Citic Resources leaps 13.85pc on Kazakh deal

PUBLISHED : Wednesday, 09 May, 2007, 12:00am
UPDATED : Wednesday, 09 May, 2007, 12:00am

Updated at 7.08pm:
Shares of Citic Resources Holdings, the resources flagship of one of China's largest conglomerates China International Trust & Investment Corp (Citic Group), jumped 13.85 per cent to a record high after it announced US$1.15 billion (HK$9 billion) worth of oil and gas asset acquisitions.

Citic Resources closed on Wednesday at HK$4.19, up from the HK$3.68 finish on April 30 - ahead of a week-long trading suspension pending announcement of the deals.

Citic Resources has agreed to buy a 47.3 per cent stake in Kazakhstan's state-owned oil and gas firm Karazhanbasmunai, and related oilfield engineering and logistics services assets, from its parent for US$1 billion.

Citic Group bought 94.6 per cent of Karachanbasmunai and the related assets from Canada-based Nations Energy's shareholders last December for US$1.91 billion, and later sold half the stake to Kazakhstan state oil and gas firm KazMunaiGas to gain Kazakhstan government's approval of the deal.

Karazhanbasmunai, with 363.8 million barrels of oil equivalent (boe) of proved oil and gas reserves, will give a big boost to Citic Resources reserves which had amounted to about 59 million boe.

Citic Resources also said it had acquired an option from third party Far East Investments, which gives it the right to buy 90 per cent of the Hainan-Yuedong exploration block in Liaohe, Liaoning province in northeastern China for US$150 million.

The block is in reserves appraisal and development stage and is estimated to have 65 million tonnes to 75 million tonnes (474.5 to 547.5 million barrels) of geological oil reserves.

Analysts estimated around 30 per cent of the reserves could be recoverable, or up to 164.25 million barrels.

This implies a per barrel cost of 91 US cents, which analysts said was attractive, even considering it may rise to about US$4 when US$500 million of the field's capital investment is added.