Barron's columnist Leslie Norton claims that while CNOOC's (ticker: CEO) bid for Unocal (ticker: UCL) remains in doubt its perception in the marketplace has changed (Barron's subscription required). Details:
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....What seems sure, however, is that perceptions
of Cnooc's growth prospects have suddenly altered, perhaps permanently.
Before the Unocal bid, Cnooc had missed production estimates, raising
concern that finding and extracting energy in the China Sea is more challenging than once believed. The lifeblood of a resource
company is replacement reserves. With finding and development costs
soaring, buying reserves on Wall Street has lately seemed the cheapest
route. Thus, to some, Unocal wasn't such a bad deal. The bid values
Unocal's reserves at up to $9.50 a barrel of oil equivalent (BOE), says
Lysle Brinker, senior vice president at John S. Herold, an energy
specialist. Cnooc's finding and development costs soared to $9 per BOE
last year, compared with a three-year average of $6. Brinker figures
that Unocal's North American reserves, more highly valued in the merger
market, are probably worth $13 to $14 per BOE, valuing the foreign
reserves at $6-$7.
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