China Oilfield Services Ltd. (COSL) announced on Monday it was offering to buy Norway's Awilco Offshore ASA (AWO) for 12.7 billion kroner (2.49 billion U.S. dollars) to create the world's eighth largest rig fleet.

COSL, the listed arm of the China National Offshore Oil Corporation (CNOOC Group), the country's biggest offshore oil producer, would pay 85 kroner in cash per share for the operator of oil and gas rigs. This represented a premium of 18.7 percent over the closing price of 71.60 kroner on July 4.

It also represented a premium of 42.4 percent over the closing price of 59.70 kroner on May 29, the last day prior to AWO confirming a third party had expressed interest in acquiring the company.

"AWO's board of directors has unanimously decided to recommend the offer," the two companies said in a joint statement.

Awilco AS and Aweco Holding AS, representing in aggregate 40.11 percent stake in AWO, have agreed to accept the offer, the statement noted.

The offer could be completed after receiving approval from holders of more than 90 percent of AWO's shares, authorization of relevant Chinese authorities and approval of COSL shareholders.

The offer is expected to close in September or October, according to COSL. It added the offer would be financed by internal resources and bank loans.

"AWO's modern high-specification rigs and cutting-edge technology for offshore drillings is a good strategic fit for COSL pursuant to its globalization and growth strategies," the statement said.

The deal would help raise the number of COSL's operating rigs to 22 from 15 at present, an increase of about 47 percent.

COSL pledged that after the acquisition, it would not introduce any major changes to AWO's business to affect the current operations and cut off any jobs.

Based in Oslo, AWO operates in Australia, Norway, Vietnam, Saudi Arabia and the Mediterranean. The deal would enable COSL to go into new international markets and increase revenue contributions from overseas operations.

Through the deal, COSL would also benefit from access to international management expertise, advanced technology and operating experience in challenging working environments.

This was considered a great move for COSL, China's largest offshore oil services provider, to expand internationally to cash on the huge business opportunities brought about by the soaring oil prices, said analysts.

The deal, if successful, would be one of the major acquisitions ever made by CNOOC Group in recent years after its listed unit CNOOC Ltd. suffered a setback in acquiring the U.S. oil giant Unocal in 2005.

CNOOC Group owns a 54.74 percent stake in the Hong Kong- and Shanghai-listed China Oilfield.

COSL shares were suspended from Monday trade pending the announcement.

AWO stocks jumped 14.66 percent to 82.10 kroner at around 2:30 p.m. local time on Oslo Stock Exchange.

(Xinhua News Agency July 8, 2008)