"COSL aims to become a top-tier international oilfield services provider by 2020. But we cannot achieve this by organic growth only," executive vice president Zhong Hua said yesterday.

COSL, a sister company of CNOOC (0883), will pay HK$130.40 for every share of Awilco, representing a premium of about 18.7 percent over its Friday closing price on the Oslo Stock Exchange in Norway.

"The [transaction] price is appropriate ... earnings per share of COSL will be higher because of the deal," Zhong said.

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CLSA head of China energy research Gordon Kwan concurred: "After acquiring Awilco, COSL can broaden its business to deepwater exploration drilling services, which can be charged at higher prices."

Of the HK$19.5 billion consideration, about US$200 million (HK$1.56 billion) will be paid in cash while the remainder will be settled by debt financing arranged by international and mainland banks.

The acquisition is expected to be completed in September or October.

COSL, currently the largest oilfield services provider in the mainland, will become the world's eighth largest after acquiring Awilco. By 2011 its total number of rigs, including those under construction, will jump to 34 from 15 at present.

"Through Awilco's current platform, we will further expand our overseas business into the high-end North Sea market," Zhong said.

Last month COSL company secretary Chen Weidong said revenue from overseas businesses will rise to 30 percent of overall income in 2010. As of the first quarter of 2008, contribution from overseas business climbed to 27.7 percent.