FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
June 23, 2005
Commission File Number: 1-14966
CNOOC Limited
(Translation of registrants name into English)
65th Floor
Bank of China Tower
One Garden Road
Central, Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F X | Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | No X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7):
Yes | No X |
Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes | No X |
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
CNOOC Limited
TABLE OF CONTENTS
1. | Press announcement, dated 22 June 2005, published pursuant to Hong Kong Stock Exchange rules |
2. | Investor Presentation |
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(Incorporated in Hong Kong with limited liability under the Companies
Ordinance)
(Stock Code: 883)
ANNOUNCEMENT
Further to the Companys announcement dated 7 June 2005, the Company wishes to announce that it has on 22 June 2005 proposed a merger with Unocal offering US$67 in cash per Unocal share. The offer values Unocal at approximately US$18.5 billion and represents a premium for Unocals shareholders of approximately US$1.5 billion over the value of Chevron Corporations offer for Unocal (which was announced on 4 April 2005) based on the closing price of Chevron Corporations shares on the New York Stock Exchange on 21 June 2005. The Company is currently proposing to engage in confidential discussions with Unocal. Such discussions (if any) will be preliminary. No definitive agreement has been signed by the parties. The Merger Proposal is also subject to negotiation and execution of a mutually acceptable merger agreement. Accordingly, there can be no assurance that the Merger Proposal will be accepted by Unocal. The Company will provide updates on developments with Unocal by way of further announcements and will release a formal announcement in accordance with Chapter 14 of the Listing Rules if any definitive agreements are entered into. The Company is advised by Goldman Sachs (Asia) L.L.C. and J.P. Morgan Securities (Asia Pacific) Ltd. in relation to the Merger Proposal. N M Rothschild & Sons (Hong Kong) Limited also assisted the Boards independent non-executive directors in their review of the transaction. Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company. |
Further to the Companys announcement dated 7 June 2005, CNOOC Limited (the Company) wishes to announce that it has on 22 June 2005 proposed a merger with Unocal Corporation (Unocal) offering US$67 in cash per Unocal share (the Merger Proposal). The offer values Unocal at approximately US$18.5 billion and represents a premium for Unocals shareholders of approximately US$1.5 billion over the value of Chevron Corporations offer for Unocal (which was announced on 4 April 2005) based on the closing price of Chevron Corporations shares on the New York Stock Exchange on 21 June 2005.
The Company is currently proposing to engage in confidential discussions with Unocal. Such discussions (if any) will be preliminary. No definitive agreement has been signed by the parties. The Merger Proposal is also subject to negotiation and execution of a mutually acceptable merger agreement. Accordingly, there can be no assurance that the Merger Proposal will be accepted by Unocal. In the event that such discussions are successful and if and when definitive agreements are entered into, it is anticipated that the transaction will constitute a Very Substantial Acquisition for the Company.
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The Board believes that, if the Merger Proposal proceeds, the combined company will have a leading position in the Asian energy market and an expanded role in the development of Chinas liquefied natural gas (LNG) market. The combination is expected to more than double the Companys oil and gas production and increase its reserves by nearly 80% to approximately four billion barrels of oil equivalent. Approximately 70% of Unocals current proved oil and gas reserves are in Asia and the Caspian region. It is expected that the merged company would also have an improved oil and gas balance, with total reserves of approximately 53% oil and 47% natural gas1.
FINANCING STRUCTUREIf the Merger Proposal proceeds, the Company expects the transaction to be earnings-per-share and cash flow accretive in the first year after completion. The Company also anticipates that it will maintain a strong, investment-grade credit rating. The proposed financing is structured to ensure that the Company will retain a strong balance sheet and maintain future financial flexibility. It is currently proposed that the transaction will be financed from the following sources:
The Company has received financing commitment letters from each of the above lenders. As the Major Shareholder is a connected person to the Company, the long-term, subordinated loan and the subordinated bridge loan proposed to be provided by the Major Shareholder will constitute a connected transaction involving financial assistance to the Company under Chapter 14A of the Listing Rules. Given that no security over the assets of the Company or any of its subsidiaries will be granted in respect of the lending and that the terms of the lending (as proposed) are on normal commercial terms (or better, from the Companys perspective), the lending falls within the exemption under rule 14A.65(4) of the Listing Rules. The Company is therefore exempted from the reporting, announcement and independent shareholders approval requirements under Chapter 14A of the Listing Rules in respect of the proposed financing from the Major Shareholder.
