16.12.10 23:23 Age: 8 yrs
China lands multi-billion dollar deal in Texas oil and gas fields
Beijing, China –December 16, 2010
The China National Offshore Oil Corporation (CNOOC) announced this week it is investing in US energy reserves located in south Texas, a move expected to draw little political opposition in the US.
China’s state-owned energy giant, CNOOC, has announced it is purchasing a 33.3 percent undivided interest in Chesapeake Energy Corporation’s oil and natural gas leasehold acres in the south Texas Eagle Ford Shale project. Price tag for the investment with Chesapeake is 2.16 billion dollars.
Consideration for the sale is $1.08 billion at closing. CNOOC also has agreed to fund 75% of Chesapeake’s share of drilling and completion costs up to the point where an additional $1.08 billion has been paid. Chesapeake expects that to occur by the end of 2012. Closing of the deal is expected to occur during the fourth quarter of 2010.
CNOOC, China’s largest producer of offshore crude oil and natural gas, is considered one of the world’s largest independent gas and oil exploration companies in the world.
Chesapeake controls approximately 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale project. The Oklahoma-based energy company anticipates the project will reach peak production of 400,000-500,000 barrels of oil equivalent within the next decade.
The financial transaction is seen by many as a means of China testing the waters for further inroads into US energy reserves as well as finding a way to alleviate China’s growing need for carbon-based energy. The International Energy Agency (IEA) announced in July that China became the world’s largest consumer of energy in 2009, surpassing the US.