Sinopec Closes China's Largest Overseas O&G Acquisition for $7.5B

China Petrochemical Corporation ("Sinopec Group") announced that the acquisition of Addax Petroleum Corporation ("Addax") was successfully completed after nearly six months of due diligence and negotiation.

Sinopec Group signed the acquisition agreement at an offer price of CAD 52.8 per share on June 24, 2009. It was approved by the Chinese regulatory authorities on August 6th. All pre-requisite conditions have been satisfied, hence Sinopec Group announced the successful closing of this transaction today.

Addax Petroleum Corporation is an independent oil producer, established in 1994 and headquartered in Switzerland. It was listed on both Toronto and London stock exchanges with common share totaling 157.6 million and now has more than 860 employees. The company recorded US $3.762 billion in revenue for the year 2008, with a net profit of US $784 million and an operating cash flow of US $1.521 billion.

Addax Petroleum's assets are primarily located in Nigeria, Gabon and the Kurdistan Region of Iraq and have a good combination of both oil and gas reserves. It has a total of 25 licensed blocks, of which 15 are under exploration and 10 are under development. Of the total blocks, 17 are offshore and 8 onshore. Addax has 537 million barrels of 2P (Proved + Probable) equity crude reserves, and 738 million barrels of 3P (Proved + Probable + Possible) equity crude reserves. In addition, Addax has 111 promising traps which await drilling.

At the time of Addax's Q2 earnings the company produced an average of 143,000 barrels of crude per day (approximately 7 million tons per year), of which 72.2% comes from Nigeria, 19.5% from Gabon and 8.3% from Kurdistan. Based on an initial development plan, its near-term production volume is expected to reach 10 million tons/year.

The closing of this deal represents the largest successful acquisition of overseas oil and gas assets by a Chinese company. According to industry experts, "Addax's assets are well-structured and of good quality, contain sizeable proven reserves and have strong production volumes with great growth potential."

Through the acquisition of Addax, Sinopec would be able to improve its resources base; further optimize its overseas oil and gas assets structure; expedite its overseas oil and gas exploration and development, and enhance China's safe and stable crude supply.