Chi­nese firm sells Al­berta drilling rights

China Daily (Canada) - - FRONT PAGE - By WANG RU wan­gru@chi­

A Chi­nese en­ergy com­pany is re­port­edly try­ing to dis­pose of its oil ex­plo­ration and drilling rights in Al­berta, Canada.

Canada Changhua En­ergy Co Ltd, a branch of China’s Shang­dong Changhua Food Group, owns 54 oil pro­duc­tion pads within a 138.24 sqm area in Cal­gary, cap­i­tal city of Al­berta. It re­port­edly now seeks in­vestors to ei­ther co-de­velop or pur­chase the en­tire site.

The project bro­ker sur­named Liu and from China Bei­jing Eq­uity Ex­change Group (CBEX), con­firmed the news to China Daily on Wed­nes­day.

The oil zone that Changhua Group ac­quired in 2011 is lo­cated within the Du­ver­nay for­ma­tion in Al­berta and is said to have a re­serve of shale oil roughly worth $5.721 bil­lion.

Ac­cord­ing to in­for­ma­tion re­leased by CBEX, the present net value of Changhua Group’s whole oil project in Al­berta is $617 mil­lion.

By the end of 2014, the Chi­nese com­pany pro­duced 500 bar­rels of oil per day from its seven oil wells in the zone.

An­a­lysts say the rel­a­tively low pro­duc­tion con­trib­utes in­signif­i­cant cash flow to the com­pany, es­pe­cially amid the drop in oil prices.

Global oil ex­porters, in­clud­ing the US shale drillers and Canada’s Al­berta oil sand, have reeled from the de­clin­ing oil prices, which has halved since last June.

“Over­seas oil ex­ploit­ing usu­ally de­mands a large ex­pen­di­ture in­clud­ing ex­plo­ration, in­fra­struc­ture build­ing, hu­man re­sources and other drilling costs,” said Tian Qinghou, a pro­fes­sor in the school of eco­nomics and man­age­ment, China Uni­ver­sity of Petroleum. “Com­bin­ing the is­sues such as global mar­ket fluc­tu­a­tion, which re­quires the in­vestors to have a sta­ble cap­i­tal source and a high anti-risk ca­pa­bil­ity.”

Some industrial an­a­lysts, how­ever, be­lieve that it is the best tim­ing for Chi­nese com­pa­nies to pur­chase en­ergy, over­seas.

Changhua Food Group, founded in 1995 in Shan­dong prov­ince, op­er­ates its main busi­ness in seafood pro­cess­ing and ex­port. It is listed on the Sin­ga­pore stock mar­ket.

Other Chi­nese play­ers in the zone in­clude China’s two oil gi­ants, Petro China (in a joint ven­ture with En­cana Corp) and Sinopec Canada, a sub­sidiary of China Petro­chem­i­cal Cor­po­ra­tion (Sinopec Group).

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.