SEOUL—State-run Korea National Oil Corp., or KNOC, signed a contract to buy Canada-based Harvest Energy Trust for C$1.8 billion (US$1.7 billion), in the largest acquisition of a foreign oil firm by a South Korean company.
Under the agreement, KNOC will buy all the issued and outstanding trust units of Harvest Energy for a total cash consideration of approximately C$1.8 billion plus the assumption of C$2.3 billion of debt, said Harvest Energy.
The deal will boost KNOC's crude oil output to 123,400 barrels a day from 70,000 barrels a day, moving it one step closer to its goal of raising daily production to 300,000 barrels a day by 2012.
The purchase will come as a relief to KNOC, which four months ago was outflanked by China Petrochemical Corp. when it tried to buy Addax Petroleum Corp., one of the largest independent oil producers in West Africa and the Middle East.
The Chinese company, also known as Sinopec, paid US$7.19 billion for Addax, in what was another example of Chinese companies being ready to pay more, or being more agile, than South Korean or Indian peers in the hunt for foreign oil.
The deal represents a 47% premium over the 30-day weighted average trading price of units on the Toronto Stock Exchange up to and including Oct. 20, 2009, Harvest Energy said.
