China-based Cnooc Ltd. will pay $1.08 billion for acquiring a one-third stake in Chesapeake Energy Corp.’s Eagle Ford shale project in Texas. The deal is seen as the biggest acquisition of a U.S-based oil and gas asset by a Chinese company.
The company is listed in Hong Kong and is the third largest oil company in China. It is not the first time that the Chinese oil giant has waded into American waters as it made an $18.5 billion bid for Unocal Corp. in 2005, which was later dropped due to political opposition. It has spent up to $3.8 billion in overseas acquisitions to meet the rising demands of the surging Chinese economy.
Under the deal, Cnooc will purchase 33.3 percent of Chesapeake’s 600,000 oil and gas leasehold acres in Eagle Ford, Texas. The company will also pay $1.08 billion, which are computed after estimating Chesapeake’s drilling costs in the basin.
The Eagle Ford shale in Texas has received global interest and two deals for drilling rights were signed in one day as Statoil ASA of Norway entered into an agreement to pay $843 million, or $10,900 an acre, to set up an equal joint venture with Talisman Energy Inc. Cnooc is paying approximately $10,800 per acre, including the upfront cash and payments for drilling costs in the basin.
The deal will allow Cnooc to acquire its first energy asset in the U.S. and the deal is expected to be completed without any delays or opposition as regulatory approval is not required for the purchase.
