China Petrochemical Corp., the nation’s biggest refiner, agreed to buy Daylight Energy Ltd. (DAY) for C$2.2 billion ($2.1 billion) in its largest acquisition this year, gaining Canadian oil and shale-gas reserves.
The state-owned company known as Sinopec Group offered C$10.08 a share in cash, Calgary, Alberta-based Daylight said yesterday. That’s 70 percent higher than Daylight’s average price over the past 20 trading days and more than double the average 32 percent premium for comparable cash bids for North American energy explorers, data compiled by Bloomberg show.
The deal would give the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, adding to its expansion outside Asia after falling crude prices made valuations attractive. Sinopec Group and Cnooc Ltd. (883) are among Chinese companies that have bought almost $30 billion of Canadian assets in the past five years to meet energy demand in the world’s fastest-growing major economy.
“Sinopec made a number of oil-sands acquisitions, and this is probably the most gas they’ve acquired in western Canada,”Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by telephone today. “It seems that Sinopec is potentially eying longer-term development of those for liquefied natural gas exports to the Asia-Pacific market, building on what Canadian companies are trying to do.”
North America may export 5 billion cubic feet a day of LNG by 2017 from projects turning surplus gas from shale into the liquefied fuel for shipment to Asia and Europe, New York-based consultant Eurasia Group said in a report Aug. 31. Encana Corp., Canada’s biggest gas producer, said Oct. 4 it expects to make a final investment decision on the 1.4 billion cubic feet-a-day Kitimat LNG facility in British Columbia in early 2012.