SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2007
PETROCHINA COMPANY LIMITED
16 ANDELU, DONGCHENG DISTRICT
BEIJING, THE PEOPLE'S REPUBLIC OF CHINA, 100011
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
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(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
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(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- )
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PetroChina Company Limited (the "Registrant") is furnishing under the cover
of Form 6-K the Registrant's announcement regarding its acquisition of Risk
Operation Service Business.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any of the contents of this announcement.
(PETROCHINA COMPANY LIMITED)
(CHINESE CHARACTER)
PETROCHINA COMPANY LIMITED
(a joint stock limited company incorporated in the People's Republic of
China with limited liability)
(STOCK CODE: 857)
CONNECTED TRANSACTION
ASSETS ACQUISITION
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The Board wishes to announce that the Company has entered into the Acquisition
Agreement with CNPC on 23 August 2007, pursuant to which the Company has agreed
to acquire the assets of the Risk Operation Service Business from CNPC. Upon
completion of the Acquisition Agreement, the Company will pay consideration in
the sum of RMB1,652,279,200 (approximately HK$1,700,225,600) to CNPC,
representing the value of the net assets of the Risk Operation Service Business
as at 31 December 2006. The parties will adjust the consideration by reference
to the net assets generated by the Risk Operation Service Business for the
period from 1 January 2007 to 31 August 2007 as shown in the management
accounts.
CNPC is the controlling shareholder of the Company holding 88.21% of the issued
share capital of the Company as at the date hereof. Pursuant to the Listing
Rules, CNPC is a connected person of the Company and the Acquisition constitutes
a connected transaction of the Company.
Since the applicable percentage ratios for the Acquisition are more than 0.1%
but less than 2.5%, the Acquisition is only subject to the reporting and
announcement requirements and is exempt from the independent shareholders'
approval requirement under the Listing Rules.
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ACQUISITION AGREEMENT
DATE
23 August 2007
PARTIES
Vendor: CNPC
Purchaser: the Company
THE ACQUISITION
Subject to satisfaction of the conditions precedent under the Acquisition
Agreement, the Company will acquire the net assets of the Risk Operation Service
Business. The Risk Operation Service Business mainly comprises the risk
operation service businesses of the Xinjiang Bureau and Tuha Petroleum primarily
in the marginal oil reserve regions. The relevant assets include oil, gas and
water wells, oil and gas processing stations, transportation facilities,
ancillary buildings and other associated assets. The mining rights and the
reserves in the marginal oil reserve regions in respect of the Risk Operation
Service Business are owned by the Company. Prior to the Acquisition, the risk
operation services provided by CNPC in respect of these reserves constituted
continuing connected transactions of the Company. Please refer to the 2006
Annual Report of the Company and the circular of the Company dated 22 September
2005 for further details of these transactions.
CONSIDERATION
The Acquisition was negotiated and entered into on an arm's length basis and on
normal commercial terms. Pursuant to the Acquisition Agreement, the Company will
pay consideration in the sum of RMB1,652,279,200 (approximately
HK$1,700,225,600) to CNPC, representing the value of the net assets of the Risk
Operation Service Business as at 31 December 2006. The parties will adjust the
consideration by reference to the net assets generated by the Risk Operation
Service Business for the period from 1 January 2007 to 31 August 2007 as shown
in the management accounts for that period. The Company will pay the
consideration together with the adjustment to the consideration in cash to CNPC
out of the internal resources of the Company. The adjustment to the
consideration is expected to be determined in early September 2007 after the
relevant accounts for the assets of the Risk Operation Service Business have
been prepared and the consideration (after taking into account the adjustment to
the consideration) will be payable by the Company to CNPC immediately thereafter
in early September 2007.
In the event the net assets generated by the Risk Operation Service Business for
the period from 1 January 2007 to 31 August 2007 as shown in the management
accounts for that period is higher than the value of the net assets of the Risk
Operation Service Business as at 31 December 2006, the Company shall pay such
difference to CNPC and verse versa on a dollar for dollar basis. Whilst there is
no upper limit set for the adjustment to the consideration, based on the
information available to the Company, it does not anticipate that substantial
adjustment will be required.
