Chinese NOCs Flash Big Dollars for Oil

Perhaps frustrated by efforts to build the infrastructure needed in their own country to get shale oil and gas flowing, Chinese national oil companies’ (NOC) are buying Texas oil assets.

Yantai Xinchao Industry Co. Ltd. said oil fields in Howard and Borden Counties would be purchased from Tall City Exploration and Plymouth Petroleum, according a disclosure to the Shanghai Stock Exchange reported by The Associated Press.

In the filing, a limited liability partnership, Ningbo Dingliang Huitong Equity Investment Center and seven shareholders intend to make the buy through a subsidiary, Moss Creek Resources LLC.

The purchase should come as little surprise to those following the embattled commodities market. With oil prices in the tank, it’s been widely expected that M&A deals, including those with foreign components, would pick up at the end of the year.

Chinese national oil companies have strong balance sheets and they have the capability – and the appetite – to acquire resources where they can, John England, chief of Deloitte LLP’s U.S. oil and gas practice, told Rigzone in July.

“They have a mandate to go out and try to acquire resources and they see the same macroeconomics that we do. They’re a huge consumer of energy, and so they want to make sure they’re getting supplies, getting access to supplies, broadly around the globe,” England said. “The Chinese are logical buyers for assets here, particularly when you think the IOCs [international oil companies] are changing around their portfolios. Some of the independents will be cash-strapped and so they’re potentially sellers. I think the Chinese NOCs are logical buyers; they’re just having to overcome some internal strife right now. It’s just a question of when they get those sorted out, but it’s reasonable to think they’ll be back in the market.”

In the past, China has not been a country rich in natural resources such as oil, gas and copper, Paul Ehrsam, senior vice president at U.S. Trust, Bank of America Private Wealth Management, noted. Instead, the country has purchased these assets through various ventures.

"Thanks to low prices, it is an opportune time for China to accumulate more resources. The Chinese have been very active over an extended period of time to secure natural resources for the country,” he said. "While I’m not familiar with the financials of the two selling companies, there are a number of motivated sellers because of low energy prices; motivated sellers meaning they may not have the financial flexibility to return to profitability without the prices of oil and gas going up from here.”

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
ken boone | Oct. 27, 2015
This is a sad commentary on our Congress. They blocked the red Chinese from buying UNOCAL in the early 2000s. I havent even seen anything on this that the US Congress is aware it has happened. We are now led by a Congress and President that seem to care less about our sovereignty than their own butts.


Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE

More from this Author
Deon Daugherty
Senior Editor | Rigzone
 -  The Rigzone Interview: Private Equity ... (Jul 13)
 -  Could Argentinian Politics Beat the Va... (Jul 10)
 -  The Rigzone Interview: Oil, Gas Goes D... (Jul 6)
 -  Deal Of The Month: EQT, Rice Energy Me... (Jun 30)
 -  OpEd: OPEC Production Cuts Fail, Marke... (Jun 27)


Most Popular Articles

From the Career Center
Jobs that may interest you
Senior Vice President, Operations
Expertise: Executive|Operations Management
Location: Houston, TX
 
Sr. Contract Specialist
Expertise: Contracts Administration|Contracts Engineer|Legal
Location: Chesterfield, MO
 
Supply Chain Management / IT Counsel
Expertise: Business Analyst|Legal
Location: Houston, TX
 
search for more jobs

Brent Crude Oil : $51.03/BBL 1.51%
Light Crude Oil : $47.09/BBL 0.66%
Natural Gas : $2.93/MMBtu 1.38%
Updated in last 24 hours