Singapore Petroleum to Buy China Oilfields for $223M

Singapore Petroleum Co. Ltd. (S99.SG) said Thursday it has bought offshore oilfields and got exploration working interests in Bohai Bay in China for $223 million.

In a statement, SPC said its subsidiary, SPC E&P (China) Pte. Ltd., won a bid for all the shares of Sino-American Energy Corp., which owns the oilfields and exploration blocks in Bohai Bay.

Sino-American is a subsidiary of Texas-based Ultra Petroleum Corp (UPL).

'The rationale for adding Bohai to our stable is two-pronged,' said Chief Executive Koh Ban Heng in the statement. 'One, it is in line with our long-term strategy to grow our business through upstream activities. The other is to tap the vast potential of China, both as a major oil and gas-producing region and as a key market.'

SPC's share of the current Bohai production will be 4,300 barrels of oil a day, bringing SPC's total current oil and gas production to more than 11,000 barrels of oil equivalents a day.

SPC said it does not expect the deal to have any material impact on the earnings per share and the net tangible asset per share of the company for the current financial year.

The acquisition will be funded through internal resources and bank borrowings and is expected to be completed by the end of October.

On a proforma basis, the net profit from the acquisition for the six months from July to December this year is expected to be S$12 million.

It would have raised earnings per share from 55.2 Singapore cents to 57.6 Singapore cents last year, assuming the transaction had been completed by Dec. 31, 2006.