HONG KONG (Bloomberg) -- Sinochem Corp., China’s biggest chemicals trader, offered to buy Emerald Energy Plc for 532 million pounds ($875 million) to expand oil and gas drilling operations in the Middle East and South America.

Sinochem plans to buy Emerald for 750 pence a share, an 11.1 percent premium to its closing share price of 675 pence on Aug. 11, the Beijing-based company said in a statement on Wednesday to the London Stock Exchange. Emerald said in a separate statement its board has recommended that shareholders accept the offer.
Chinese energy companies have spent at least $12.6 billion on overseas assets since December as the world’s second-biggest energy consuming nation takes advantage of lower asset valuations after crude oil prices fell from a record. Emerald rose as much as 9.6 percent in London trading after the takeover announcement.
“They are paying what Emerald shareholders will think is a good price,” said Charlie Sharp, an analyst at Matrix Corporate Capital LLP in London. Emerald’s “assets are strong in both Syria and Colombia. Acquiring both increases Sinochem’s footprint in both places.”
Emerald is drilling in Syria and Colombia. The company’s Gigante field in Colombia’s Matambo permit area, where the Gigante 2 well found potentially oil-bearing sandstone, Emerald said June 23. Wells at Colombia’s Capella field pumped as much as 700 barrels of oil a day during testing in May, it said then.
-----------Syrian output
In Syria, proven and probable oil reserves at Emerald’s Khurbet East field rose 3.3 percent as of the end of April since the previous evaluation at the end of 2007, according to company data based on independent estimates.
Sinochem, which gets less than 1 percent of its revenue from oil and gas production, is buying Emerald after crude oil futures in New York declined 53 percent from a record $147.27 a barrel in July last year.
“The Emerald Energy acquisition, while small, could help enhance Sinochem’s upstream operations,” said Gordon Kwan, an analyst at Mirae Asset Securities in Hong Kong.
Sinochem produced the equivalent of about 10.3 million barrels of oil and gas last year, according to a statement on its Web site. It has stakes in oil and gas fields in Tunisia, the United Arab Emirates, Ecuador, Yemen and Indonesia, the statement said.
---------------Global company
“The acquisition strengthens our operations and represents another step in our strategy of building a global energy company,” Sinochem President Han Gensheng said in Wednesday’s statement. “Emerald’s assets have attractive growth potential and, by bringing Emerald into the Sinochem group, will reinforce our position in the Middle East and South America.”
Lisa Hibberd, a spokeswoman for Emerald Energy, declined to comment further when contacted by telephone on Wednesday. Sinochem’s spokesman Zhang Xinhua couldn’t immediately be reached at his office in Beijing.
Emerald traded at 736.5 pence at 9:41 a.m. local time.
Emerald increased first-quarter production to 5,693 barrels of oil a day from 1,622 barrels a day a year earlier, the company said on April 24. Net income in the quarter advanced to $4.6 million from $3.5 million.