China National Petroleum Corp, the largest oil producer on the mainland, has had its acquisition of United States-based Devon Energy's West African assets thrown into doubt over valuation disagreements, according to sources.
CNPC several weeks ago topped a number of competitors with the highest bid of more than US$2 billion for the oil and gas assets that Devon put on the block. The bid was short of the US$2.5 billion it earlier indicated was a fair price.
Now, after weeks of talks, a deal still has not yet been signed and a quick fix is unlikely to be found, sources said.
CNPC, it is said, felt its bargaining position was strong because it placed the largest bid and Devon said publicly many times it considered the assets non-core to its main business.
Devon said in January it wanted to shed its African assets to concentrate on exploration in Brazil and the mainland. In April it said that it planned to drill seven wells in the Panyu field in the western South China Sea, according to a Bloomberg report. Devon has a 24.5 per cent stake in the field.
If the deal is sealed CNPC may hold on to the assets or transfer them to the 50/50 joint venture it runs with Hong Kong-listed subsidiary PetroChina.
The assets for sale, located in Equatorial Guinea, Ivory Coast, Nigeria, Gabon, Ghana and Angola, have 300 million barrels equivalent of proven and probable reserves according to a source.
