The United Energy Group, the oil and gas unit of mainland tycoon Zhang Hongwei that bought BP's Pakistan assets for US$750 million last year, aims to balance its risk profile by clinching a larger acquisition of a company based in North America or Europe.
The Hong Kong-listed company was in talks with non-state-owned oil and gas firms in the developed regions about taking them over, chief financial officer Thomas Pang Pui-yin said yesterday.
"We are after projects whose resources have already been explored with positive results, since we don't want to do high-risk, high-return exploration that are more available in emerging markets," Pang said.
"We don't mind paying a premium to buy partly proven projects and invest in them to bring them to production."
He said United was mostly interested in assets of independent firms founded by former state-backed oil companies, but the entrepreneurs involved tended not to let go of their control without protracted bargaining.
United, 72 per cent owned by Zhang, has met owners of a target company in North America a few times, but a deal remains elusive.
Pang said: "We are looking at potential deals in the region of US$1 billion, and we are looking at targets that are based in North America and Europe but have assets also in South America and Africa besides their home regions."
United obtained a US$5 billion credit facility from policy bank China Development Bank in December 2010, and has drawn down US$640 million to fund the purchase of the Pakistani assets. The 10-year loan it took out has an interest rate of about 5 per cent.
United posted a net profit of HK$213.9 million for last year, compared with a loss of HK$34.5 million in 2010, thanks to the Pakistani acquisition in September. It aims to raise daily oil and gas output to 25,500 to 26,000 barrels of oil equivalent (boe) this year at its onshore fields in Pakistan, up from 21,400 boe last year.
The fields produced as much as 39,000 boe a day in 2009 under BP's control. Pang blamed the decline in 2010 and last year to a lack of BP investment.
United plans to plough US$200 million to US$220 million this year on the fields' development to further boost their output and reserves.