Cnooc Ltd. will pay $1.08 billion for a one-third stake in Chesapeake Energy Corp.’s Eagle Ford shale project in Texas, in the biggest acquisition of a U.S. oil and gas asset by a Chinese company.
Cnooc, listed in Hong Kong, plans to buy 33.3 percent of Chesapeake’s 600,000 oil and gas leasehold acres in Eagle Ford, the companies said in separate statements. Cnooc will also pay $1.08 billion of Chesapeake’s drilling costs in the basin.
Bloomberg's piece changed between last night and this morning. It removed language stating Chesapeake would provide all leasing, drilling, completion, operations and marketing activities for the project. I went to bed thinking China's oil company bought U.S. hard assets.
I awoke to find Bob Pisani on CNBC calling the deal a "capital only" investment, not a sale of energy assets. Bloomberg added language in this regard.
U.S. regulatory approval isn’t needed for the Eagle Ford stake purchase, Chesapeake spokesman Jim Gipson said by e-mail.How did CNOOC characterize the deal?
“This deal is completely consistent with what U.S. government has said they would like to see Chinese energy companies do, which is to provide capital into America to acquire minority interests and for American companies to use that capital to go out and develop American oil fields and to reduce oil imports,” McClendon said.
The execution of this project will benefit CNOOC Limited's long term production and reserves growth and should produce considerable returns for our shareholders.
Exactly how will it benefit CNOOC's reserves? That question needs answering, preferably from CFIUS. Given China's commodity and energy buying spree, CFIUS could be very busy.
The government of Chinese President Hu Jintao controls the world’s biggest holdings of foreign-exchange reserves, with about $2.5 trillion, including at least $846 billion of U.S. Treasuries, according to data compiled by Bloomberg.
The Chinese have trillions to spend and they're rapidly buying.