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Sinopec considers bid for Chesapeake assets: FT
Posted on Thursday, 21 June 2012 10:55
Chinese petrochemicals explorer Sinopec is mulling over a possible bid for assets owned by Chesapeake Energy, according to the Financial Times (FT), citing people familiar with proceedings.
These people told the news provider that Fu Chengyu, chairman of Sinopec, was in the vendor’s home state of Oklahoma this week to conduct due diligence on the assets, said to be worth billions of dollars.
However, the FT added that the Chinese firm is not making an offer for the entire business, and quoted unidentified bankers and oil executives as saying that by not going down this road, the company is avoiding a potential political backlash.
No details of the specific assets Sinopec may bid for have been disclosed, but those up for sale include leases on 1.50 million acres of land in the Permian Basin region of western Texas and New Mexico.
Chesapeake is currently undergoing an asset disposal programme worth USD 11.00 billion in a bid to arrest the decline in earnings as a result of a fall in US natural gas prices, the FT said in a separate report.
It added that Sinopec is planning to make more mergers and acquisitions than in recent times, citing sources close to the company.
Chesapeake claims to be the second largest natural gas producer in the US, with leading positions in the Barnett, Haynesville, Bossier and Marcellus natural gas shale plays.
It is also the country’s most active driller of new wells, according to its website.
The business was founded in 1989 when it employed just ten people.
In fiscal 2011, it generated total revenues of USD 11.64 billion, up 24.2 per cent on 2010.
Sinopec, which is officially known as China Petrochemical Corporation, was formed in 1998 and is owned by the Chinese state.
The company is headquartered in Beijing and is also active in the industrial investment and investment management sector, as well as gasoline and kerosene wholesale and the marketing of oil and natural gas.
© Zephus Ltd