We reported that Addax, in turn, may take over Anadarko's share of the highly prospective Block 3. It's unclear whether Sinopec's interest in Addax is due or related to that development, which at this stage remains a rumor.
Such a bid would probably mean that ERHC Energy's percentages of equity in Blocks 2 and 4 would be assumed by Sinopec and that ERHE shreholders would be compensated for those. Alternatively, ERHC could go forward with Sinopec as the operator of both blocks and owner of Addax.
It's difficult to tell whether such a deal might produce upfront cash for ERHC Energy, although it should spark some interest in our shares, since if Sinopec thinks Addax is worth a good price, it stands to reason its assets - including these huge blocks in the Gulf of Guinea - are also valuable.
Nonetheless, while Addax Shares are up $3.75 at $39.75, they have been over $40.
TORONTO (Dow Jones)--Speculation about a possible takeover of oil company Addax Petroleum Corp. (AXC.T) is driving its share price higher.
Addax is up 9.4% after a story in the South China Morning Post reported that China Petroleum & Chemical Corp. (SNP), known as Sinopec, is working on a US$8 million bid for Addax, which is an oil and gas exploration company operating in the Middle East and West Africa.
Addax said in a press release that it has been in discussions with third parties, but it didn't elaborate. It also said it won't comment further unless a transaction is finalized.
Raymond James analyst Rafi Khouri told Dow Jones that he thought Addax would be a good fit for the Chinese company. Khouri said the Chinese are trying to expand their access to oil and gas, and have shown some interest in West Africa.
"My personal view is that I would not be surprised if Addax were to be acquired at some time in the next 12-24 months," Khouri said. "Whether or not that will happen now, or if there's any truth to the speculation, is hard to say."
Khouri doesn't own Addax shares and he said Raymond James doesn't have an investment-banking relationship with Addax.
Addax officials weren't immediately available for comment.
In Toronto Tuesday, the stock is up C$3.40 to C$39.40 on 2.3 million shares.
-Jennifer Walter, Dow Jones Newswires, 416-306-2028 firstname.lastname@example.org