CNOOC’s (HKEx: 883; NYSE: CEO) $2.1 billion gamble on a bankrupt oil sands business in Canada rings of a recent Chinese M&A refrain, which has seen Chinese companies across all sectors swoop in and grab struggling overseas assets for what look like bargain prices but end up becoming major headaches. In this case, CNOOC’s purchase of OPTI Canada certainly looks good on paper. (company announcement; English article) Analysts estimate the cost of producing oil from OPTI’s main asset, an oil sands deposit in Canada, is well below the rate paid in another recent transaction and will add 5.3 percent to CNOOC’s reserves. But what the numbers don’t show is that CNOOC is making this purchase near the top of a frothy oil market, and also that it is probably acquiring more problems than it realizes with the purchase of bankrupt OPTI. Bankruptcies of this scale are never simple, and this particular one saw work on the oil sands project that OPTI was developing come to a halt due to lack of funds. Restarting the process may be harder than CNOOC realizes, as hoards of creditors will most likely have to be placated before work can resume — a process that could take months at best and years at worst. On a more macro economic basis, CNOOC has purchased this asset at the top of a heady oil market that has seen prices near or above the $100 mark per barrel for an extended period. There’s no guarantee that prices will stay that high for long, meaning any oil from this field, which will require an expensive process to produce, could ultimately be too expensive to develop if and when prices come down. Investors seem to sense all this, with CNOOC shares dipping 3 percent in Hong Kong and 4 percent in New York on Wednesday. Like many of China’s overseas M&As, this one will hardly be a simple one to execute well.
Bottom line: Despite a bargain price, CNOOC is getting a complicated deal with its purchase of a bankrupt Canadian oil sands producer, which could result in headaches for CNOOC down the road.
中海油<0883.HK> <CEO.N>以21亿美元收购一家加拿大油砂生产商OPTI，这是中国企业近年来进行海外并购的又一宗案例。表面看来这起收购确实不错。分析师预计从OPTI主要资产进行开采的成本远低於最近的另一项交易，并将使中海油储量增加5.3%。但财务数字没有体现出来的是，中海油是在油市高点进行这宗交易的，这家加拿大破产油砂企业的问题可能比中海油预计的要更多。如此规模的破产从来都不是容易的事，而这家企业正是因为缺乏资金而停掉了油砂项目。重启项目要比中海油所预料得要更难，因为重启项目需要先安抚好债权人，而这至少需要几个月的时间，最糟糕则要数年。从更加宏观的角度来看，中海油是在油市高点进行这笔交易的，原油每桶近100美元或更高已持续好一段时间了，没人能保证油价会一直这麽高。这意味着如果油价下降，从这里开采将会变得太昂贵。投资者可能已经意识到这点，周三中海油在香港和纽约股市的股价分别下跌了3%和4%。和中国很多其他海外并购案一样，这个并购案也不会容易操作。
一句话：尽管收购价格便宜，但中海油收购加拿大破产油砂企业可能会在未来令其遭遇更多难题。
Related postings 相关文章:
◙ Bohai Spill: A Slippery Mess for CNOOC 中海油的漏油危机
◙ China’s Oil Shuffle: Not So Fast, Naysayers 石油巨头高管轮换：先别急着唱衰
◙ Shenhua Takes Smart Step Into Mongolia 中国神华走入蒙古
Two developments this week in the steel sector highlight how China’s determination to achieve self-sufficiency in iron ore procurement won’t be easy or cheap, as Beijing tries to free itself from dependence on the global trio of Rio Tinto (London: RIO), Vale (NYSE: VALE) and BHP Billiton (Sydney: BHP). In the first of the developments, private conglomerate Sichuan Hanlong has been rebuffed in its $1.9 billion bid to take over all of Australia’s Sundance Resources (Sydney: SDL), in which it already owns a 19 percent stake. (
China’s education services firms may not be as high-profile as big names like Baidu (Nasdaq: BIDU) or Geely (HKEx: 165), but industry leader New Oriental Education (NYSE: EDU) is showing it can be equally profitable and notch enviable growth that would make many of the big boys jealous. While high inflation may be eroding Chinese consumer appetite for many discretionary items, education for themselves and their children is clearly not one of those, as evidenced by New Oriental’s latest results which saw its revenue rise nearly 60 percent and net income more than double for its fiscal quarter through the end of May. (
without seeming to care about copyright protection before finally becoming “enlightened”, and have no doubt that its change of heart is coming at least in part due to heavy pressure from regulators who are trying to stamp out China’s rampant piracy. While it’s one thing for a little old lady from the countryside to sell pirated DVDs from a cart on the side of the street, it’s quite an embarrassment for Beijing when many of its top Internet companies like Baidu also engage in such practices, and clearly we’re going to see a move by major Net firms to slowly phase out their sites that encourage copyright infringement over the next few years. As that happens, look for more deals like the one just announced by Baidu, and also look for the company and its peers to suffer a bit when they finally close down their popular but illegal song- and video-swapping services.
The latest resignation of a top audit committee member in the solar sector, this time at LDK Solar (NYSE: LDK), hints that major new storm clouds could be on the horizon for an industry already struggling with its worst ever downturn. LDK announced late on Monday in the US that Louis Hsieh, one of its independent directors who also happened to chair its audit committee and was a member of its corporate governance committee, has resigned for unspecified reasons after several years on the board. (
users with the ability to post longer messages, as well as photos and other multimedia offerings. Does this sound a bit like Facebook? The beta site at qing.weibo.com says the service already has about 700,000 users, though I’ve no doubt that is probably a bit inflated. Still, considering Google’s (Nasdaq: GOOG) early success with its new SNS product, Google Plus, despite being years behind Facebook, I’d say this new Qing product, which smartly draws on Weibo’s huge user base, stands a strong chance of success and could quickly pose a major challenge to industry leaders Renren (NYSE: RENN) and Kaixin, as well as SNS products being developed by established net giants like Tencent (HKEx: 700). From a broader perspective, Qing will undoubtedly be coupled with Weibo into a single SNS business unit at Sina, which is hoping to quickly build up the company for a blockbuster IPO in the next two to three years. It’s still too early to say if Qing will be able to make big headway in the market, but I would say the chances are good that it could quickly catch up with and possibly even overtake Renren or Kaixin in the next couple of years.
frequent subject of merger talk with SMIC or venture-backed Grace Semiconductor, another smaller struggling player. In fact, David Wang was a former CEO of Huahong NEC, but was clearly only an executive at the company and probably had little clout to pursue an acquisition of his former company after arriving at SMIC in late 2009. Zhang, on the other hand, as chairman of both SMIC and Huahong, is in a perfect position to push such consolidation, and perhaps even bring Grace into the mix, as that company’s stakeholders have long wanted to sell off the investment. If all goes according to plan, I would expect to see SMIC merge with Huahong NEC in the next 12 months, and perhaps also with Grace during that time, to create the world’s clear number-three contract chipmaker. Handling such a difficult merger would be tough for the most experienced of executives, and will be even more difficult for whoever SMIC names as its new CEO. For that reason, I’d look for lots of problems with this company over the next two years, and high volatility in its share price as it seeks to find its new footing.
that this move seems to reflect a recent acceleration of new initiatives by Ctrip, in sharp contrast to a much slower approach in the past. The company’s list of other recent initiatives is quickly growing, including hotel brand management (
