Pertamina bids to acquire US-based Coastal Energy

JAKARTA. State-owned oil and gas company PT Pertamina is seeking to acquire US-based oil and gas company Coastal Energy in a move by Pertamina to expand its business overseas and increase oil production, an executive has confirmed.

Pertamina’s investment planning and risk-management director Afdal Bahaudin told The Jakarta Post on Wednesday the firm had presented its proposal to purchase Coastal Energy, which is listed in the Toronto Stock Exchange and has assets in Thailand and Malaysia.

“We are preparing to expand our business abroad in a bid to boost the firm’s oil output, which is the benefit we can get [by acquiring Coastal Energy],” he said in Jakarta.

Pertamina, the oil and gas company, had submitted its proposal to join the tender to acquire the Houston-based company to Coastal Energy’s majority shareholders, the executive said, adding that the firm expects a response next week.

Coastal Energy’s biggest shareholders include billionaire Oscar S. Wyatt Jr., who owns around 26 percent and Ingalls & Snyder LLC, which holds a 9.3 percent stake, according to data compiled by Bloomberg.

Earlier, Bloomberg cited Canada’s Financial Post’s reports saying Pertamina had expressed its interests in “pursuing Coastal on its own and is prepared to pay a 15 percent premium to Coastal’s share price at, or around, US$23 per share or $2.6 billion.”

The Canadian newspaper said that in a document dated October, Pertamina had, after an initial expression of interest in September that surrounded a joint venture with Calgary-based Talisman Inc, expressed an “ongoing interest in Coastal”.

In its statement following the reports, Coastal said it “continuously evaluates strategic alternatives, including but not limited to the potential sale of the company, to maximize shareholder value. However, there can be no assurance that any transaction will occur.”

Commenting on this, Afdal said Pertamina could not reveal any value regarding the potential transaction, citing that “too much information regarding the planned acquisition may shake the market, which will increase [Coastal’s] stock price and will burden the firm’s plans.”

“We will disclose everything once the deal has been sealed,” he said firmly, adding that the firm expected the deal to be closed “as soon as possible”.

Coastal, according to the firm’s official website, currently produce more than 22,000 barrels of oil per day from its three offshore oil fields. The company owns and operates Block G5/43 and Block G5/50 in the Gulf of Thailand as well as varying interests onshore northeast Thailand, which includes a 13.7 percent interest in the Phu Horm gas field.

In July 2012, Coastal entered into a Small Field Risk Service Contract with Malaysia-based Petronas for the development and production of petroleum from the Kapal, Banang and Meranti cluster of small fields offshore Peninsular Malaysia, where it intends to hold 70 percent in equity interest.

Pertamina has allocated Rp 40 trillion ($4.16 billion) this year to develop its upstream business sector. As for the firm’s acquisition plan, Pertamina has allotted as much as Rp 18.5 trillion this year.

Earlier this year, Pertamina had also signed a purchase agreement to purchase a stake in the Venezuelan firm, Petrodelta SA, but is still awaiting further negotiations between shareholders and both governments before the acquisition could be finalized. (Amahl S. Azwar/ The Jakarta Post)