SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
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REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For January 9, 2006
CNOOC Limited
(Translation of registrant's name into English)
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65th Floor
Bank of China Tower
One Garden Road
Central, Hong Kong
(Address of principal executive offices)
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(Indicate by check mark whether the registrant files or will file annual
reports under cover 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): N/A.)
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 part of the
contents of this announcement.
[LOGO OMITTED]
CNOOC Limited
[Translation of Company Name]
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 883)
DISCLOSEABLE TRANSACTION RELATING TO ACQUISITION OF INTERESTS IN OFFSHORE
NIGERIAN OIL MINING LICENSE
AND
RESUMPTION OF TRADING
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The Company is pleased to announce that on 8 January 2006, the Purchaser
entered into the Sale and Purchase Agreement with the Seller under which it
will acquire from the Seller certain contractual benefits, interests and
obligations held by the Seller as contractor in respect of the PSC covering
OML 130 offshore Nigeria. The aggregate cash consideration required to be paid
by the Purchaser under the Sale and Purchase Agreement is approximately
US$2.268 billion (approximately HK$17.69 billion), subject to adjustments as
described below. The Company has agreed to guarantee the obligations of the
Purchaser under the Sale and Purchase Agreement.
The Company is advised by Goldman Sachs (Asia) L.L.C. in relation to the
Acquisition. The Acquisition constitutes a discloseable transaction of the
Company under Chapter 14 of the Listing Rules. A circular containing, among
other things, further details relating to the Acquisition and the Sale and
Purchase Agreement will be despatched to the Shareholders in due course.
At the request of the Company, trading in the shares of the Company on the
Stock Exchange was suspended from 9:30 a.m. on 9 January 2006, pending the
issue of this announcement. An application has been made by the Company to the
Stock Exchange for the resumption of trading in the shares of the Company on
the Stock Exchange from 9:30 a.m. on 10 January 2006.
Shareholders and potential investors should be aware that the implementation
of the Acquisition is subject to the conditions to the Sale and Purchase
Agreement being fulfilled (or waived, as applicable), and the Acquisition may
or may not be completed. Shareholders and potential investors are reminded to
exercise caution when dealing in the Company's securities.
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THE SALE AND PURCHASE AGREEMENT
Date
8 January 2006
Parties
Seller: South Atlantic Petroleum Limited, a privately held company
established under the laws of the Federal Republic of Nigeria
Purchaser: CNOOC Exploration & Production Limited, a company established
under the laws of the Federal Republic of Nigeria and an
indirect wholly-owned subsidiary of the Company
Summary
On 8 January 2006, the Purchaser entered into the Sale and Purchase Agreement
with the Seller under which it will acquire from the Seller certain
contractual benefits, interests and obligations held by the Seller as
contractor in respect of the PSC covering OML 130 offshore Nigeria - please
refer to the paragraph headed "Background to and Reasons for the Acquisition"
below for further details. Upon completion, the sale and purchase will be
deemed for all purposes to be made with effect from the Effective Date, being
1 July 2005. The Effective Date was part of the auction structure set by the
Seller, as 1 July 2005 was the date at which the most recent technical and
financial information was available prior to the launch of the auction
process.
Under the Deed of Guarantee entered into between the Company and the Seller,
the Company has agreed to guarantee all of the Purchaser's obligations under
the Sale and Purchase Agreement.
Consideration
The aggregate cash consideration required to be paid by the Purchaser under
the Sale and Purchase Agreement is US$2.268 billion (approximately HK$17.69
billion), subject to adjustments as described below. The cash consideration
comprises a payment of US$1.75 billion (approximately HK$13.65 billion) to the
Seller and a payment of US$518 million (approximately HK$4,040 million) to
TUPNI and Brasoil on behalf of the Seller, being repayment of advances made by
TUPNI and Brasoil on behalf of the Seller. The consideration will be funded
from the internal resources of the Company. The acquisition cost will be
capitalised and the PSC interest will be accounted for as a tangible asset in
the accounts of the Purchaser in accordance with the Group's published
accounting policies.