REASONS FOR AND BENEFITS OF THE MERGER PROPOSAL
The Board believes that, if the Merger Proposal proceeds, the merged group will benefit greatly from each of the companies complementary strengths. Reasons for and benefits of the Merger Proposal include:
2
COMMITMENTS CONCERNING UNOCALs U.S. ASSETS
The Company is also committed to fully integrating its strong management team and workforce into the combined company. The Company has agreed to give the following assurances in relation to Unocals U.S. assets:
3
The Company will provide updates on developments with Unocal by way of further announcements and will release a formal announcement on the acquisition in accordance with Chapter 14 of the Listing Rules if any definitive agreements are entered into.
The Board is of the view and has confirmed that the Major Shareholder does not have any interest in the Merger Proposal which is different from the interest of the other shareholders of the Company. It is currently contemplated that the Major Shareholder will, under a voting agreement, covenant and agree with Unocal to vote in favour of any shareholders resolutions required to approve the Merger Proposal under Chapter 14 of the Listing Rules.
The Company is advised by Goldman Sachs (Asia) L.L.C. and J.P. Morgan Securities (Asia Pacific) Ltd. in relation to the Merger Proposal. N M Rothschild & Sons (Hong Kong) Limited also assisted the Boards independent non-executive directors in their review of the transaction.
Shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.
Note: all financial information presented in this announcement is extracted from financial statements of the Company and Unocal for the year ended 31 December 2004.
As at the date of this announcement, the Board comprises of:
Executive Directors By Order of the Board
CNOOC Limited
Yunshi Cao
Company Secretary
1 | All reserves data as at 31 December 2004 and all production data for the year ended 31 December 2004, as published in the Companys and Unocals 2004 financial statements. |
4
CNOOC Limited and Unocal Corporation - An Asian E&P Leader June 23, 2005 |
Important Notice This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: whether a transaction with Unocal Corporation ("Unocal") will occur and the terms and conditions of any such transaction; the extent and timing of our ability to realize synergies from the transaction; the effect of the transaction on employees, customers and other persons that have a material commercial relationship with CNOOC Limited ("CNOOC Ltd.") or Unocal and our ability to maximize the value of those relationships; the possibility that the anticipated benefits from the acquisition cannot be fully realized; the possibility that costs or difficulties related to the integration of Unocal operations will be greater than expected; the impact of competition; the parties' ability to obtain required regulatory and other approvals in connection with the transaction; and other risk factors relating to our industry as detailed from time to time in each of CNOOC Ltd.'s and Unocal's reports filed with the SEC. In addition, future results could also differ materially from those expressed in the forward looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, CNOOC Ltd. undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The financial information referred to in this presentation is based on public filings of CNOOC Ltd. and Unocal. 1 |
Unocal is an excellent strategic fit for CNOOC Ltd. |X| Company-transforming merger |X| Doubles production and increases reserves by almost 80% |X| World-class international portfolio |X| Leadership position in Asia |X| Complementary gas/LNG positions |X| Attractive financial outcome |X| EPS and cash EPS accretive in first full year 2006 |X| Investment grade credit rating expected to be maintained 2 |
Key transaction terms Form of transaction: 100% cash Per share consideration: $67 per Unocal share Implied transaction value: Equity value of approximately $18.5 billion Enterprise value of approximately $19.6 billion1 Conditions: CNOOC Ltd. and Unocal Shareholder approvals Exon-Florio approval in the U.S., antitrust approvals in the U.S., and approvals in Canada and certain other jurisdictions Anticipated closing: 3 to 6 months from signing 1 Includes US$1.1bn net debt and minority interests as of 31 March 2005 (Source: Unocal company reports) 3 |
