Sinopec to buy Canada's Daylight for $2.1 billion
Oct. 9, 2011, 6:34 p.m. EDT
By Edward Welsch
CALGARY -(MarketWatch)- Canadian oil and gas producer Daylight Energy Ltd. (DAY.T) said Sunday it will be acquired by China Petrochemical Corp. (600028.SH) for 2.2 billion Canadian dollars ($2.12 billion).
It's the second takeover of a Canadian energy company by a Chinese state-owned entity, after China's CNOOC Ltd. CEO -1.30% acquired bankrupt oil-sands producer OPTI Canada Inc. in July.
China Petrochemical, as known as Sinopec, is paying a hefty premium for Daylight, which produces light oil and natural gas from properties in northeast British Columbia and northwestern Alberta. The offer is worth C$10.08 a share, or more than twice Daylight Energy's closing price on Friday, and a 44% premium to the 60-day moving average share price.
Daylight produced 37,000 barrel-of-oil equivalents of oil and gas in the second quarter, but it's recently been known for accumulating a significant undeveloped land position in the emerging liquids-rich Duvernay shale gas play in Alberta.
It's not the first time a Chinese state-owned oil company has done a deal in western Canada's oil and gas patch. Last year Sinopec bought ConocoPhillips's (COP) 9% stake in the large Syncrude oil-sands project in northeastern Alberta for $4.65 billion.
CNOOC's purchase of OPTI and Sinopec's move to take Daylight mark a new boldness in Chinese state-owned companies to purchase Canadian energy companies outright; they usually take stakes in companies or individual projects, avoiding the public and regulatory scrutiny that comes with an outright takeover. The deal is subject to approval by the Canadian government under laws regulating foreign takeovers, and by two-thirds of Daylight shareholders.