Brightoil continues talks to buy Newfield's China assets
Brightoil Petroleum, which just raised HK$1.3 billion by selling shares to cut debt and fund expansion after spending US$1 billion on American oil firm Anadarko's China offshore oil assets, is continuing talks to buy similar assets from US firm Newfield Exploration.
Brightoil Petroleum, which just raised HK$1.3 billion by selling shares to cut debt and fund expansion after spending US$1 billion on American oil firm Anadarko's China offshore oil assets, is continuing talks to buy similar assets from US firm Newfield Exploration.
However, progress had been slow after the sharp plunge in crude oil prices, with Newfield and Brightoil having divergent views on the outlook for prices, Brightoil chief executive Bruce Yung Pak-keung said yesterday.
"We hope to build our oil and gas production assets, so that in two to three years' time, this business's contribution to our total net profit will rise to as much as two-thirds," he said. A comparison with last year was not made available.
He said the strategy would help balance its fuel trading profit, which had been volatile despite the hedging of its exposure with derivative contracts.
Profit before interest, taxes and one-off gains and losses from oil and gas production accounted for 73 per cent of Brightoil's total profit in the second half of last year, up from 13.7 per cent in the second half of 2013.
Brightoil said in November it planned to submit a bid in an auction for Newfield's 12 per cent stake in a producing oil project in northern China's Bohai Bay, and a 49 per cent stake in a project in the northern South China Sea that started production in November.
Brightoil already owns 29 per cent of the Bohai Bay project.
Yung said Newfield had shelved the auction due to the sharp fall in oil prices since November, but remained open to bilateral talks on the sale of the assets.
"We are interested to buy both projects together or one after another, but the most important thing is whether the two companies can share a similar projection on future oil prices," he said.
The Bohai Bay project was producing about 32,000 barrels a day last year, while the South China Sea one is projected to pump 30,000 barrels a day at its peak in the middle of this year, according to industry newspaper .
Newfield posted a profit of US$6 million on US$39 million of revenue from China last year, down from a profit of US$23 million on revenue of US$39 million in 2013, due to a 24 per cent fall in oil prices and lower output at Bohai Bay due to facilities maintenance.
Brightoil, a Shenzhen-based oil and gas producer, oil trader and logistics services provider, sold new shares equivalent to a 6.3 per cent stake last Thursday to investors, including the National Social Security Fund, Huaxia Life Insurance, People's Insurance and ICBC International. Yung would not disclose the combined stake bought by the investors.
Brightoil has a US$4 billion credit line from China Development Bank, of which less than US$1 billion has been used.
