Korea National Oil Corp. agreed to buy a stake in a Texas shale-oil block from Anadarko Petroleum Corp. (APC) for $1.55 billion, the second-largest purchase of U.S. oil and natural-gas fields this year, as Asian companies increase access to U.S. reserves.
South Korea’s state-owned energy company, known as KNOC, will pay Anadarko’s drilling costs in the Maverick basin block this year after the deal closes, in exchange for a 23.67 percent stake, according to an e-mailed statement from the South Korean government yesterday. KNOC will pay 90 percent of Anadarko’s drilling costs in the block after this year, the Woodlands, Texas-based company said in a statement.
The deal allows Anadarko to boost funding to exploit more reserves, building on the sale of assets in the northeastern U.S. last year to Japan’s Mitsui & Co. for $1.5 billion in drilling and development costs. KNOC is switching focus from buying companies to investing in fields to secure supplies for an economy that relies on imports for almost all its oil needs.
“South Korea needs to keep buying these sorts of energy assets,” said Yoo Young Kuk, an oil and chemicals analyst with KTB Investment & Securities Co. in Seoul. “The global supply of oil and gas is likely to tighten and prices for the assets will rise, given demand from emerging economies including China.”
Anadarko rose $3.51, or 2.7 percent, to $79.98 at the close of trading on the New York Stock Exchange. The stock has advanced 13 percent during the past 12 months.
Jefferies & Co. and Deutsche Bank AG advised Anadarko on the sale, according to Anadarko’s statement.
“Cash is Cheap”
The deal shows Anadarko is branching out further into dealings with Asian companies, said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.
Asia “is where the money is,” said Gheit, who has a “market perform” on Anadarko shares and owns none. “These people have enormous amount of U.S. dollars and cash is cheap.”
BHP Billiton Ltd. (BHP)’s $4.75 billion bid for Arkansas gas operations from Chesapeake Energy Corp. (CHK) was the largest purchase of U.S. oil and gas assets announced this year according to Bloomberg data.
The KNOC stake includes 80,000 net acres in the Eagle Ford shale that produce 75 percent oil, and 16,000 acres in the Pearsall Shale that produce gas, the South Korea company said. Shale formations consist of dense rock that can be broken apart to release oil and gas.
KNOC said in February it plans to invest as much as $4 billion in overseas oilfields this year to secure supplies. The company plans to raise daily output by 60,000 barrels to 240,000 barrels by the year end.
The shale block in Texas holds the equivalent of 491 million barrels of oil and is producing 28,000 barrels a day, South Korea’s Ministry of Knowledge Economy said in an e-mailed statement. Anadarko’s holding in the block will fall to 47.33 percent from 71 percent after the deal, according to the statement.
KNOC Chief Executive Officer Kang Young Won said in October he will focus on investing in producing fields rather than buying companies, after completing a hostile takeover of Scotland’s Dana Petroleum Plc (DNX) for 1.8 billion pounds ($2.9 billion) last year.
The South Korean company also acquired 95 percent of Altius Holdings Inc. for $515 million last week, the ministry said in the e-mailed statement.
The two acquisitions may boost KNOC’s output by 16,500 barrels a day, the ministry said. Altius Holdings owns four oil blocks in Kazakhstan with reserves totaling 56.9 million barrels, the South Korean ministry said. Altius is the Kazakh arm of Arawak Energy, a unit of closely held commodity trader Vitol Group.