A Chinese investment firm has its sights set on West Texas as they declare their intent to spend $1.3 billion (8.3 billion yuan) to buy massive oil fields in Howard and Borden counties. This purchase is part of a trend of Chinese interest in U.S. energy resources.
Yantai Xinchao Industry Co. has signed a letter of intent to the Shanghai Stock Exchange to acquire oil fields in the West Texas Permian Basin area, now owned by Tall City Exploration LLC and Plymouth Petroleum LLC, two Nevada-based companies with Midland offices. According to the stock exchange filing from Saturday, Oct. 31, this deal is part of a limited liability partnership in which Yantai Xinchao will also acquire Ningbo Dingliang Huitong Equity Investment Center.
The purchase has been approved by the U.S. Committee on Foreign Investment, part of the Treasury Department, the filing said.
This deal is part of a growing trend in which smaller Chinese oil and gas companies seek out international investment opportunities to deal with fierce competition from state-owned energy firms, and intense government regulations of their work.
The Permian Basin is one of the oldest oil fields in the country, and is widely considered the most important oil and gas resource in the U.S. Many other North American basins are contracting, but the Permian is still creating big-money deals in a down market, this deal shows. The Permian basin spans from just south of Lubbock, to just south of Midland and Odessa, extending westward into the southeastern part of New Mexico.