S Korea's KNOC plans to sell non-core assets in Canada and UK
24 September 2013
South Korea's state-run oil and gas company Korea National Oil Corp (KNOC) is planning to sell non-core assets of loss-making Harvest Energy, just four years after it acquired the Canadian energy company for $3.95 billion including debt.
Citing KNOC chief executive Suh Moon-kyu, South Korean media had earlier said that the company plans to sell Harvest, but KNOC senior executive vice president Joong-hyun Kim told reporters yesterday that it is planning to sell only non-core Harvest assets.
"Not only Harvest, we are currently re-evaluating all of our overseas assets including Dana Petroleum and could sell non-core parts of these units," he said.
KNOC had acquired UK-based Dana Petroleum in a hostile takeover in 2010 for $2.91 billion.
Dana's activities are focused within its two core areas of Europe (North Sea) and Africa. In Africa, Dana has production, development and exploration interests across Egypt, oil and gas discoveries offshore Mauritania and Morocco, and additional exploration opportunities offshore Senegal and Guinea.
Harvest, which has reserves of 219.9 million barrels and 950 employees, has oil fields in Alberta, Saskatchewan and British Colombia.
The South Korean government had blamed KNOC's $840-million loss last year on the poor performance of overseas investments.
The Calgary-based company reported a net loss of $728 million in 2012, $98 million in 2011 and $93 million in 2010.
Analysts had earlier said that KNOC overpaid for both the Harvest and Dana acquisitions, which were financed with debt.
Debt-financed deals have increased the South Korean state-run company's debt to $16 billion last year.
Bloomberg yesterday reported that Pengrowth Energy Corp and Canadian Natural Resources could be likely buyers of Harvest assets and KNOC has held initial talks with unnamed potential buyers.
South Korea, the world's fifth-largest crude buyer, relies on crude imports for nearly all of its oil needs.