Acquisition of Unocal will not affect US oil and gas market, CNOOC

China National Offshore Oil Corporation (CNOOC) Ltd., China's largest offshore oil and gas producer, Thursday announced its decision to bid for the Unocal Corporation will not adversely affect the US oil and gas market.

CNOOC Ltd. said it was proposing a friendly merger with Unocal,offering 67 dollars in cash per share for the California-based company.

The offer values Unocal at about 18.5 billion US dollars, representing a premium for Unocal's shareholders of about 1.5 billion US dollars over the value of Chevron Corporation's offer based its closing price on New York Stock Exchange (NYSE) on Wednesday, said CNOOC Ltd.

In a public notice offered by the CNOOC Ltd., the company said it is committed to fully integrating Unocal's strong management team and workforce into the combined company.

CNOOC Ltd. will seek to substantially retain all Unocal employees, including those in the U.S.. This is in contrast to the proposal of Chevron that it would extract hundreds of millions of dollars of cost savings from the merger annually, including from employee layoffs.

CNOOC Ltd. will endeavor to persuade members of Unocal's executive and operational management to join the management team of the combined company.

The transaction will not adversely affect the U.S. oil and gas market since CNOOC Ltd. is ready to continue Unocal's practice of selling and marketing all or substantially all of the oil and gas produced from Unocal's U.S. properties in the U.S. market, said CNOOC. Ltd.

According to CNOOC Ltd., Unocal's oil and gas production in the U.S. accounts for less than one percent of the total U.S. oil and gas consumption.

CNOOC Ltd. will accept and agree to the terms of Unocal's recent settlement with the Federal Trade Commission of the U.S. relating to its patent rights in reformulated gasoline.

CNOOC Ltd. said it is confident that it will obtain Exon-Florio approval.

CNOOC Ltd. is willing to divest or take other actions with respect to any of Unocal's non-exploration and production assets in North America to the extent such divestitures and actions would not give rise to a material adverse effect on Unocal, including considering special management arrangements for Unocal's U.S. non-controlling, minority pipeline interests and its storage assets, said the company.

In a letter sent to the Chairman of Unocal, CNOOC Ltd. Chairman and Chief Executive Officer Fu Chengyu described the approach as "friendly", saying that the company is seeking a consensual transaction with UNOCAL.

Source: Xinhua