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Business |
OSL shares leap on takeover talk
But no formal offers, says Botten
By BRIAN GOMEZ in Sydney
SHARES in Oil Search
soared to a near record A$4.30 (K10.83) yesterday after Hong
Kong’s biggest English language newspaper said a Chinese
petroleum group was planning to make a US$5 billion (K14.9
billion) bid.
Oil Search managing director Peter Botten told the Australian
Stock Exchange, following a report in Hong Kong’s South China
Morning Post, that the company had not received notification of
any takeover offer.
Nevertheless a huge volume of 34.9 million shares exchanged
hands yesterday compared with a normal trading volume of two
million to four million shares, although trading volumes spiked
to a high of 7.1 million shares last Friday.
Oil Search shares yesterday rose by A$0.45 (K1.13) or 11.69% to
A$4.30 giving the stock a market capitalisation of around A$4.8
billion (K12.08 billion).
The PNG Government is likely to play a critical role in the
event a takeover offer eventuates from CNPC Exploration, a joint
venture between China National Petroleum Corp and its newly
listed Hong Kong subsidiary, PetroChina.
The PNG Government is the single biggest shareholder in Oil
Search with a 17.6% stake, which would be valued at around K2.6
billion if it accepts the Chinese offer.
According to Mr Botten, Oil Search is PNG’s largest investor and
tax payer and is responsible for 23% of PNG’s export revenue and
13% of the country’s gross domestic product.
Industry sources said the PNG Government was likely to take a
cautious attitude towards any bid from China, a critical factor
being the way in which such a takeover was funded.
The sources said that if substantial debt funding was utilised
for a takeover, the Government could find this an unattractive
proposition because servicing of the debt could erode the level
of corporate taxes presently paid by Oil Search.
Oil Search had established extremely good relations with the PNG
Government and with landowners in the Southern Highlands.
Observers said PNG landowners may be wary of a Chinese takeover
of Oil Search especially in view of recent adverse publicity
regarding China’s ongoing involvement in the Ramu Nickel
project.
The Australian government could also be concerned that a
successful bid from China could divert significant quantities of
premium quality crude oil from the Australian market.
Oil Search is the largest oil and gas producer in PNG which in
2006-07 was the 5th largest exporter of crude oil to Australia
after Vietnam, Malaysia, Indonesia and the US.
 
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