October 22, 2009 at 1:26 pm #2921
Last updated at 2:21 PM on 22/10/09
Harvest Energy shares add more than 30 per cent amid South Korean takeover deal
Deal involves Come By Chance refinery
The Canadian PressCalgary
Come By Chance refinery. Telegram file photo
Units in Harvest Energy Trust (TSX:HTE.UN) soared more than 33 per cent today in trading after the company that produces oil in Western Canadan and operates the Come By Chance refinery in Newfoundland agreed to be taken over by a South Korean energy firm in a $4.1 billion cash and debt deal.
In Thursday trading on the Toronto Stock Exchange, units in the integrated oil and gas company added $2.45 or 33.6 per cent to $9.75. The stock traded at a 52-week high of $14.90 last November and low of $3.87 in March.
Calgary-based Harvest Energy said late Wednesday that the deal with state owned Korea National Oil Corp. values its units at $10 per share, for a total cash consideration of about $1.8 billion. The deal also sees Korea National assume $2.3 billion of debt.
The deal will be South Koreas biggest acquisition of a foreign oil firm as it seeks to secure new sources of energy and grow in North America.
We are extremely pleased to announce this transaction, which provides substantial value to our investors, Harvest Energy president and CEO John Zahary said late Wednesday.
Harvest has a considerable portfolio of opportunities including large oil in place assets coupled with production and throughput expansion opportunities in the upstream and downstream segments respectively. Continued investment by KNOC will supplement this growth.
Harvest said its board has unanimously approved the deal. A meeting will be held in December for Harvest Energy unitholders to vote on the proposal, and requires two-thirds acceptance. It also requires court and regulatory approvals.
The Korea National Oil board also needs to approve the deal on or before Oct. 29.
If approvals are met, the deal is set to close before the end of the year.
Harvest Energy also said late Wednesday that it will suspend its distribution plans, effective immediately. However, the five-cent distribution announced Oct. 8 to unitholders on Oct. 22 will be paid on Nov. 16.
Korea National Oil explores and produces oil and gas and stores petroleum resources. It operates oil and gas fields in Vietnam, Libya, Peru, Indonesia, Nigeria, Yemen, Kazakhstan, Russia, Canada and South Korea.
Harvest Energy, founded in July 2002, has upstream oil and gas production in Alberta, Saskatchewan and British Columbia weighted approximately 70 per cent to crude oil and liquids and 30 per cent to natural gas. Harvest became an integrated energy company in 2006 with the acquisition of North Atlantic Refining and its related marketing businesses, which operate the Come by Chance refinery in Newfoundland.
In August, Harvest Energy bought Pegasus Oil & Gas Inc. in a deal valued at $18 million, including approximately $14 million in debt.
The trust reported a loss of $265.8 million or $1.59 per unit for the quarter ended June 30 compared with a loss of $162.1 million or $1.07 per diluted unit for the same time last year.
Revenue totalled $563 million, down from $1.62 billion.
Its daily sales in the quarter averaged 52,745 barrels of oil equivalent per day, down from 55,574 a year ago.
The trusts refinery operations average 52,808 barrels per day, down from 100,422 barrels per day in the same period last year, as its Newfoundland operation underwent a planned turnaround.
Harvest Energy is scheduled to report its latest results in early November.
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