This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

China's Oil Hunger Hits $15 Billion in Canada Amid U.S. Diet Deals

CNOOC's bid for Nexen may still be worth watching for U.S. investors and energy players. Benchmark analyst Mark Gilman said in November that Chinese M&A interest in North America is at least partially about acquiring the technological expertise required from complicated deepwater and shale drilling. The same could be said of ExxonMobil's acquisition of XTO Energy, seen as not only an asset play but a shale drilling expertise and technology acquisition.

Gilman noted the key to deals will be the size of new shale finds and the emergence of new types of drilling methods like fracking. "You have to keep half an eye on the frequency on which new plays are emerging... In terms of shale , we are talking about a business that has emerged in the last two to three years and has exploded on the scene," said Gilman.

Sinopec's acquisition of a stake in Petrogal Brasil includes access to the Jupiter and Tupi offshore oil fields -- the largest oil finds in the western hemisphere since the 1970s. The push into what is known as the Brazilian pre-salt, adds to a legacy of Chinese oil ventures with established players in hard to drill areas.

More recently, Sinopec bought a 33% interest in five shale ventures owned by Devon Energy for $2.2 billion, giving it access and a drilling partner in prized shale assets like the Tuscaloosa Marine , Niobrara, Mississippian, Ohio Utica and the Michigan Basin shale formations.

The head of China's Sinopec was recently seated next to Chesapeake Energy CEO Aubrey McClendon at an NBA Finals game. Chesapeake Energy is looking to sell billions in shale assets as a way to meet a $10 billion-plus funding gap this year. There have been reports that the recent visit by Sinopec's CEO Fu Chengyu to Chesapeake's hometown of Oklahoma City was the prelude to an asset acquisition.

Estimates for the potential oil and gas trapped in Chinese domestic shale vary, but there are expectations that the Chinese energy companies will develop in the coming years a significant domestic shale drilling industry.

Unlike many Chinese acquisitions and joint ventures focused on assets in one drilling region or at least one country, Monday's acquisition of Nexen provides CNOOC access to oil and gas assets around the world, including in Canada, West African countries, and access to prized U.S.-based Gulf of Mexico deepwater and continental shale drilling opportunities.

Cannacord Genuity analyst Phil Skolnick said the market is likely to see this as a positive indicator of the ability of Talisman Energy (TLM) to be acquired given it has a mixture of international assets (TLM's Asia assets in particular are potentially of interest). However, he noted that Talisman lacks the oil sands exposure of Nexen, which on its own makes Nexen a more attractive target. On Monday, Talisman announced that it was selling a 49% stake in its U.K. North Sea business to Sinopec for $1.5 billion.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs