Petro-king plans HK$381m upgrade

Termbray Petro-King Oilfield Services, which recently agreed to take over its tool- and equipment-making subsidiary in Singapore, plans to spend 300 million yuan (HK$379 million) in the next two years to quintuple its annual capacity in tools for fracturing rock formations to enhance oil and gas production.

The Shenzhen-based firm, which raised about HK$900 million in March in an initial public offering in Hong Kong, agreed this month to buy the 45 per cent stake in Sheraton Investment that it does not already own.

Sheraton makes tools and equipment used to prepare wells so that oil and gas can flow from underground to the surface, and tools used to inject pressure and chemicals to fracture rock formations.

Demand for such tools has been rising rapidly as Chinese oil and gas firms increasingly have to use more sophisticated equipment and methods to extract “unconventional oil and gas” that is harder to reach than conventional resources, since it adheres to rock formations more tightly.

Unconventional resources include those trapped between shale rocks and coal seams, which makes them costlier to extract.

Petro-King chairman Wang Jinlong said the takeover of Sheraton would further boost services provider Petro-King’s profit margin, since it would be able to further reduce the procurement of tools from third parties.