its business outside Russia.

TNK-BP almost imploded during a venomous shareholder conflict between the co-owners in 2008 but the dispute was patched up when shareholders agreed to appoint Maxim Barsky chief executive effective from January 1, 2011, with Fridman taking the reins in the interim.

Ironically, Dudley was ousted as TNK-BP chief executive at the height of the conflict. With relations now smooth, Hayward has been nominated as non-executive director at TNK-BP after his departure from BP.

TNK-BP, which operates huge oil fields in Siberia and accounts for 16 percent of Russian production, has long been considered one of BP's crown jewels.

"The acquisitions in Venezuela and Vietnam mark a milestone in TNK-BP's strategic expansion in the global energy market," said Fridman, who is serving as acting chief executive of the company, in a TNK-BP statement.

TNK-BP said a deposit of $1 billion will be made by October 29 with final payment upon completion.

"Subject to government approvals and the fulfilment of other agreed pre-closing conditions, the companies expect the transaction to be completed in the first half of 2011."

According to the terms of the agreements, in Venezuela TNK-BP will acquire from BP a 16.7 percent equity stake in the PetroMonagas SA extra heavy oil producer, a 40 percent stake in Petroperija SA which operates the DZO field, and a 26.7 percent stake in Boqueron SA.

The deal comes after Russian and Venezuela on Friday signed a memorandum of understanding supporting the acquisition, at a ceremony in the Kremlin attended by Venezuelan President Hugo Chavez and Russia's Dmitry Medvedev.

In Vietnam, TNK-BP will acquire from BP a 35-percent stake in an upstream offshore gas production block containing the Lan Tay and Lan Do gas condensate fields, a 32.7-percent stake in the Nam Con Son Pipeline and Terminal, and a 33.3-percent stake in the Phu My 3 power plant.

The acquisitions of the assets in Venezuela and Vietnam will bring TNK-BP net proved and probable reserves of 290 million barrels of oil equivalent, it said.

TNK-BP has also expressed interest in acquiring BP's assets in Algeria and the issue was discussed earlier this month during a visit by Medvedev to the North African country.

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TNK-BP to acquire BP's Vietnam, Venezuela assets

Russian oil company TNK-BP said on Monday it had agreed a deal with its part-owner BP to acquire the troubled British oil giant's assets in Vietnam and Venezuela for US$1.8 billion.

TNK-BP, Russia's third-biggest oil company, is owned 50 percent by BP and 50 percent by a group of Russian billionaires including banking magnate Mikhail Fridman known collectively as Alfa Access-Renova (AAR).

The divestment is in line with a plan by BP to sell up to $30 billion (€21.2 billion) of assets by the end of 2011 to help meet its financial obligations from the Gulf of Mexico oil spill.

"Today's agreement is further evidence of the rapid progress BP is making towards the divestment target we set out in July," BP's new chief executive, Robert Dudley, said in a statement

Dudley, who replaced Tony Hayward after the oil spill catastrophe, said that the acquisition would give TNK-BP a solid foundation to build its business outside Russia.

TNK-BP almost imploded during a venomous shareholder conflict between the co-owners in 2008 but the dispute was patched up when shareholders agreed to appoint Maxim Barsky chief executive effective from January 1, 2011, with Fridman taking the reins in the interim.

Ironically, Dudley was ousted as TNK-BP chief executive at the height of the conflict. With relations now smooth, Hayward has been nominated as non-executive director at TNK-BP after his departure from BP.

TNK-BP, which operates huge oil fields in Siberia and accounts for 16 percent of Russian production, has long been considered one of BP's crown jewels.

"The acquisitions in Venezuela and Vietnam mark a milestone in TNK-BP's strategic expansion in the global energy market," said Fridman, who is serving as acting chief executive of the company, in a TNK-BP statement.

TNK-BP said a deposit of $1 billion will be made by October 29 with final payment upon completion.

"Subject to government approvals and the fulfilment of other agreed pre-closing conditions, the companies expect the transaction to be completed in the first half of 2011."

According to the terms of the agreements, in Venezuela TNK-BP will acquire from BP a 16.7 percent equity stake in the PetroMonagas SA extra heavy oil producer, a 40 percent stake in Petroperija SA which operates the DZO field, and a 26.7 percent stake in Boqueron SA.

The deal comes after Russian and Venezuela on Friday signed a memorandum of understanding supporting the acquisition, at a ceremony in the Kremlin attended by Venezuelan President Hugo Chavez and Russia's Dmitry Medvedev.

