Fortune Oil Aims to Sell Chinese Gas Assets for $400M
by Rigzone Staff
|Monday, December 17, 2012
London-listed Fortune Oil disclosed Monday that it is seeking to sell its natural gas business to Hong Kong's China Gas for a total consideration of up to $400 million.
In its statement, Fortune detailed that the proposed deal is for $200 million in cash and a form of deferred consideration. The two options being considered for the deferred consideration is a further payment of $200 million or 250 million China Gas shares.
Fortune estimated that net proceeds from the transaction will be around $195.3 million. The company intends to use the proceeds to pare down some debt.
Fortune's natural gas business in China includes a 25 percent stake in the Liulin block; a CBM field that stretches across 71 square miles (183 square kilometers). The company disclosed in September that gas production from the block exceeded one million standard cubic feet per day.
Fortune also owns gas pipeline infrastructure covering three major municipalities and seven provinces, as well as natural gas and liquefied natural gas operations with downstream retailing to end-users.
Fortune is aiming to submit its Overall Development Plan (ODP) pertaining to the Liulin block for approval in 2013. An ODP approval is the regulatory green light that a foreign company needs to gain, in order to move its project from the exploration phase to the production phase.
At present, privately-held Asian Asian American Gas and Hong Kong-listed Sino Oil and Gas Holdings are the only two foreign companies that have gained ODP approvals.
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