Arab Today, arab today petronas raises bid for progress
Last Updated : GMT 20:42:19
Arab Today, arab today
Arab Today, arab today

Petronas raises bid for Progress

Arab Today, arab today

Arab Today, arab today Petronas raises bid for Progress

Toronto - Agencies

Petroliam Nasional (Petronas), Malaysia’s state oil company, will raise its bid for Canadian natural gas producer Progress Energy Resources Corporation by 8 per cent to fend off a rival offer, and Progress shares surged on expectations of a bidding war. Progress said that Malaysia’s Petronas will now pay C$22.00 for each share, up from the C$20.45 it offered in June, making the bid worth C$5.17 billion ($5.12 billion). Calgary-based Progress did not name the third party that made the unsolicited offer, but said its board has approved Petronas’s latest offer. Deal worth $5.12 billion needs approvals by regulators of both the countries and once again shows growing global interest in Canada’s gas reserves Chinese state-owned oil company CNOOC’s this week offered $15.1 billion for Canadian oil producer Nexen in what would be China’s largest foreign deal. Progress said in a regulatory filing earlier this week it had been stalked by a “multi-national oil company” since early this year and that the unnamed company had submitted a written offer in early June. Petronas trumped that bid a week later, on June 11, and a friendly deal with the Malaysian entity was finalized in late June. Progress did not say if the new and unsolicited offer came from the same multi-national oil company that it had engaged with since early this year. Shares of Progress rose 13.5 per cent to C$22.79, well above the revised offer price, as investors bet on a possible bidding war. Petronas’s initial offer of C$20.45 a share was already 77 per cent above Progress’ closing stock price the day before the deal was announced. Scotia Capital analyst William Lee said in a note that any future bid for Progress would have at around C$23 a share, given that the C$150 million break fee in the agreement with Petronas equates to about 64 Canadian cents per Progress Energy share. Progress, known for reserves in British Columbia’s Montney tight gas region and Alberta’s Deep Basin, has been working with Petronas since last year, when the Malaysian company paid C$1.07 billion for a half interest in shale gas fields it owns. The partners in that joint venture also pledged to study the feasibility of exporting liquefied natural gas to Asian markets. Other Asian players, including PetroChina, Korea Gas and Mitsubishi, have poured billions of dollars into North American shale gas plays in recent years, providing the capital that the North American companies need to fund growth. An excess of natural gas supplies in North America has led to a prolonged slump in prices in the region. Petronas-Progress and other groups want to export liquefied natural gas to Asian markets, where natural gas commands much higher prices. Petronas is being advised by Bank of America Merrill Lynch and law firm Norton Rose on the deal, while Progress is being advised by BMO Capital Markets and law firm Burnet, Duckworth & Palmer. Progress Energy’s board received a fairness opinion from Scotia Waterous.  he higher price Petronas is willing to pay for the Calgary-based company highlights the interest in gaining access to gas reserves in Western Canada and shipping the fuel to Asia. Royal Dutch Shell Plc, Exxon Mobil Corp.’s Imperial Oil Ltd. and Apache Corp. are among the companies that have said they’re considering exports of liquefied natural gas. While “the price looks very high relative to how natural gas is trading,” Progress Energy Resources’ holdings in British Columbia’s Montney shale-gas region give it a unique position to supply LNG projects on the province’s west coast, which is driving up the bids, said Michael Tims, chairman of Calgary-based investment bank Peters & Co. Progress Energy Resources rose above the offer price to C$22.85 at the close in Toronto, a 13 per cent gain and the highest intraday price in more than four years. Chief Financial Officer Art MacNichol declined to identify the other bidder, citing confidentiality agreements. The company rejected two bids from a “multi-national oil company” before agreeing to the Petronas takeover, according to a July 24 regulatory filing. Progress Energy Resources’ board was in talks with the unidentified company until June 11, two weeks before the Petronas deal was announced. The bids were rejected because they didn’t adequately value the company, according to the filing. From gulftoday

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