In Vietnam, TNK-BP will acquire from BP a 35-percent stake in an upstream offshore gas production block containing the Lan Tay and Lan Do gas condensate fields, a 32.7-percent stake in the Nam Con Son Pipeline and Terminal, and a 33.3-percent stake in the Phu My 3 power plant.

The acquisitions of the assets in Venezuela and Vietnam will bring TNK-BP net proved and probable reserves of 290 million barrels of oil equivalent, it said.

TNK-BP has also expressed interest in acquiring BP's assets in Algeria and the issue was discussed earlier this month during a visit by Medvedev to the North African country.

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KNOC in $2.6 bln hostile bid for Dana Petroleum

SEOUL/LONDON - State-run Korea National Oil Corp made a hostile 1.67 billion pounds ($2.6 billion) bid for British group Dana Petroleum, highlighting South Korea's stronger resolve to secure energy assets overseas.

Korea gave KNOC a $6.5 billion war chest this year to compete with energy-hungry Asian state firms looking to secure supplies for their growing economies.

Chinese and other firms have so far outgunned KNOC, which explores and stores oil, in bigger M&A battles.

The biggest hostile bid by a South Korean firm came on Friday after management at Dana, a North Sea and Egypt-focused explorer, rejected KNOC's 1,800 pence per share proposal earlier this month.

The Aberdeen-based explorer urged investors to take no action. Its shares closed up 6.1 percent at 1,798 pence.

Investors said that, with two months having passed since KNOC's approach, Dana needed to quickly produce another bidder or other material reasons why the bid undervalued the company.

"They have got to pull a rabbit out of the hat," one hedge fund manager said.

Investors did not expect another bidder emerging at this late point. "I'm not holding my breath," a second hedge fund manager said.

KNOC said it had secured non-binding letters of intent from investors representing 48.6 percent of Dana's shares.

The offer represented a 59 percent premium to Dana's closing price on June 30, the day before news of KNOC's approach.

"The offer implies an enterprise value per proven and possible reserves of circa $12.5/barrel of oil equivalent, which is a good price for the Dana assets, in our view," Marc Kofler, an oil analyst at Citigroup, said in a research note.

Dana shares have lagged the offer price by around 100 pence since KNOC revealed it last month because of fears a deal would not materialize.

Some investors have said Dana's reluctance to accept what many analysts see as a generous offer was related to chief executive Tom Cross's close ties to the company.

KNOC said it had no alternative but to take its offer to shareholders. "We are very disappointed that the board of Dana does not agree that 1,800 pence per share represents a full and fair value for the company," KNOC senior executive vice president Kim Seong-hoo said.

KNOC will buy out Dana's convertible bond holders to give a total deal value of $2.9 billion, meaning it would top KNOC's purchase of Canadian group Harvest Energy last October for C$1.8 billion ($1.7 billion).

Positive bid

Analysts saw a bid as positive for South Korea and KNOC.

"This shows the will of the South Korean government, which has been trying hard to boost its presence in global resource markets, and we consider it positively," Sean Hwang, head of the research team at Mirae Asset Securities, said before KNOC's confirmation of the bid.

Dana said last week it had ended takeover talks with KNOC after the Korean firm declined to sign an agreement Dana wanted before opening its books.

Dana's top institutional investors, including Schroders, BlackRock and JPMorgan Asset Management, had urged Dana to engage in talks, according to reports.

Timid buyer?

Korea gave KNOC the war chest with orders to raise the nation's production capacity to 300,000 barrels per day (bpd) by 2012 from 130,000 bpd in December.

A deal with Dana would also help KNOC address perceptions of being a timid buyer, created after its failure to conclude deals in recent years.

The company has lost a number of deals in recent years.

China's largest oil refiner, Sinopec, outbid KNOC for London-listed Addax Petroleum in 2009. Italian group ENI trumped KNOC to snap up British-based Burren Energy in 2007.

KNOC chief executive Kang Young-won, who spent more than three decades with the now defunct Daewoo Group, is best known for hitting the jackpot with a $5.6 billion Myanmar gas development deal which he helped Daewoo International win while serving as chief executive until 2008.

After moving to KNOC, he has been scouring the world to boost oil reserves, adding Harvest Energy and a $335 million buy of Kazakh oil developer Sumbe to its assets.

Analysts said a takeover of Dana could put Faroe Petroleum, in which Dana holds 27.5 percent, in play.

"The market could look at this being a potential springboard for a bid for the company, whether by KNOC itself or if it is sold on to another potential predator," said Peter Hitchens, oil analyst at Panmure Gordon, Faroe's joint house broker.

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