Financing structure Acquisition financing (US$ billion) Achieving financing objectives Cash on CNOOC Ltd. balance sheet 3 |X| Solid investment grade credit profile ICBC term loan 6 |X| Simple execution and low cost GS/JPM bridge loan 3 |X| Certainty of acquisition financing CNOOC Ltd. parent subordinated financing Sub loan1 4.5 Sub bridge loan 2.5 ---- Total 19 ------------------------------------------------- Permanent financing post closing (US$ billion) ICBC term loan 6 |X| Maximize earnings accretion Corporate bonds 3 |X| Ensure sufficient liquidity and financial flexibility ---- Parent sub loan1 4.5 Equity financing 2.5 ---- Total 16 ------------------------------------------------- 4 |
Milestone Status/timing |X| Sign merger agreement with Unocal |X| Subject to Chevron merger agreement and actions of Chevron and Unocal |X| U.S. regulatory approvals |X| HSR Signing + 35 days (estimated) |X| Hart-Scott-Rodino Exon-Florio Signing + 90 days (estimated) |X| Exon-Florio |X| Other material government approvals |X| Expected to be within the above timeframes |X| Signing + 3-6 months |X| CNOOC Ltd./Unocal shareholders' meetings 5 |
Agenda Transaction overview 6 Unocal overview 12 Integration planning 18 Conclusion 21 Appendix 24 6 |
Transaction valuation is in line with industry trading multiples Industry trading multiples1 Unocal Transaction Valuation ---------------------------- CNOOC Ltd. Large-cap Independent (US$ billion) ($67/share) current International E&P2 Asia E&P3 ------------------------------------------------------------------------------------------------------------------------------ Equity value4 $18.5 22.0 Net debt (inlc. minority)5 1.1 (1.3) FV 19.6 20.7 P/E (x) 2005 12.6x 8.1x 10.4x-15.4x 10.0x-13.4x FV/EBITDA (x) 2005 4.4x 4.4x 4.7x-5.3x 4.8x-5.7x Firm value/reserve6 Unocal: 1,754 mmboe CNOOC Ltd.: 2,230 mmboe $11.2 $9.3 $12.2-$13.8 $7.2-$13.1 ------------------------------------------------------------------------------------------------------------------------------ 1 Based on consensus forecasts sourced from I/B/E/S and JCF, who are independent providers of market consensus forecasts derived from broker research; Market data as of close of trade on June 21, 2005 2 Large-cap International E&P includes Devon, Apache, Burlington, Anadarko, Kerr McGee, XTO, EOG, Chesapeake, Murphy, Pioneer, Noble Energy, Questar, Newfield, Pogo Producing, BG Group, and Statoil. Presented ranges are based on 33rd to 67th percentile 3 Asia E&P includes Petrochina, Sinopec, ONGC, Santos, Woodside, Medco, PTTEP, and Inpex. Presented ranges are based on 33rd to 67th percentile 4 Unocal equity value calculated based on the Offer price of $67/share; CNOOC equity value is the market capitalisation as at 21 June 2005 5 Net debt is derived from balance sheet data published in the latest company filings 6 Entire firm value considered for this multiple; no downward adjustment for value of midstream and other non-reserve assets 7 |
Creates an upstream leader Source: Public company filings Note: Figures based on reported CNOOC Ltd. and Unocal financial data; summation calculation for illustrative purpose only and does not constitute pro-forma analysis 8 |
... with a more balanced asset portfolio A more balanced oil/gas reserve profile reduces CNOOC Ltd.'s exposure to commodity price cyclicality Source: Unocal and CNOOC Ltd. published information Note: Figures based on reported CNOOC Ltd. and Unocal financial data; summation calculation for illustrative purpose only and does not constitute pro-forma analysis 9 |
Transforms CNOOC Ltd. in size, scale and geographical footprint Approximately 70% of Unocal's assets are located in Asia and Caspian regions, which are strategic to CNOOC Ltd. Source: Unocal and CNOOC Ltd. published information, website; figures as of year end 2004 Note: Figures based on reported CNOOC Ltd. and Unocal financial data; summation calculation for illustrative purpose only and does not constitute pro-forma analysis 1 Unocal is currently conducting a process to sell the Canadian assets 10 |
Creates additional opportunities |X| Accelerate commercialization of Unocal's substantial gas resources |X| Optimize capital investment program to enhance return on investment |X| Apply Unocal's deepwater drilling capabilities and other expertise to CNOOC Ltd.'s portfolio |X| Integrate Unocal's staff: managerial and technical 11 |
