African Petroleum is in talks with two Chinese suitors interested in acquiring an up to 10% stake in the West Africa-focused oil and gas explorer, a person familiar with the matter told Deal Journal Australia.
If successful, the transaction could be worth “several hundreds of millions of dollars” that would boost funding for the development of African Petroleum's projects, the person said. Negotiations are advanced and could see the issue of new shares to the two Chinese groups.
Interest in West Africa's Transform Margin region has been building and analysts say it is poised for one of the largest deepwater exploration programs in the world. Anadarko Petroleum of the U.S., London-listed Tullow Oil and Spain's Repsol YPF are among the companies that own interests in exploration acreage in the region.
Western Australia-based African Petroleum has amassed a substantial position in the coastal region, and in February it caught the market's attention when it said it had made a significant oil discovery at its Narina-1 well offshore Liberia. That news sparked an about 70% jump in its share price on the day.
The stock, traded on Australia's National Stock Exchange, has more than tripled since the start of the year to grow the company's market capitalization to 2.36 billion Australian dollars (US$2.3 billion). That means it accounts for roughly two-thirds of the combined value of companies on the National Stock Exchange.
The company last month said it had US$152 million cash in the bank as of the end of March, plus about US$19 million held in escrow accounts as security for the acquisition of seismic data, a drilling contract and a bank guarantee for the government of the Ivory Coast.
The largest shareholder in African Petroleum is the Timis Trust, with an almost 40% stake.
Frank Timis, who is non-executive chairman, also is the biggest shareholder and executive chairman of AIM-listed African Minerals Ltd. (AMI.LN), where he is currently also acting chief executive following the retirement after just three years at the helm of industry veteran Alan Watling. African Minerals in March sold a 25% stake to Shandong Iron & Steel Co. for US$1.5 billion.
Also on African Petroleum's board is Deputy Chairman Tony Sage, chief executive of Cape Lambert Resources, an Australian company with a strategy of buying resources assets, building them up and then selling them on.