Yantai Xinchao, a Chinese real estate developer, has inked a letter of intent to buy oilfields in the Permian Basin for $1.3 billion (8.3 billion yuan) through a limited liability partnership. The deal highlights China’s growing interest in the US energy sector and continues the trend of expanding Chinese interest in overseas oil assets.
The oil fields in Howard and Borden counties will be acquired from two Nevada-based companies: Tall City Exploration and Plymouth Petroleum.
Shares of Yantai Xinchao were suspended from trading last Friday after the announcement to allow for asset restructuring and the purchase. Trading is expected to cease for approximately one month with plans for periodic updates to come.
The deal is being facilitated by Ningbo Dingliang Huitong Equity Investment Center and through its subsidiary, Moss Creek Resources LLC.
Yantai Xinchao Industry Co., Ltd. engages in the real estate, cable, and travel. The company develops and constructs residential and commercial real estate properties, offers coaxial cables and broadband network data cables, and provides travel and tourism services.
Many Chinese oil and gas companies have been looking for deals abroad to compete against local government owned energy firms larger in scale.
The Wall Street Journal has recently reported that Chinese companies are looking abroad for oil and gas deals due in part to the strict domestic restrictions, which renders investment in Chinese producers nearly impossible. State-run companies dominate China’s energy sector, which has left little room for independent companies to invest.
The transaction has been approved by the United States Committee on Foreign Investment.
Lilia Fabry is the owner of MPP Freelance, a writing and web design firm in Houston, TX.