South Korean oil "locks in" Dana, UK

South Korea's National Petroleum Corporation said on September 25 that the company has actually controlled more than 64% of Dana Oil, a BP oil exploration company. Dana Oil also issued an announcement on the same day, recommending that shareholders accept the offer. This means that Korea Petroleum’s hostile takeover bid for Dana Oil, which totals 1.87 billion pounds (about 2.9 billion U.S. dollars), is drawing to a close. The company is about to achieve the largest overseas acquisition of South Korean companies this year.

According to the report of the Yonhap News Agency on the 27th, South Korean Petroleum is expected to pay off the share purchase fund by October 7, officially becoming the new owner of Dana Oil. The successful acquisition of Dana Oil by South Korea’s oil will allow South Korea’s oil exploitation ratio to exceed 10% for the first time in history. It will also be able to lay the foundation for South Korea’s expansion of overseas oil exploration bases from the Americas and the former Soviet Union to the North Sea and Africa.

South Korea’s oil is Korea’s largest state-owned oil company established to improve national energy security after it was hit by the first oil crisis of the 1970s. The company also plans to double oil production capacity by 300,000 barrels per day by 2012. Dana Oil, a large British oil company established in 1994, is involved in the development of oil and natural gas in the North Sea and Africa.

Smoothly “greeting” Dana Oil

South Korea Petroleum said on the 25th that the company has so far received a 34.8% shareholder of Dana Oil's quotation approval, plus last week the company has acquired a 29.5% stake in Dana Oil, the company has actually controlled Dana Oil. More than 64% of shares. South Korea’s oil also said it will purchase Dana’s 141.5 million pound convertible bonds.

On the same day, Dana Oil chairman Colin Goodor said, “We will reluctantly recommend shareholders of the company to accept the South Korean oil purchase.” This means that South Korea’s oil has successfully cleared the last obstacle to “marrying” Dana Oil. Industry analyst Peter Hitchings pointed out that "(acquisition) is over, South Korea's oil will effectively control Dana Oil, and the latter's independence will no longer exist."

KORCO also stated that it will apply to the London Stock Exchange to suspend the trading of Dana Oil and withdraw from the market after it has obtained approval from the holders of 75% of Dana Oil. In response, the UK Fair Trade Office stated that it will not submit the purchase to the competition committee for review.

On August 20, South Korea Petroleum launched a hostile takeover of Dana Oil at a purchase price of 1800 pence per barrel, which is about 159% of Dana Oil’s closing price on July 1. On September 24, Dana Oil The closing price was 1797 pence.

The next step will be to acquire again

As the fourth largest energy consumer in Asia and the fifth largest crude oil importer in the world, South Korea’s oil supply depends almost entirely on imports. In order to better protect the country’s energy supply security, Korean companies have recently become increasingly active in the acquisition of overseas energy projects. According to Bloomberg data, including the South Korean oil purchase case, South Korean companies have initiated 19 overseas acquisitions of energy assets in the past year.

South Korea's Ministry of Knowledge Economy said in January this year that South Korean companies plan to invest US$12 billion in overseas resource acquisitions this year, compared with only US$6.73 billion in 2009. Among them, Korean state-owned energy companies including South Korea's oil are expected to invest a total of 8.3 billion U.S. dollars, and private companies in South Korea are also planning to invest 3.9 billion U.S. dollars, both higher than the investment in 2009.

According to the latest data released by Korea's Ministry of Knowledge Economy, only a Korean oil company will invest a total of US$6.5 billion in overseas mergers and acquisitions in 2010. This will undoubtedly become a core part of South Korea's overseas energy investment.

South Korea’s oil also won’t be disappointed. In February 2009, it acquired a 50% stake in Peru’s Petro-Tech Perusana for US$450 million. In October 2009, the company successfully greeted the Canadian Harvest Energy Trust Company for US$3.9 billion.