Eni makes offer for First Calgary Petroleums

Uchenna Izundu
International Editor

LONDON, Sept. 9 -- Italy's Eni SPA offered $923 million (Can.) cash for Calgary-based First Calgary Petroleums Ltd. First Calgary shareholders are being urged to accept the deal, which would significantly boost Eni's position in Algeria.

Eni would acquire reserves totaling 1.3 billion bbl of oil equivalent, half of which is gas in the Algerian perimeter of Ledjmet (Block 405b) as First Calgary has a 75% stake in the asset. The block is in the Berkine basin.

The deal would boost Eni's 2P reserves by 190 million boe within its Algerian asset portfolio. Production start-up is expected in 2011 with a plateau of Eni's share of production of 30,000 boe/d by 2012. The deal is expected to close in by late 2008.

Eni has operated in Algeria since 1980. The slow development of First Calgary's $1.3 billion Menzel Ledjmet East (MLE) development in eastern Algeria's Berkine basin, one of several fields within the Ledjmet block, was a key reason behind its decision to sell; it has struggled to raise the necessary finances to develop the asset.

Eni Chief Executive Officer, Paolo Scaroni, said the transaction would increase its presence in core countries, acquiring high potential assets. "We are committed to the successful and rapid development of these gas fields and the consequent rapid start-up of an important resource for the country," he said.

"Calgary shareholders will receive C$3.60/share in cash and convertible debenture holders will receive US$108,000 (plus accrued interest) in cash for each US$100,000 par value of bonds held," Eni said.

Analysts said the price was fair and welcomed this proposal which builds upon other Eni's previous acquisitions to build its portfolio, snapping up acreage in the Congo and Turkmenistan, among other places.

First Calgary Petroleums announced Sep. 3 it has a number of suitors seeking a potential takeover or buying significant assets. Interested companies were rumoured to be ConocoPhillips and Statoil.

Contact Uchenna Izundu at uchennai@pennwell.com.

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