Sinopec buys 18 per cent of Chevron Indonesia deep-water project

Beijing, October 11th - Sinopec International Petroleum Exploration and Production Corp, a wholly-owned unit of state-owned Sinopec Group, has completed the purchase of an 18 percent stake in Chevron Corp's Indonesian deep-water project for $680 million, a Sinopec official told Reuters on Tuesday.

The move marks Sinopec Group's return to Indonesia after its withdrawal in 2006.

The deep-water project, located in the Kutei basin off East Kalimantan, included the Rapak, Ganal, and Makassar Strait blocks, with a water depth of between 550 and 1,900 meters, the official said, declining to be identified.

The project includes one under-producing oil field and five oil and gas fields that have yet to be developed. Remaining recoverable reserves total 15 million barrels of crude oil and 700 billion cubic feet of natural gas. The project was expected to have a peak 370 thousands metric tonnes of equity oil and 79 billion cubic feet of equity gas in 2016, Sinopec Group said in a statement on its website.

The deal signals a pick-up in M&A activity by Chinese energy companies seeking to secure energy supplies to power the country's booming economy.

Sinopec Group signed an agreement to buy Canadian oil and gas explorer Daylight Energy Ltd for C$2.2 billion ($2.1 billion) in cash earlier this month. - Reuters.

Sinopec Buys Canada’s Daylight for $2.1 Billion to Gain Shale-Gas Assets

Canada, October 11th, 2011 - China Petrochemical Corp., the nation’s biggest refiner, agreed to buy Daylight Energy Ltd. for C$2.2 billion (US$2.1 billion) in cash, gaining Canadian oil and shale-gas reserves in its largest acquisition this year.

The state-owned company known as Sinopec Group offered C$10.08 a share, Calgary-based Daylight said in a statement yesterday. That’s 70 percent higher than Daylight’s average price during the past 20 trading days and more than double the average 32 percent premium for comparable cash bids for North American energy explorers, data compiled by Bloomberg show.

The takeover would give the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, adding to its expansion outside Asia after falling crude prices made valuations attractive. Sinopec Group and Cnooc Ltd. are among Chinese companies that have bought almost $30 billion of Canadian assets in the past five years to meet energy demand in the world’s fastest-growing major economy and gain access to drilling methods to help unlock Asian resources.

“Sinopec made a number of oil-sands acquisitions, and this is probably the most gas they’ve acquired in western Canada,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by telephone today.

The oil and gas industry accounts for the second-biggest volume of mergers worldwide this year after telecommunications, with $127 billion in transactions, Bloomberg data show.

Daylight’s Assets
Two other energy deals were announced today. Superior Energy Services Inc., a U.S.-based oilfield services provider, will pay $2.6 billion in cash and stock for Complete Production Services Inc. In Australia, Everyday Mining Services Ltd. said it will merge with Hughes Drilling Pty Ltd.

Daylight’s proven and probable reserves rose 46 percent to the equivalent of 174 million barrels of oil at the end of 2010, the company said March 1. Beveridge values Daylight’s reserves at $16.70 per barrel of oil equivalent, saying Sinopec Group is paying a “fair price” for those assets.

Sinopec Group will join rival China National Petroleum Corp. and Cnooc in seeking technology through partnerships as China, estimated to hold more gas trapped in shale rock than the U.S., opens new areas to exploration. The world’s biggest energy user, which currently doesn’t produce any shale gas commercially, has brought in foreign partners including Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. to assess its potential.

Chinese Shale
China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas, more than the estimated reserves in the United States and Canada combined, according to an April report by the U.S. Energy Information Administration.

The U.S. and Canada produced 26.2 trillion cubic feet of gas in 2009 compared with 2.9 trillion cubic feet in China, according to EIA data.

China Petroleum & Chemical Corp., Sinopec Group’s Hong Kong-listed unit, fell 4.4 percent to close at HK$7.16. Daylight closed at C$4.59 on Oct. 7 in Toronto. The company’s shares have declined 56 percent this year. Canadian markets were closed today because of a national holiday.

Collaboration with overseas companies will help boost the search for shale-gas resources, and “future growth will mainly come from unconventional gas,” Chairman Fu Chengyu said Aug. 30. China Petroleum finished drilling its first shale-gas well in Hubei province July 15, Sinopec Group said July 26. - Bloomberg