The consideration above will be adjusted by (i) an adjustment calculated with
reference to LIBOR plus a margin varying between 0% and approximately 3% and
(ii) additional advances made on behalf of the Seller under the PSC Operating
Agreement, in each case for the period between the Effective Date and the date
of completion.
The consideration was determined after arms' length negotiations between the
parties following an auction process, taking account of the results of the
Company's legal, financial and technical due diligence and by reference to
factors including the characteristics of the basin, its production prospects
and other relevant benchmarks. No independent valuation report has been
prepared for OML 130.
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Conditions
The Agreement is conditional on, amongst other things:
(a) the receipt of the unconditional written consent of NNPC under the PSC
to the assignment to the Purchaser of the Seller's ninety per cent (90%)
interest as a contractor under the PSC; and
(b) the receipt of the consent of the Government of the PRC to the
acquisition of the Transferred Interest by the Purchaser pursuant to the
Sale and Purchase Agreement.
If the conditions precedent are not satisfied within six months of the date of
the Sale and Purchase Agreement (or such later date as the Purchaser and the
Seller shall agree in writing), either the Seller or the Purchaser may
terminate the Sale and Purchase Agreement.
Deposit and Escrow arrangement
A deposit of US$235 million (approximately HK$1,833 million) is payable by the
Purchaser to a mutually agreed escrow agent, Meespierson, on the business day
following signing of the Sale and Purchase Agreement. Subject to Completion of
the Sale and Purchase Agreement, this deposit will be released to the Seller
and the remainder of the adjusted purchase price will be paid by the
Purchaser.
Completion
Completion is expected to occur as soon as reasonably practicable and in any
event no later than ten business days after the date on which the Seller shall
have given notice of satisfaction of all of the conditions precedent, which is
expected to occur during the first half of 2006.
BACKGROUND TO AND REASONS FOR THE ACQUISITION
Background to OML 130
OML 130 covers an area of approximately 500 square miles offshore Nigeria and
is a deepwater block with water depths ranging around 1,100 m to 1,800 m. OML
130 contains the Akpo field, which was discovered in 2000 and is currently
under development. Besides Akpo, OML 130 contains three other significant
discoveries: Egina, Egina South and Preowei. The OML 130 area also contains a
range of further exploration prospects.
Akpo's P50 liquid recoverable volumes
have been estimated by TUPNI, the operator of OML 130, to be approximately
600MMB, with potential for additional P50 recoverable oil in excess of 500 MMB
for the whole OML130 area. According to the estimates prepared by TUPNI, first
production (meaning commencement of production of oil available for sale) from
the Akpo field in OML 130 is currently expected in the second half of 2008.
OML 130 is covered by the PSC and the PSA, each of which relates to a 50%
interest in OML 130. The PSC is between NNPC, the Seller and TUPNI. The Seller
is the sole contractor and holds benefits, interests and obligations under the
PSC. Under the Sale and Purchase Agreement, the Purchaser has agreed to
acquire 90% of all of the Seller's said benefits, interests and obligations as
contractor under the PSC. Therefore, after completion of the Acquisition, the
Company will effectively own a 45% economic interest in the whole of OML 130.
OML 130 is operated by TUPNI. The Purchaser will not acquire any interests in
the PSA under the Sale and Purchase Agreement. Under the PSC and PSA, 50% of
the production attributable to OML 130 and 50% of
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all costs of joint operation in respect of OML 130 are allocated to each of
the PSC and PSA respectively.
The Company made the Acquisition to gain access to a field of significant size
and considerable upside potential, located in one of the world's most prolific
oil and gas basins. In particular, the Acquisition perfectly fits the
Company's strategy to pursue long term growth while diversifying
geographically its reserves.
