Indonesia’s state-owned Pertamina has expressed an interest in buying TSX-listed Coastal Energy Co., according to documents received by the Financial Post.
Houston-based Coastal Energy is an international oil and gas exploration and production company with a market value of about $2.2-billion as of trading Tuesday at midday. The company began trading on the TSX last year, and was previously listed on London’s junior AIM market.
According to a letter obtained by the Financial Post and dated October 2012, Pertamina expressed an “ongoing interest in Coastal Energy” after making an initial expression of interest in September surrounding a joint venture with Calgary-based Talisman Inc. In the letter, Pertamina states it is interested in pursuing Coastal Energy on its own and is prepared to pay a 15% premium to Coastal’s share price at or around US$23 per share or $2.6-billion.
The Indonesian firm said it is seeking Coastal Energy advisor Citigroup’s “co-operation to complete additional due diligence which will enable us to deliver a binding proposal, subject to the framework defined within this letter.”
Unlike other Canadian oil and gas companies targeted by foreign state-owned companies in recent months, Coastal does not have any Canadian-based operations — its assets are in Thailand and Malaysia — and any takeover bid is unlikely to come under close government scrutiny.
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Pertamina’s interest followed a “data disclosure and series of presentations which culminated in an expression of interest during September,” according to the letter sent on an unspecified date in October and addressed to Citigroup.
Pertamina also stated that it “is highly motivated and incentivized to work on a time table to facilitate the completion of this transaction by the 31st of December 2012.”
The proposal has the full support of Pertamina management and board of directors, according to the letter.
Coastal Energy did not return calls seeking comment Tuesday but indicated in a statement that it could neither confirm nor deny any potential transactions.
“The company advises that it continuously evaluates strategic alternatives, including but not limited to the potential sale of the company, to maximize shareholder value,” it said.
“However, there can be no assurance that any transaction will occur.”
Coastal Energy recently upsized and amended its senior secured revolving credit facility to $200-million with BNP Paribas and Commonwealth Bank of Australia, the Standard Bank and Standard Chartered Bank, according to a company filing on Oct. 16.
In a recent release, Pertamina spoke of its plans for a sharp increase in oil and gas production by 2025 and to lift oil output this year through acquisitions of interests in Indonesia and elsewhere.
In June it announced an all-cash offer to acquire a 32% stake in Petrodelta SA of Venezuela from Harvest Energy Resources – a deal that, when completed next March, will net Harvest US$525-million.