The above consideration was determined based on the valuation report as of 31
December 2006 prepared by China Enterprise Appraisals Company Inc., Beijing, an
independent valuer. According to the valuer's report with valuation based on the
cost method, as at 31 December 2006, the total value of the net assets of the
Risk Operation Service Business to be acquired under the Acquisition is
RMB1,652,279,200 (approximately HK$1,700,225,600).
The total value of the net assets of the Risk Operation Service Business as at
31 December 2006, audited by Zhongtianyun Accountants Limited (CHINESE
CHARACTER), after adjustments made in accordance with IFRS, was RMB1,575,309,700
(approximately HK$1,621,022,500).
The unaudited net profits attributable to the assets of the Risk Operation
Service Business for the financial year ended 31 December 2005 amounted to
RMB460,940,000 (approximately K$474,320,000) were based on the management
accounts of the assets of the Risk Operation Service Business prepared in
accordance with the Generally Accepted Accounting Principles of the PRC. The
audited net profits
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attributable to the assets of the Risk Operation Service Business for the
financial year ended 31 December 2006 amounted to RMB369,040,000 (approximately
HK$379,750,000) were also prepared in accordance with the Generally Accepted
Accounting Principles of the PRC, after adjustment made in accordance with IFRS.
As CNPC developed the relevant assets under the Risk Operation Service Business
over a number of years in the past, the original purchase cost of these assets
was unavailable.
CONDITIONS PRECEDENT TO COMPLETION OF THE ACQUISITION AGREEMENT
Completion of the Acquisition Agreement is subject to the satisfaction of
certain conditions precedent, including:
(a) the Company having completed due diligence on the Risk Operation Service
Business;
(b) the Company having obtained all necessary consents of the creditors and any
other relevant third parties in connection with the transfer of the assets
of the Risk Operation Service Business;
(c) there having been no material adverse change to the business operation and
technical performance of the Risk Operation Service Business; and
(d) the representations, warranties and undertakings given by CNPC being true,
accurate, complete and valid as at the date of completion.
As at the date of this announcement, all of the above conditions have been
satisfied.
REASONS FOR THE ACQUISITION
The Company is principally engaged in the exploitation of oil and gas resources
in China. The Board considers that the acquisition of the assets of the Risk
Operation Service Business is in line with the development strategies of the
Company.
The risk operation service business of the Company comprises the oil and gas
exploitation and production operations commenced several years ago when the
crude oil price was relatively low and the production volume, investment and
cost pressure were relatively high, with a view to reduce the risk associated
with the exploitation of marginal oil reserves of the Company and utilise the
advantage of the cost-effectiveness of CNPC's engineering and technological
services. In recent years, as oil price continues to rise and exploitation
technologies continue to evolve, conditions have existed for the Company to
expand such business, which are mainly manifested in: (i) the marginal oil
reserve regions corresponding to the Risk Operation Service Business are able to
produce stable oil output enabling more efficient exploitation for the Company;
(ii) the assets acquired will be deployed to reserves owned by the Company which
enables the Company to achieve scientific, rational, continuous and efficient
exploitation of its reserve resources; and (iii) the relevant business presents
certain level of economic returns to the Company. In addition, upon completion
of the Acquisition, the connected transactions between the Company and CNPC will
be reduced by a certain extent.
RELATIONSHIP BETWEEN THE PARTIES AND CONNECTED TRANSACTION
CNPC is the controlling shareholder (as defined in the Listing Rules) of the
Company holding 88.21% of the issued share capital of the Company. Pursuant to
the Listing Rules, CNPC is a connected person of the Company and the Acquisition
constitutes a connected transaction of the Company. Since the applicable
percentage ratios for the Acquisition are more than 0.1% but less than 2.5% for
the Group, the
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Company is only subject to the reporting and announcement requirement and is
exempt from the independent shareholders' approval requirement under the Listing
Rules.
