ACQUISITIONS

Petroleum Industry

Brightoil in talks to buy US firms’ China operations

PUBLISHED : Friday, 14 February, 2014, 3:13pm
UPDATED : Saturday, 15 February, 2014, 1:17am

Marine fuel supply and oil trading firm Brightoil Petroleum has held talks with US oil companies Anadarko Petroleum and Newfield Exploration to buy their China operations, sources said.

Hong Kong-listed Brightoil has been searching for upstream investment opportunities in China and overseas for several years.

Trading in its shares has been suspended since Tuesday, pending an announcement of a "very substantial acquisition".

A person close to Brightoil said the pending announcement pertained to a major upstream transaction. It was not immediately known whether the trading halt was related to the talks held with Anadarko and Newfield.

Brightoil declined to comment. Anadarko and Newfield did not reply to e-mails seeking comment. The sources declined to be identified because the talks were confidential.

Reuters reported in November that Anadarko was considering the sale of its holdings in oil and gas projects in China worth about US$1 billion.

Houston-based Anadarko owns about a 35 per cent interest in production and development projects in Bohai Bay. It also has a 50 per cent stake in a South China Sea exploration acreage.

Brightoil, which has a market value of US$2.5 billion, is the third-largest marine fuel supplier by volume in Singapore, which is the largest bunkering port in the world.

Last year, the company's trading and bunkering business added crude oil, diesel and petrochemicals.

Brightoil's management had said upstream oil and gas was a key area of its development to diversify away from the volatile oil trading business, which commands low profit margin.

Its gross profit margin rose to 2.2 per cent in the year to June last year from 1.3 per cent a year earlier, while pre-tax profit excluding fair-value change in derivative financial instruments stood at HK$11.8 million, compared with a loss of HK$772.4 million previously.

The bunkering, oil trading and transport operations suffered losses during the period, which were offset by profit at a natural gas production operation in northwest China.

Brightoil shares have jumped 74 per cent since late October to HK$2.22 before the trading halt. They had plunged almost 60 per cent in the previous three years.