Rights and obligations of the Purchaser under the PSC and ancillary agreements
Upon completion of the Acquisition, the Purchaser will become a party to the
PSC, the PSC Operating Agreement and the Production Co-Ordination Agreement.
The Seller's benefits, interests and obligations in respect of the Transferred
Interest will be assigned to the Purchaser under a separate assignment to be
signed upon completion of the Sale and Purchase Agreement. In addition, the
Seller's benefits, interests and obligations in respect of the PSC Operating
Agreement and the Production Co-ordination Agreement relating to the
Transferred Interest will be novated to the Purchaser under separate novation
agreements to be signed upon completion of the Sale and Purchase Agreement.
Currently, under the PSC, the "contractor" is granted a 100% contractual
participating interest under the PSC. The contractor, in this case the Seller,
is currently required to fund 100% of operations costs in respect of the PSC,
and is entitled to share in the hydrocarbon production under OML 130. TUPNI,
the operator under the PSC, has been appointed by the contractor to manage all
exploration and production work under a production sharing contract. TUPNI is
not entitled to share in hydrocarbon production by virtue of its appointment
as operator under the PSC.
The PSC
The Seller and the Purchaser as the contractors under the PSC will have the
right to lift and freely export crude oil produced from OML 130. Under the
PSC, the Purchaser as contractor effectively bears 45% of all costs and
expenses of joint operations in respect of OML 130 and can recover these costs
against revenues from the sale of petroleum produced. After recovery of costs
and payment of all applicable taxes, the contractors will be entitled to a
share of profit oil produced from OML 130 under the PSC as follows:
(i) oil in the production range of 0-350MMB, the contractor will accrue
70.0% of such oil;
(ii) oil in the production range of 351-750MMB, the contractor will accrue
65.0% of such oil;
(iii) oil in the production range of 751-1000MMB, the contractor will accrue
52.5% of such oil;
(iv) oil in the production range of 1001-1500MMB, the contractor will accrue
45.0% of such oil; and
(v) oil in the production range of 1501-2000MMB, the contractor will accrue
35.0% of such oil.
The contractors' share will be negotiable for oil in the production range
above 2000MMB. The above percentages are comparable to other deep water
offshore production sharing contract terms in Nigeria.
As noted above, the PSC entitlement to hydrocarbons is 50% of production under
OML 130 and the Transferred Interest being acquired by the Purchaser
represents 90% of the total contractors' interest under the PSC.
The term of the PSC is 20 years from the date of the PSC, subject to renewal
and customary termination provisions. In accordance with Petroleum Act, Cap
P10 of the Federation of Nigeria
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2004, under the PSC, 50% of the area covered by OML 130 shall be relinquished
10 years after the grant of OML 130. The precise area to be relinquished is
subject to agreement between NNPC, the contractor and the Nigerian Department
of Petroleum Resources (the regulator of the Nigerian oil and gas industry).
The contractor under the PSC is also responsible for all operational matters
relating to the PSC share of OML 130, although such responsibility is
currently sub-contracted to TUPNI under the PSC Operating Agreement. TUPNI is
the operator across all of OML 130.
PSC Operating Agreement
At completion, the Purchaser will acquire rights and obligations under the PSC
Operating Agreement. The PSC Operating Agreement appoints and contains rights
to remove TUPNI as operator in respect of the PSC. The PSC Operating Agreement
is coterminous with the PSC.
The PSC Operating Agreement also gives the Purchaser representation (with the
right to appoint one out of two representatives) on the PSC operating
committee, which is responsible for approving all aspects of the joint
operations under the PSC. All important decisions of the PSC operating
committee must be made by unanimous vote.
Production Co-Ordination Agreement
At completion, the Purchaser will also acquire rights and obligations under a
Production Co-ordination Agreement. The Production Co-ordination Agreement
regulates the various decisions of the operating committees under the PSC and
the PSA relating to joint operations for OML130.
