CNOOC launches counter bid for Unocal

As widely anticipated, China?s oil, gas firm CNOOC Limited announces on Thursday that it had proposed a merger with El Segundo-based Unocal Corporation offering US$67 in cash per Unocal share.

The offer valued Unocal at approximately US$18.5 billion and represents a premium for Unocal's shareholders of approximately US$1.5 billion over the value of Chevron Corporation's offer based on Chevron's closing price on NYSE on 21 June 2005.

In a letter sent to the Chairman of Unocal, CNOOC Limited Chairman and Chief Executive Officer, Fu Chengyu stressed that the approach is friendly and the company is seeking a consensual transaction with Unocal. This proposal is being submitted in accordance with the sale process initiated by Unocal.

?CNOOC Limited believes that the combined company would have a leading position in the Asian energy market and an expanded role in the development of China's LNG market. The combination is expected to more than double CNOOC Limited's oil and gas production and increase its reserves by nearly 80% to approximately four billion barrels of oil equivalent.? Fu said in a statement.

Approximately 70% of Unocal's current proved oil and gas reserves are in Asia and the Caspian region. It is expected that the merged company would also have an improved oil and gas balance, with total reserves of approximately 53% oil and 47% natural gas.

The company said that it believed that China's LNG market potential will allow it to accelerate the exploration and development of gas resources and position it as a long-term supplier to the Bontang LNG plant.

Unocal has a vast inventory of untapped gas in East Kalimantan, and would become significant supplier for Bontang LNG in the future. (alex)