2009-08-05-2009-08-01

To buy co. with assets in West Africa & Middle East, gaining 537 MMBOE 2P, 140,000 BOE/d.

Chinese oil company Sinopec International Petroleum Exploration and Production Corp. has won a bidding tussle with Korean National Oil Corp. (KNoc) to acquire Switzerland-based Addax Petroleum Corp., (Toronto, London: AXC) for approximately C$8.2 billion (US$7.2 billion) in cash. Addax focuses on West Africa and the Middle East, with operations in Nigeria, Gabon, Cameroon, and the Kurdistan Region of Iraq. Year-end 2008, Addax produced 140,000 barrels of oil per day and held 537 million barrels of oil proved plus probable reserves. Sinopec will pay C$52.80 per Addax share, a 47% premium to the closing price on the June 5. Sinopec Group, the parent of Sinopec E&P, is China's largest producer and supplier of oil products and major petrochemical products. Sinopec will pay a termination fee of C$300 million if approvals required from the government of The People's Republic of China have not been obtained by Aug. 24. Sinopec said in a statement, "The acquisition of Addax Petroleum is a transformational transaction, which SIPC believes will further enable it to achieve its strategic objective to build a stronger presence and operations in West Africa and Iraq, accelerating its international growth strategy as well as optimizing its offshore oil and gas asset portfolio...In addition, Addax Petroleum's exploration potential, particularly in offshore deepwater exploration projects, will provide a strong platform for SIPC's ongoing growth and development." Sinopec said it expects to retain all Addax employees. Addax Petroleum president and chief executive Jean Claude Gandur says, "We are pleased that Sinopec has recognized the highly attractive asset portfolio and exceptional team that we have assembled at Addax Petroleum. The efforts and accomplishments that Addax Petroleum has achieved thus far will be built on through increased investment in the business and acceleration of development and exploration plans. While Addax Petroleum will cease to be a publicly traded company, we look forward to continuing our business in the countries in which we operate for the benefit of all stakeholders." Addax shares climbed more than 10% during June as rumors circulated that the company was in discussions with several Asian suitors, including KNoc, in a bidding tug of war for the company. RBC Capital Markets is financial advisor to Addax and has provided a fairness opinion. Fasken Martineau DuMoulin LLP and Osler, Hoskin & Harcourt LLP are legal counsel. Credit Suisse is financial advisor to Sinopec, and Vinson & Elkins LLP and Stikeman Elliott LLP are legal advisors.