The Purchaser will participate in a co-ordination committee established under
the Production Co-ordination Agreement (with the right to appoint one out of
four representatives). The co-ordination committee includes all parties under
the PSC and the PSA as members. All decisions of the co-ordination committee
are required to be unanimous.
GENERAL
The principal business activity of the Company is investment holding. The
Group principally engages in the exploration, development, production and
sales of crude oil and natural gas and other petroleum products.
The principal business activity of the Seller is the exploration, development,
production and sales of crude oil and natural gas and other petroleum
products.
To the best of the knowledge, information and belief of the Company, and
having made all reasonable enquiries, the Seller and its ultimate beneficial
owner, as well as NNPC, TUPNI, Brasoil and Meespierson, are Independent Third
Parties.
The Company is advised by Goldman Sachs (Asia) L.L.C. in relation to the
Acquisition. The Acquisition constitutes a discloseable transaction of the
Company under Chapter 14 of the Listing Rules. A circular containing, among
other things, further details relating to the Acquisition and the Sale and
Purchase Agreement will be despatched to the Shareholders in due course.
At the request of the Company, trading in the shares of the Company on the
Stock Exchange was suspended from 9:30 a.m. on 9 January 2006, pending the
issue of this announcement. An application has been made by the Company to the
Stock Exchange for the resumption of trading in the shares of the Company on
the Stock Exchange from 9:30 a.m. on 10 January 2006.
Shareholders and potential investors should be aware that the implementation
of the Acquisition is subject to the conditions to the Sale and Purchase
Agreement being fulfilled (or
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waived, as applicable), and the Acquisition may or may not be completed.
Shareholders and potential investors are reminded to exercise caution when
dealing in the Company's securities.
DEFINITIONS
"Acquisition" the proposed acquisition of the Transferred Interest pursuant to the Sale and Purchase Agreement
"Brasoil" Brasoil Oil Services Company Nigeria Limited, a company established under the laws of the Federal
Republic of Nigeria, its successors and permitted assigns, a subsidiary of Petroleo Brasileiro
S.A. (a petroleum company based in Brasil)
"Company" CNOOC Limited, a company incorporated in Hong Kong with limited liability, the shares of which
are listed on the Hong Kong Stock Exchange and whose American Depository Shares are listed on the
New York Stock Exchange
"Deed of Guarantee" a parent company guarantee dated 8 January 2006 given by the Company as guarantor for the benefit
of the Seller, where the Company guarantees the performance of all the obligations of the
Purchaser under the Sale and Purchase Agreement
"Directors" the directors of the Company
"Effective Date" 00.01 hours, Lagos Nigeria time (07.01 hours, Hong Kong time), 1 July 2005
"Group" the Company and its subsidiaries
"HOA" the Heads of Agreement entered into between NNPC, TUPNI, Brasoil and the Seller dated 25 April
2005 relating to NNPC's entry into OML 130
"Hydrocarbons" includes crude oil but also other related substances
"Independent Third Party" an independent third party not connected with the Directors, chief executive or substantial
shareholders of the Company or any of its subsidiaries or their respective associates as defined
under the Listing Rules
"LIBOR" the display rate per annum of the offered quotation for deposits in US Dollars for a period of
one month which appears on Telerate Page 3750 (or such other page as the Parties may agree) at or
about 11.00 am London time on the business day immediately prior to 1 January 2006 and thereafter
on the first day of each month in the period until completion of the Sale and Purchase Agreement,
or, if such day is not a business day in London, on the last business day in London prior to such
day
"Listing Rules" The Rules Governing the Listing of Securities on the Stock Exchange
"Meespierson" Meespierson Intertrust (Singapore) Ltd., a company incorporated
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in Singapore and wholly-owned by Fortis Bank S.A./N.V.
