European trader Arcadia Petroleum has agreed to buy U.S.-based Masefield Group to expand its business to North America and extend further in Africa, five sources close to the matter said.

The $20-$30 million deal will give Arcadia, which operates as a
conventional trading house, access to the niche market of structured
financing for the energy sector, particularly in the United States,
Canada and South Africa, where Masefield has a strong presence.

The takeover will also allow the trader to leverage Masefield’s risk management expertise.

When contacted, spokesmen from both firms declined to comment. It was not immediately clear when the deal will be completed.

With the strong shipping support that Arcadia has from its parent
company, its business now stretches from upstream activities, trade
financing, risk management and trading logistics to the power sector.

“Arcadia is your typical trading house while Masefield is stronger in
off-trading activities like arranging and providing structured
financing to customers, especially in North America and South Africa,
although they do trade as well,” one source said.

“They (Masefield) also have some crude supply deals in South Africa and
it seems that the thinking behind the acquisition is that there is good
synergy between the companies in the areas that they are strong in.”

The sources said staff at Arcadia, which has been in expansion mode
since two years ago when it started fuel oil and distillates trading in
Singapore, had been informed of the acquisition about a month ago.

The move comes on the back of recent takeover activities in the energy
sector, such as PetroChina’s acquisition of Singapore Petroleum Co
(SPC) and Glencore’s agreement to buy a 51 percent stake in
Singapore-listed Chemoil.

Arcadia was formed in 1988 as a unit of Japan’s Mitsui & Co, which
then sold its entire stake to Cyprus-based Farahead Holdings in 2005,
which owns two shipping companies transporting oil and liquefied
natural gas, as well as an offshore drilling fleet.

Parent firm Farahead provides integrated logistical support to Arcadia’s oil trading businesses.

Arcadia made its name trading crude and currently trades across the
barrel from crude to all oil products mainly in Europe, West Africa and
Asia.

The company trades more than 800,000 barrels of physical crude and more
than 10 million barrels of oil futures and options contracts each day,
its official website shows, similar to the output of OPEC member Qatar.

Arcadia is regarded as a medium-sized trading house, similar to
companies such as Mercuria, Sempra and Hetco, but lags big players such
as Vitol, Glencore and Trafigura.

Farahead’s other units include the world’s largest independent oil tanker companies, Frontline, Golar LNG Ltd and SeaDrill Ltd.

Masefield, which also has supply deals for crude and oil products,
provides risk management services to clients. Masefield has a 20
percent stake in International Energy Group (IEG), which in turn has
stakes in three other oil-related companies.

Two of these — London-listed Nautical Petroleum and Africa-based Wilton Petroleum — are oil exploration firms.

Wilton is focused on heavy utility fuel with sister company, Quadrise
Fuels International, which produces Multiphase Superfine Atomised
Residue (MSAR) that is extracted directly from the ground in Venezuela
and can be used for power generation.

IEG also has stakes in the Strategic Energy Bank, which provides cover
to governments in case of supply disruptions to their reserves.

Source: Reuters

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