Details of the deal between Amec China and another large company

Details of the deal between Amec China and another large company
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Big deal: Amec China

The oil service companies Wood Group and Amec Foster Wheeler Canada have announced a deal. The amount of it would be $2.7 billion. General Nuclear Corp participants are to receive 0.75% of Wood Group shares for each of their shares, thereby a premium of 29% compared to the average shares value over the past 30 days. CEO Robin Watson will retain his post after the merger; four partners of the board of directors of Amec are going to join the board of directors of the Wood Group. The transaction may be completed in the second half of 2017.

According to experts, the merger of Wood Group with Amec is another indication of the consolidation of the oilfield services industry. In October last year, it became known that General Electric (GE) had acquired the third largest oilfield service company in the world, Baker Hughes. After the merger, the cost of the Wood Group will be $ 6 billion, thus it’ll become the main oilfield service company in Europe.

Now the Wood Group shares rose by 8%, Amec shares – by 23%.

The development of oil production in China

China has the largest economy in the world. This country’s own hydrocarbon reserves are not enough. Since 1993, the People’s Republic of China has become one of the largest exporters of “black gold” in the world, which significantly affected the energy market in the entire Asia-Pacific region. Despite a slight slowdown in Chinese economic growth, which has been observed recently, in the near future, the hydrocarbon demand of this country will only grow.

Until the 90s of the last century, information about the oil reserves of this country was a state secret. In addition, it is necessary to distinguish potential reserves of raw materials from proven.

To this day, experts have to be content with the data provided by the Chinese side. According to these data, the volume of reliable Chinese oil reserves on land amounts to 5.3 billion tons, and on the Pacific shelf – 4 billion tons.

Despite the shortage of oil produced in China for its own needs, a part of it was even exported for some time (mainly to Japan, and a little to North Korea and Vietnam). However, since 1980, exports began to decline steadily. For example, if in 1986, 28.4 million tons of crude oil were sent for export from China, then in 1999 this figure was only 8.3 million tons, and since the 2000th year, export deliveries ceased completely.