"MMB" millions of barrels of hydrocarbons
"Nigeria" the Federal Republic of Nigeria
"NNPC" the Nigerian National Petroleum Corporation, a company established under the laws of the Federal
Republic of Nigeria
"OML 130" the oil mining lease granted by the Nigerian Minister of Petroleum Resources to NNPC, TUPNI,
Brasoil and the Seller by a letter dated 24 February 2005 in respect of the area covered by the
OML 130
"P50" recoverable volumes are categorized as P50 when a 50% probability exists that recovered volumes
will be equal or higher than the original estimates. The concept of P50 recoverable volumes
estimates is different to the concept of "probable" (P2) reserves estimates. More generally, the
concept of recoverable volumes differs from the concept of reserves as the calculation of
reserves requires an economic analysis associated with it. Such analysis is not performed in the
estimation of recoverable volumes. The Company does not currently have P50 estimates for
recoverable volumes in respect of its own oil and gas properties, as such estimates are not
consistent with disclosure requirements of the US Securities and Exchange Commission applicable
to the Company, and discloses exclusively "proven" (P1) reserves.
"PRC" The People's Republic of China
"Production Co-ordination
Agreement" the agreement dated 26 April 2005 entered into between the Seller, TUPNI and Brasoil to
co-ordinate decisions relating to operations in the area covered by OML 130
"PSA" the production sharing agreement between TUPNI, the Seller and Brasoil dated 26 April 2005
governing the funding and operations related to the 50% combined interest of TUPNI, Brasoil and
the Seller in OML 130
"PSC" the Production Sharing Contract dated 25 April 2005 and entered into by NNPC of the one part and
the Seller of the other part as Contractor and TUPNI as operator relating to NNPC's fifty per
cent (50%) interest in OML 130 offshore Nigeria and the rights and obligations of the Contractor
and TUPNI in respect of the funding and the conduct of petroleum operations on behalf of NNPC
"PSC Operating Agreement" the operating agreement dated 25 April 2005, and entered into between the Seller and TUPNI
relating to the conduct of operations under the PSC
"Purchaser" CNOOC Exploration & Production Limited, a company established under the laws of the Federal
Republic of Nigeria and
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an indirect wholly-owned subsidiary of the Company
"Sale and Purchase Agreement" the Sale And Purchase Agreement dated 8 January 2006 relating to the sale of 90% contractor
interest under the PSC
"Seller" South Atlantic Petroleum Limited, a private company established under the laws of the Federal
Republic of Nigeria
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Transferred Interest" all of the rights, benefits, interests and obligations attaching to and forming part of (1) the
ninety per cent (90%) interest of the Seller's interest as a Contractor in and under the PSC, (2)
the Seller's ninety per cent (90%) participating interest in and under the PSC Operating
Agreement, (3) all of the corresponding rights, interests and obligations under the Production
Co-ordination Agreement, and (4) all of the corresponding rights, benefits and interests under
the HOA
"TUPNI" Total Upstream Nigeria Limited, a company established under the laws of the Federal Republic of
Nigeria, its successors and permitted assigns, a subsidiary of TOTAL S.A. (a petroleum company
based in France)
"US Dollar" or "US$" the lawful currency of the United States of America
In this announcement, an exchange of rate of HK$1 to US$7.8 has been used.
As at the date of this announcement, the Board comprises the following:
Executive Directors
Fu Chengyu (Chairman)
Luo Han
Zhou Shouwei
Cao Xinghe
Wu Zhenfang
Wu Guangqi
Yang Hua
Independent non-executive Directors
Sung Hong Chiu
Kenneth S. Courtis
Evert Henkes
Tse Hau Yin, Aloysius
Lawrence J. Lau
By Order of the Board
CNOOC Limited
Cao Yunshi
Company Secretary
Hong Kong, 9 January 2006
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report on Form 6-K to be signed
on its behalf by the undersigned, thereunto duly authorized.
CNOOC Limited
By: /s/ Cao Yunshi
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Name: Cao Yunshi
Title: Company Secretary
Dated: January 9, 2006