SKorean oil company buying Canada's Harvest Energy

By KELLY OLSEN

posted: 35 DAYS 22 HOURS AGO

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SEOUL, South Korea -South Korea's state oil company is buying Canada's Harvest Energy for nearly $4 billion in the East Asian nation's biggest acquisition of a foreign oil firm as it seeks to secure new sources of energy.

South Korea's Ministry of Knowledge Economy valued the deal at $4.1 billion Canadian ($3.95 billion). Korea National Oil Corp. has signed a final contract with Harvest Energy Trust to purchase the Canadian company, the ministry said in a release Thursday.

In a separate release, Calgary-based Harvest Energy said the deal involves a cash payment of $1.8 billion Canadian and KNOC assuming $2.3 billion Canadian of debt. Harvest's board has approved the deal, the company said, contingent on Canadian court and regulatory approvals.

Jeon Byong-hyuk, a spokesman for KNOC, said the deal is South Korea's biggest acquisition of a foreign oil company.

Industrially strong but resource poor South Korea imports almost all of its oil and gas and is moving to secure new sources of energy.

The company is involved in oil exploration as part of a consortium with other South Korean companies in the Kurdish region of Iraq. It is also active in energy projects in Indonesia, China, Uzbekistan, Nigeria, Peru and other countries, according to its Web site.

Kang Young-won, CEO of KNOC, said the deal fits the South Korean company's expansion strategy.

"KNOC has ambitious plans for future growth and is committed to a long term investment strategy in Canada," he said in the Harvest Energy release.

Harvest Energy both explores for and produces oil and natural gas. The Ministry of Knowledge Economy said the company can produce 53,000 barrels a day of oil and gas.

On its Web site, the Canadian company says that its production is weighted at approximately 70 percent crude oil and liquids and 30 percent natural gas.

(This version CORRECTS name of company to Korea National Oil Corp. sted Korean in graf 2)

2009-10-22 10:15:38