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COSL to wrap up Awilco acquisition end-September

(Agencies)
Updated: 2008-08-30 14:49

China Oilfield Services Ltd (COSL) expects to complete its acquisition of Norwegian oil services firm Awilco Offshore ASA by the end of September, chief execcutive officer Yuan Guangyu said.

COSL announced the $2.4 billion deal in July.

Awilco Offshore provides drilling services and operates jack-up and semi-submersible drilling rigs.

Yuan told a post-results media briefing that COSL has secured the acceptance of most shareholders of Awilco and now awaits China's regulatory approval.

COSL has basically completed the financing arrangements, chief financial officer Zhong Hua said.

It will finance the deal through a syndicated loan and $200 million from internal resources, Zhong said.

The syndicated loan will likely carry an annual interest rate of 5-6 percent, he said.

COSL's gearing will rise to 60 percent from 13 percent as a result of the purchase, he said.

He declined to say whether the higher gearing would affect the company's future dividend payouts.

The mainland-based oilfield services provider reported its first-half to June net profit rose 39 percent to 1.53 billion yuan ($223.25 million) from 1.10 billion a year earlier as high crude oil prices boosted its customers' oil exploration and production activities.

Revenue for the period increased 20 percent to 5.11 billion yuan from 4.25 billion.

Earnings per share was 0.3413 yuan, up from 0.2742 yuan a year earlier.

The company said it will continue to expand its overseas business and invest more in equipment.

It expects to take delivery of a 400-foot jack-up rig, at least three land rigs and nine utility vessels in the second half of the year.

CFO Yuan said overseas business is expected to become COSL's key driver, likely accounting for 25 percent of total revenue this year and 30 percent by 2010.

Yuan said he is confident that COSL can sustain its current growth pace in the second half of this year as demand for oilfield services remains strong.

COSL currently generates around 65 percent of its revenue from contracts awarded by its parent CNOOC Ltd. This ratio is likely to be sustained in the foreseeable future, Yuan said.