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CNOOC gains US$570m stake in US oil reserves
By Richard Fu |
January 31, 2011, Monday
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Online Edition
Online Edition
CNOOC Ltd, China's largest offshore oil and gas producer, said today it 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, adding to 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 United States 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. Mirae Asset Securities analyst Gordon Kwan estimated the deal could translate to additional reserves of 124 million barrels of oil by 2014 or 4 percent of CNOOC's current proven reserves.
In November, CNOOC completed its US$1.08 billion purchase of Chesapeake's Eagle Ford shale project in Texas, in its first successful acquisition in the US after failing to buy Unocal Corp in 2005 on political grounds.
"We expect more to come in the form of sizable but minority stakes which will more easily win US regulatory approvals," Kwan said.
The latest deal is expected to be completed in the current quarter, the companies said.
Kwan said CNOOC will gain access to more resources and technology with the deal while Chesapeake needs the funding to monetize its asset.
CNOOC also agreed to fund 66.7 percent of Chesapeake's share of drilling and completion costs up to US$697 million in the Colorado/Wyoming shale blocks.
"The project will not only strengthen our solid resource and production base in overseas but create value to shareholders in the long term," said Yang Hua, vice chairman of CNOOC.
Chesapeake CEO Aubrey K. McClendon said the deal would result in a reduction of oil imports for the United States over time and create thousands of high-paying jobs.
Shale is an underground rock that holds oil and natural gas reserves. It has become a key energy source in the United States 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. Mirae Asset Securities analyst Gordon Kwan estimated the deal could translate to additional reserves of 124 million barrels of oil by 2014 or 4 percent of CNOOC's current proven reserves.
In November, CNOOC completed its US$1.08 billion purchase of Chesapeake's Eagle Ford shale project in Texas, in its first successful acquisition in the US after failing to buy Unocal Corp in 2005 on political grounds.
"We expect more to come in the form of sizable but minority stakes which will more easily win US regulatory approvals," Kwan said.
The latest deal is expected to be completed in the current quarter, the companies said.
Kwan said CNOOC will gain access to more resources and technology with the deal while Chesapeake needs the funding to monetize its asset.
CNOOC also agreed to fund 66.7 percent of Chesapeake's share of drilling and completion costs up to US$697 million in the Colorado/Wyoming shale blocks.
"The project will not only strengthen our solid resource and production base in overseas but create value to shareholders in the long term," said Yang Hua, vice chairman of CNOOC.
Chesapeake CEO Aubrey K. McClendon said the deal would result in a reduction of oil imports for the United States over time and create thousands of high-paying jobs.
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