Agenda Transaction overview 6 Unocal overview 12 Integration planning 18 Conclusion 21 Appendix 24 12 |
Unocal has a world-class E&P portfolio with a concentration in Asia * Units indicated in footnote US Canada Azerbaijan and others Asia Reserves Production Reserves Production Reserves Production Reserves Production ------------------------------- ------------------------------- ------------------------------- ---------------------------- Oil 218 54 Oil 60 16 Oil 204 19 Oil 177 70 ------------------------------- ------------------------------- ------------------------------- ---------------------------- Gas 229 82 Gas 50 14 Gas 13 4 Gas 803 152 ------------------------------- ------------------------------- ------------------------------- ---------------------------- Total 447 136 Total 110 30 Total 217 23 Total 980 222 ------------------------------- ------------------------------- ------------------------------- ---------------------------- Source: Unocal company reports, Website Note: All reserves are 1P (net entitlement) for 2004. All production figures are on a net entitlement basis. Reserves stated in mmboe and production in mboe/d unless otherwise stated 1 Unocal is currently conducting a process to sell Canadian assets 13 |
Unocal has an attractive portfolio of development projects with substantial growth profile Gulf of Mexico deepwater Azerbaijan Bangladesh |X| Mad Dog and K2 on stream H1 2005 |X| Phases 1 & 2 add ~750 mbbl/d by 2007 |X| Moulavi Bazaar on stream Q1 2005 |X| Multiple discoveries (St. Malo, |X| Phase 3 (sanctioned 3Q04) adds ~300 |X| Bibiyana 4Q06 startup of 200mmcf/d, Tobago, Trident, Puma) come online mbbl/d by 2009 doubling by 2008 near the end of the decade Vietnam Indonesia deepwater Thailand |X| 5-8 Tcf of gas (gross unrisked) could |X| Gendalo development 2008 - 2009 |X| Thailand Oil expansion project 2005 come online near the end of decade |X| Gehem/Ranggas development 2010-2011 |X| Start-up of third gas pipeline in 2Q06 significantly increases gas sales Significant visible pipeline of projects supporting production growth Source: Unocal company reports, Website 14 |
Unocal LNG assets will be commercialized more efficiently when combined with CNOOC Ltd. Approximately 75% of Unocal's gas reserves are in Asia *Per Heads of Agreement Source: Unocal company reports, Website 15 |
Unocal offers CNOOC Ltd. a presence in North America with an attractive GOM deepwater portfolio Alaska (US) |X| 29 mboe/d production |X| Main positions in North Slope and Cook Inlet Canada |X| 110 mmboe proved reserves |X| 30 mboe/d production |X| 10.1 R/P, 45% gas reserves |X| Activities concentrated in Alberta and Saskatchewan United States (overall) |X| Comprises Lower 48, Alaska, GOM Shelf and deepwater assets |X| 447 mmboe proved reserves |X| 136 mboe/d production Pure (lower 48) |X| 54 mboe/d production |X| Stable producing assets mainly in Permian and San Juan Basins GOM Shelf |X| 54 mboe/d production GOM deepwater |X| Production initiated at Mad Dog and K2 in 1Q/2Q 05 with 4Q net production estimated at 10-12 mboe/d |X| New discoveries at St Malo, Trident/Tobago, Puma Note: Reserve and production figures as of 12/31/04 Source: Unocal company reports, Website 16 |
Unocal's operating and technical strengths |X| Leading operational capabilities |X| World-class deepwater drilling - efficient and low-cost |X| Repeatable, low-cost platform design and installation |X| Integrated reservoir management |X| World-class technical expertise |X| Sub-salt seismic imaging |X| Detailed reservoir visualization |X| Enhanced seismic processing 17 |
Agenda Integration planning 18 |
Short-term integration objectives |X| The primary objective is to maintain the stability of Unocal's operations post-transaction |X| Retain most of the senior management, give high-level autonomy |X| Maintain current operations |X| Minimize Unocal management distraction and aim to retain its competitive advantages |X| Establishment of Steering Committee to be chaired by CNOOC Ltd. senior executive and with representation of key managers from Unocal |X| Frequent meetings to discuss operational cooperation |X| Subcommittees to cover various functional areas such as synergy and integration |X| Explore synergy opportunities that do not require major integration/restructuring |X| Technology transfer, E&P capital program optimization 19 |
Pro forma organization structure |X| Complementary organizational structure |X| Merger of Indonesian operations over time 20 |
