Sonangal Sinopec International Ltd – a subsidiary of crude oil and natural gas producer China Petroleum and Chemical Corp or Sinopec (SNP) – has entered into an agreement with energy exploration and production firm Marathon Oil Corp. (MRO) to acquire the latter’s 10% stake in Angolan assets.
Per the deal, Sinopec will pay $1.52 billion for block 31 in an oil and gas field in Angola. This purchase will increase Sinopec’s stake in the block to 15%. Back in 2011, Sinopec bought 5% stake in the block from France-based Total SA (TOT) for $983 million.
The Angolan block 31 field is expected to hold proved and probable reserves of 533 million barrels and is operated by the U.K. supermajor BP plc (BP). Also, the increased stake will likely add 14,600 barrels of oil per day for Sinopec.
The sale is part of the $3-billion asset disposal goal set by Marathon in 2011 to free up its capital and concentrate on its longer-term high-grade prospects. The agreement is subject to approval by the Chinese and Angolan governments.
Sinopec, with its head office in Beijing, China, is one of the largest petroleum and petrochemical companies in Asia. It is the second largest crude oil and natural gas producer, and the largest refiner and marketer of refined petroleum products in China. The company is also the largest producer and distributor of petrochemicals in the nation.
In April, the company reported first quarter 2013 net income of 15.834 billion yuan (US$2.52 billion), up 23.4% from the prior-year quarter. Earnings per share of 0.178 yuan ($2.83 per ADS) also jumped 21.1% year over year, as per the Chinese reporting standards.
Sinopec currently holds a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.
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