Sinopec makes $2.1 Billion offer for Canada’s Daylight Energy

                  Sinopec makes $2.1 Billion offer for Canada’s Daylight

 China Petrochemical Corp. also known as or Sinopec, has made an offer to buy Daylight Energy Ltd. (DAY) for C$2.2 billion ($2.1 billion U.S.) in cash, gaining access to Canadian oil and shale-gas reserves in its largest acquisition this year.

Sinopec International Petroleum Exploration and Development Co a subsidiary of the SOE (state-owned enterprise) known as Sinopec Group has offered C$10.08 a share for Calgary-based and Toronto-listed Daylight Energy Ltd, which is a 43% premium to the company's recent average share price according to a statement from Daylight Energy. Daylight Energy is a conventional oil and shale-gas supplier with productive fields in Alberta and British Columbia.

If regulators and shareholders approve the deal, it would give the Beijing-based Sinopec Group access to more than 300,000 acres of Canadian land in areas rich with oil and natural gas and a boost to Daylight Energy share holders.

According to Bloomberg; the oil and gas industry accounts for the second-biggest volume of mergers worldwide this year after telecommunications and I believe we will keep seeing the international expansion of Chinese firms.

China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas, more than the estimated reserves in the United States and Canada combined, according to an April report by the U.S. Energy Information Administration.

The U.S. and Canada produced 26.2 trillion cubic feet of gas in 2009 compared with 2.9 trillion cubic feet in China, according to EIA data.

The deal is subject to the agreement of Canadian regulators and Daylight Energy shareholders; it will be interesting to see if the political climate is ripe for a Chinese SOE to make a purchase this large of a Canadian energy producer. Canadian Prime Minister Stephen Harper recently said the nation will “proceed with caution” as it considers opening its doors to more foreign takeovers.

Regardless of the out come of this deal, I believe we will continue to see Asian energy companies expand internationally to secure resources to fuel their growing domestic economies.