4th Feb 2008 07:00
Soco International PLC02 February 2008 2 February 2008 PROPOSED DISPOSAL OF SOCO YEMEN PTY LIMITED 1. Introduction SOCO International plc ("SOCO" or the "Company") today announces that it hasentered into a conditional sale and purchase agreement (the "Agreement") for thesale of its wholly owned subsidiary SOCO Yemen Pty Limited (Australia) ("SOCOYemen"), the entity that holds the Company's interest in the East ShabwaDevelopment Area in Yemen, to Sinochem Petroleum Limited ("Sinochem") for anenterprise value of US$465 million, subject to certain financial adjustments(the "Disposal"). The consideration for the Disposal is payable in cash oncompletion. Sinochem is a wholly owned subsidiary of Sinochem Corporation, a state-ownedChinese enterprise established in 1950 and one of the four major national oilcompanies of China. Sinochem Corporation's core businesses include petroleum(upstream and downstream), chemicals, finance, insurance and propertydevelopment. It is also the largest fertiliser importer and distributor inChina. 2. Background to and reasons for the Disposal SOCO has a track record of realising value at the appropriate stage of anasset's life-cycle and re-investing the capital to build significant shareholdervalue. The Board believes that the Disposal is in the best long-term interestsof the Company and represents an excellent opportunity to realise value from amature producing non-core asset. As described further below, the proceeds from the Disposal will strengthen theCompany's balance sheet and provide funding for existing exploration anddevelopment opportunities and exploration prospects that may arise. 3. Information regarding SOCO Yemen SOCO Yemen holds an indirect interest of 16.785 per cent. in the East ShabwaDevelopment Area of Yemen through its 58.75 per cent. equity interest in ComecoPetroleum Inc. ("Comeco"). Comeco, in turn, has a 28.57 per cent. interest inthe East Shabwa Development Area in Block 10 in Yemen. The East Shabwa jointventure is operated by TOTAL E&P Yemen under a production sharing agreement withthe government of Yemen. As at 31 December 2006, it was estimated that SOCO Yemen's interests in Yemenhad net proven, and net proven and probable reserves of 18.7 million barrels ("mmbbl") and 29.6 mmbbl of oil respectively. Production in 2006 from East Shabwa averaged 40,300 barrels of oil per day ("bopd") and SOCO Yemen's working interest share was 6,766 bopd. During the firsthalf of 2007 production, net to SOCO Yemen's working interest, was 6,341 bopd. For the 12 months ended 31 December 2006, on an IFRS basis, SOCO Yemen generatedrevenues of US$76 million and profit before taxation of US$55 million. Grossassets of SOCO Yemen, as at 31 December 2006, were US$65 million. 4. Approvals and consents Completion of the Disposal is subject to, amongst other things, variousregulatory approvals (the "Regulatory Approvals") including the approval of theNational Development and Reform Commission of the People's Republic of China.Additionally, due to the size of the transaction, the Disposal is conditionalupon the approval of SOCO shareholders at an extraordinary general meeting ("EGM") of the Company. Sinochem also has the right to terminate the Agreement on orprior to 28 March 2008 (the date on or by which SOCO expects to post its noticeof EGM to its shareholders) in the event that Sinochem has not by such datereceived such consents and approvals (other than the Regulatory Approvals) as itrequires in relation to the Disposal. In the event that Sinochem terminates theAgreement in accordance with that right, Sinochem has agreed that it will pay toSOCO a fee of US$3 million. A circular containing further details of the Disposal and including the noticeto convene the EGM is expected to be posted to SOCO shareholders on or before 28March 2008. The Disposal is expected to complete early in the second quarter of2008. 5. Use of proceeds The majority of the Disposal proceeds will be used to fund the Company'sexploration and development programmes. In particular, capital will be deployedin order to further develop SOCO's assets in Vietnam, a key area of operationfor the Company. The remaining proceeds will provide the financial flexibilitynecessary to participate in future opportunities as and when they arise. Ed Story, President and CEO of SOCO, said: "The Disposal will enable SOCO to generate greater long-term value byre-investing the proceeds in the development of its core assets, particularly inVietnam. This transaction is another example of the Company's strategy ofrealising value for shareholders at the appropriate stage of an asset'slifecycle and illustrates our ongoing co-operation with Chinese industryparticipants who have interests in expanding their international role." Mr Han Gensheng, Vice President (E&P) of Sinochem Corporation, said: "Sinochem is pleased with this transaction that diversifies its E&P portfoliowith immediate production and increases its footprint in the Middle East, anarea of focus for Sinochem." ENQUIRIES SOCO International plc +44 20 7747 2000Roger CagleDeputy Chief Executive and Chief Financial Officer Merrill Lynch International +44 20 7628 1000Sole financial adviser and joint corporate broker to SOCOAndrew OsborneRussell Alton Citigroup Global Markets Limited +44 20 7986 4000Joint corporate broker to SOCOBertie Whitehead Pelham Public Relations +44 20 7743 6670PR adviser to SOCOJames Henderson +44 7774 444 163Alisdair Haythornthwaite +44 7714 721 379 Sinochem E&P +86 10 595 688 77Gao Shan Vice President BNP Paribas + 33 1 42 98 36 40Sole financial adviser to SinochemMarianne Daryabegui Merrill Lynch International is acting exclusively for SOCO in connection withthe Disposal and no one else and will not be responsible to anyone other thanSOCO for providing the protections afforded to clients of Merrill LynchInternational or for providing advice in relation to the Disposal or any othermatters referred to herein. Citigroup Global Markets Limited which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting for SOCO and no one elsein connection with the Disposal and will not be responsible to anyone other thanSOCO for providing the protections afforded to clients of Citigroup GlobalMarkets Limited or for providing advice in relation to the Disposal, or anyother matters referred to herein. BNP Paribas is acting exclusively for Sinochem in connection with the Disposaland no one else and will not be responsible to anyone other than Sinochem forproviding the protections afforded to clients of BNP Paribas or for providingadvice in relation to the Disposal or any other matters referred to herein. Certain statements made in this announcement are forward-looking statements.Such statements are based on current expectations, and by their nature, aresubject to a number of risks and uncertainties that could cause actual resultsand performance to differ materially from any expected future results orperformance expressed or implied by the forward-looking statement. Theinformation does not assume any responsibility or obligation to update publiclyor revise any of the forward-looking statements contained herein. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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