Sinochem buys into Texas oil-shale field
Bloomberg in New York
Sinochem Group, China's biggest supplier of chemical products, has agreed to buy a 40 per cent stake in Texas oil-shale acreage from Pioneer Natural Resources for US$500 million.
It will also pay US$1.2 billion of Pioneer Natural's share of future drilling costs, the Dallas-based company said on Wednesday. Pioneer Natural will continue to operate the 83,800 net hectares in the Wolfcamp field.
Sinochem's move follows other deals in which Chinese buyers acquired stakes in US shale formations in exchange for funding drilling costs.
CNOOC agreed to pay as much as US$1.3 billion including drilling costs for an interest in Chesapeake Energy's Niobrara shale project in 2011, and China Petrochemical and Devon Energy agreed to a deal valued at as much as US$2.5 billion last year.
"This accelerated development will add significant production and reserves for Pioneer while enhancing shareholder value," said Scott Sheffield, chairman and chief executive of Pioneer Natural.
Pioneer Natural is also halting efforts to sell properties in the Barnett Shale because of low bids, the company said.
The companies plan to drill 86 horizontal wells in the Wolfcamp area this year, increasing to 120 next year and 165 in 2015.
Pioneer is the largest land holder in Wolfcamp, with more than 161,900 hectares, according to its website. Its first two wells in the area produce about 75 per cent oil, 20 per cent natural gas liquids and 5 per cent gas. The company had planned to drill 90 horizontal wells in the area by the end of this year.
In the past 12 months, Chinese companies have announced acquisitions valued at US$17.9 billion for North American oil and gas companies, according to Bloomberg data.