Agenda Conclusion 21 |
Merger with Unocal fits CNOOC Ltd.'s strategy CNOOC Ltd. strategies How Unocal fits CNOOC Ltd.'s strategy Focus on production and |X| 79% increase in reserves and doubling reserve growth of production |X| Substantially visible pipeline of development projects |X| Prospective resources provide source of longer-term growth |X| Sustain exploration focus and seek opportunities in new geographic regions |X| Substantial deepwater Indonesia and GOM drilling inventory (prospective acreage of 16 million acres worldwide) Develop and expand |X| 140% increase in gas reserves and over 400% natural gas business increase in gas production |X| Opportunity to substantially increase supply to Bontang, underpinned by LNG China market potential |X| World-class positions in Indonesia and Thailand |X| Application of Unocal drilling expertise (fast-track, deepwater) and other technologies Maintain industry leading |X| Expected to maintain solid investment grade credit cost management and financial ratings discipline |X| EPS and cash EPS accretion expected in first full year |X| Consideration will be given to commodity hedging |X| Opportunity to optimize combined exploration budget 22 |
CNOOC Ltd. and Unocal - a compelling merger CNOOC UNOCAL 76 Scale |X| Size and scale |X| Expands and diversifies geographic footprint |X| Leading Asian E&P company Industrial logic |X| Strategic fit with CNOOC Ltd.s gas strategy |X| Balanced oil/gas portfolio mix |X| Strong and highly visible production growth profile Value creation opportunities |X| Exploration upside |X| Accelerated commercialization of gas resources |X| Application of deepwater technology Enhanced skill base |X| Experienced management |X| Leading operational capabilities |X| World class technical expertise 23 |
Agenda Appendix [X]Profile of key Unocal assets 24 |
Unocal's extensive resources in Indonesia position it to become a major supplier to Bontang LNG Capacity overview1 1 Source: Unocal company reports, Website Development of significant deepwater gas resources |X| Varying interests in 12 offshore PSCs covering approximately 7 million acres |X| Opportunity to materially increase gas sales to Bontang |X| Opportunity to replace existing contracts beyond 2010 |X| Increase in the share of supply to Bontang driven by development of 3 identified hubs |X| West Seno Hub is Indonesia's first deepwater production project, began production in August 2003 |X| Gendalo Hub expected to commence production between 2008-2010, followed by the Gehem Hub by 2011-12 |X| Gendalo and Gehem expected to supply Bontang for a combined 20 years |X| Continued deepwater exploration planned 25 |
Unocal is the leading gas producer in Thailand, one of the region's fastest growing markets Future growth in Thailand production (mboe/d) 1 Source PTT Investor presentation, PTT Website 2 As per Heads of Agreement, Unocal Website Future growth in Thailand domestic gas demand |X| Gas demand driven by an expanding economy |X| Future gas demand in Thailand is expected to grow at a CAGR (2004-2015) of 7%1 |X| Gas demand forecast of 5.5 bcf/d in 20151 Unocal Gulf of Thailand contract volumes expected to increase mmcf/d ---------------------------- Date Gross Net --------------------------------------------- 2004 642 July 20062 1,220 670 Beyond 20062 1,610 920 --------------------------------------------- 26 |
ACG stake provides for participation in one of the world's largest oil gas projects Strategic (1,762 km) transportation route to Mediterranean (B-T-C) Main export pipeline (B-T-C) Planned crude capacity of 1 mmbbl/d Project to be completed some time in Q2 or Q305 Source: Unocal company reports, Website AIOC Contract Area |X| Estimated 5 to 7 billion barrels of oil gross recoverable oil by 2024 |X| Unocal has 10.28% interest |X| Gross production expected to be more than 230 mbbl/d in 2005, rising to 670 mbbl/d in 2007 and over 1 mmbbl/d by 2009 |X| Phases 1 & 2 add 750,000 bbl/d at peak - under construction |X| Phase 3 adds 300,000 bbl/d at peak - sanctioned 9/20/2004 27 |
Unocal has an attractive position in the Gulf of Mexico with substantial upside from deepwater Source: Unocal company reports, Website |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CNOOC Limited | ||||
Date: | June 23, 2005 | By: | /s/ Cao Yunshi | |
Name: | Cao Yunshi | |||
Title: | Company Secretary |