Chinese Company Searching for Billion-Dollar Oil Deals in Texas

China’s Yantai Xinchao Industry Co. is pursuing U.S. oil acquisitions worth as much as $1 billion in the Permian Basin, and it won’t be satisfied letting others run the show, according to the head of the company’s U.S. subsidiary.

Unlike other Asian companies that bought stakes in U.S. energy prospects in recent years, Xinchao is seeking so-called operated positions, or deals that give it primary authority over everything from how deep to drill to how intensively to frack each well, said Curtis Newstrom, chief executive officer of Blue Whale Energy North America Corp., the U.S. arm of the Shanghai-listed company.

Houston-based Blue Whale made a splash last year with its first two deals on behalf of its Chinese parent, a company virtually unknown in U.S. exploration circles: a $315 million acquisition of drilling rights across 7,100 acres from Juno Energy II in April 2015 and a $1.1 billion transaction in November with Tall City Exploration LLC and Plymouth Petroleum LLC. Both deals involved Texas oil fields. It is now on the search for other assets valued at between $500 million and $1 billion, he said.

“We’re going to continue looking for opportunities,’’ Newstrom said in an interview on the sidelines of Hart Energy’s DUG Permian Basin conference in Fort Worth, Texas, on Tuesday. “Xinchao is a very aggressive company and it’s looking to grow.’’

Texas Competition

Xinchao and Newstrom are up against some stiff competition in trying to expand their portfolio in the Permian basin of West Texas and New Mexico. International heavyweights and domestic titans from Exxon Mobil Corp. to Occidental Petroleum Corp. have been ramping up acquisition efforts in the region at a breakneck pace.

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http://www.bloomberg.com/news/articles/2016-05-24/chinese-company-searching-for-billion-dollar-oil-deals-in-texas