Business / Companies

Geo-Jade eyes Shanghai Longzhou Xinke purchase

By Yang Ziman (China Daily) Updated: 2016-03-22 09:08

Geo-Jade Petroleum Corp, a Chinese petroleum explorer, announced a plan on Sunday to purchase a Shanghai-based firm with overseas oil and gas assets worth 8.2 billion yuan ($1.27 billion).

Geo-Jade is a Beijing-based oil and gas exploration and development enterprise with a total acreage of nearly 30,000 square kilometers and an annual oil output more than 500,000 metric tons.

The company has suspended trading on the stock market for half a year. It now plans to issue 1.2 billion shares at 6.83 yuan per share to buy 99.99 percent of the shares of Shanghai Longzhou Xinke through private replacement.

Geo-Jade plans to purchase Shanghai Longzhou Xinke Co Ltd, a power investment company for purchasing overseas assets, was founded in 2015. Longzhou Xinke currently has three target assets overseas, including Canada's Bankers Petroleum Ltd estimated at 2.98 billion yuan. Other overseas assets targeted by Longzhou Xinke are estimated at 4.6 to 4.9 billion yuan.

Bankers Petroleum is listed in Canada and Britain. Longzhou Xinke can only purchase it when it has been privatized.

Bankers Petroleum mainly operates three oilfields in Albania-Patos-Marinza, Kucova and Block F. Patos-Marinza and Kucova are producing oil, while Block F is still being prospected.

Geo-Jade also plans to raise 7 billion yuan among its major shareholders for the construction of Longzhou Xinke's targeted projects, replenishing the company's cash flow and the payment for intermediary agencies.

The company said that if the purchase is successful, it will boost the company's oil and gas reserves, speed up the capacity building and push its annual oil output up to 5 million tons.

"Oil prices have been falling in recent years, which has created opportunities for mergers and acquisitions in the industry," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

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