Chinese firm to buy Calgary oil company for $2 billion

A Calgary-based oil company with interests in Syria announced early Thursday that it has been bought by a Chinese firm for $2 billion.

Tanganyika Oil Co. Ltd. released a statement that said China's Sinopec International Petroleum Exploration and Production Corp. will buy all of the outstanding common shares of the company for $31.50 a share in cash.

The company said its board has unanimously approved the all-cash deal, subject to shareholder approval.

The company said in the statement that the sale price represents a significant premium on Tanganyika's recent and historical share prices.

Tanganyika's shares closed at $26 on the Toronto stock market on Wednesday. That amount is 75 cents lower than the all-time highs set in July.

Tanganyika holds operating interests in two Syrian properties. In the first half of 2008, it said those properties produced 16,670 barrels of oil a day.

"We believe this transaction is in the best interest of Tanganyika and delivers immediate and significant value to our shareholders," Gary Guidry, president and chief executive officer of Tanganyika, said in the statement.

"Tanganyika has conducted a tremendous volume of work to enhance the Syrian assets over the past five years. SIPC's world-class scale and expertise promise continued growth and enhancement to this asset base."

SIPC president Zhou Baixiu said the acquisition is good news for SIPC. "This transaction is an important component of Sinopec Group's strategy to become a diversified global resource provider," he said in the statement.

"We believe that our strong technical experience and our local relationships will serve to maximize the underlying value of these very attractive assets, and we are excited about this opportunity.

SIPC has agreed to pay a break-up fee of $65 million in the event that it fails to obtain regulatory approval from the Chinese government by Dec. 24. Tanganyika will pay the same amount as a termination fee if the acquisition is not completed according to the deal reached between the two companies.