The Board (including the independent non-executive directors) considers that the
terms of the Acquisition Agreement are on normal commercial terms and are fair
and reasonable and in the interests of the Company and its shareholders as a
whole.
INFORMATION ON THE GROUP
BUSINESS OF THE GROUP
The Group is principally engaged in petroleum and natural gas-related
activities, including:
(a) the exploration, development, production and sale of crude oil and natural
gas;
(b) the refining, transportation, storage and marketing of crude oil and
petroleum products;
(c) the production and sale of basic petrochemical products, derivative
chemical products and other petrochemical products; and
(d) the transmission of natural gas and crude oil, and the sale of natural gas.
BUSINESS OF CNPC
The principal business activities of CNPC and its subsidiaries include a broad
spectrum of upstream and downstream activities, domestic marketing and
international trade, provision of operational services and technical support,
and equipment manufacturing and supply. The group is also a major producer and
supplier of petrochemical products.
DEFINITIONS
In this announcement, unless otherwise defined, the following terms shall have
the following meanings:
"Acquisition" the acquisition of the assets of the Risk Operation
Service Business from CNPC by the Company pursuant to
the Acquisition Agreement the acquisition agreement
"Acquisition Agreement" dated 23 August 2007 entered into between the Company
and CNPC in respect of the Acquisition
"Board" the board of directors of the Company, including the
independent non-executive directors
"CNPC" China National Petroleum Corporation (CHINESE
CHARACTER), a State-owned enterprise incorporated
under the laws of the PRC and the controlling
shareholder of the Company
"Company" PetroChina Company Limited, a joint stock limited
company incorporated in the PRC under the Company Law
of the PRC, and listed on the Main Board of The Stock
Exchange of Hong Kong Limited with American depository
shares listed on the New York Stock Exchange
"Group" the Company and its subsidiaries
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"IFRS" the International Financial Reporting Standards
"Listing Rules" the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited
"PRC" the People's Republic of China
"Tuha Petroleum" the Command Department of Tuha Petroleum Exploration
and Exploitation (CHINESE CHARACTER), an enterprise
owned by the whole people (CHINESE CHARACTER) of CNPC
in the Xinjiang Uygur Autonomous Region
"Risk Operation Service the business in relation to the exploration and
Business" exploitation of oil and natural gas undertaken by the
Xinjiang Bureau and Tuha Petroleum primarily in the
marginal oil reserves regions (CHINESE CHARACTER)
"Xinjiang Bureau" Xinjiang Petroleum Administration Bureau (CHINESE
CHARACTER), an enterprise owned by the whole people
(CHINESE CHARACTER) of CNPC in the Xinjiang Uygur
Autonomous Region
"HK$" Hong Kong dollars, the lawful currency of Hong Kong
Special Administrative Region, PRC
"RMB" Renminbi, the lawful currency of the PRC
By order of the Board
PETROCHINA COMPANY LIMITED
LI HUAIQI
Company Secretary
23 August 2007
Beijing, the PRC
As at the date of this announcement, the Board comprises Mr. Jiang Jiemin as the
Chairman; Mr. Duan Wende as the executive director; Mr. Zheng Hu, Mr. Zhou
Jiping, Mr. Wang Yilin, Mr. Zeng Yukang, Mr. Gong Huazhang and Mr. Jiang Fan as
non-executive directors; and Mr. Chee-Chen Tung, Mr. Liu Hongru and Mr. Franco
Bernabe as independent non-executive directors.
In this announcement, RMB has been translated into HK$ at the rate close to the
date of the Acquisition Agreement of HK$1 = RMB0.9718 for reference purpose
only.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PetroChina Company Limited
Dated: August 24, 2007 By: /s/ Li Huaiqi
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Name: Li Huaiqi
Title: Secretary to the Board