CNOOC buys stake to boost US assets
By Richard Fu |
February 1, 2011, Tuesday
|
Print Edition
Print Edition
CNOOC Ltd, China's dominant offshore oil producer, has agreed to buy a one-third stake in Chesapeake Energy Corp's shale oil and gas leases in Colorado and Wyoming for US$570 million as it expands its energy assets in the United States.
Shale is an underground rock that holds oil and natural gas reserves. It has become a key energy source in the US thanks to new techniques.
Chesapeake has 800,000 net oil and natural gas leasehold acres in the Denver-Julesburg and Powder River Basins in northeast Colorado and southeast Wyoming.
CNOOC also agreed to fund 66.7 percent of Chesapeake's share of drilling and completion costs up to US$697 million in these shale blocks by 2014, the Beijing-based company said yesterday.
The latest deal is expected to be completed in the current quarter, the companies said.
Mirae Asset Securities analyst Gordon Kwan estimated the deal could translate to a potential additional net proven reserves of 124 million barrels of oil equivalent by 2014, or 4 percent of CNOOC's current proven reserves.
"We expect more to come in the form of sizable but minority stakes which will more easily win US regulatory approval," Kwan said.
He said the deal will give CNOOC access to more resources and technology while Chesapeake needs the funding to monetize its assets.
"The project will not only strengthen our solid resource and production base overseas but create value to shareholders in the long term," Yang Hua, vice chairman of CNOOC, said.
Chesapeake CEO Aubrey K. McClendon said the deal will help the US cut its oil imports.
CNOOC in November made its first successful acquisition in the US when it bought a stake in Chesapeake's Eagle Ford shale project in Texas for US$1.08 billion.
Shale is an underground rock that holds oil and natural gas reserves. It has become a key energy source in the US thanks to new techniques.
Chesapeake has 800,000 net oil and natural gas leasehold acres in the Denver-Julesburg and Powder River Basins in northeast Colorado and southeast Wyoming.
CNOOC also agreed to fund 66.7 percent of Chesapeake's share of drilling and completion costs up to US$697 million in these shale blocks by 2014, the Beijing-based company said yesterday.
The latest deal is expected to be completed in the current quarter, the companies said.
Mirae Asset Securities analyst Gordon Kwan estimated the deal could translate to a potential additional net proven reserves of 124 million barrels of oil equivalent by 2014, or 4 percent of CNOOC's current proven reserves.
"We expect more to come in the form of sizable but minority stakes which will more easily win US regulatory approval," Kwan said.
He said the deal will give CNOOC access to more resources and technology while Chesapeake needs the funding to monetize its assets.
"The project will not only strengthen our solid resource and production base overseas but create value to shareholders in the long term," Yang Hua, vice chairman of CNOOC, said.
Chesapeake CEO Aubrey K. McClendon said the deal will help the US cut its oil imports.
CNOOC in November made its first successful acquisition in the US when it bought a stake in Chesapeake's Eagle Ford shale project in Texas for US$1.08 billion.
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