BLR: Chinarado

China Firm to Pay $570M for Oil and Gas Interests in Colorado and Wyoming

January 31st, 2011

China’s recent push to dominate manufacturing in the renewable energy markets is well documented. Last year, cleantech investment in China was up 30% to $51.1bn in 2010, by far the largest figure for any country. Now, the big red machine (sorry, Cincinnati baseball fans) is reaching its long arm into local and regional oil and natural gas plays.

Chinese energy company Cnooc Ltd. has agreed to pay $570 million for a one-third interest in Chesapeake Energy Corp.’s 800,000 leased acres in northeast Colorado and southeast Wyoming. The acreage is in the Denver-Julesburg (DJ) and Powder River basins. Cnooc is China’s biggest offshore oil and natural gas producer.

Oklahoma City-based Chesapeake, one of the nation’s largest natural gas producers, says the investment will help it speed up drilling in the promising Niobrara shale formation and could generate as many as 4,000 jobs in the area.

Chesapeake is currently operating four rigs in southeast Wyoming, with a fifth rig expected to be online soon, said John Dill, Chesapeake’s director of corporate development and government relations in the Rocky Mountain region.

“We fully anticipate that this deal is going to allow us to rapidly increase that rig count, and that would benefit both Colorado and Wyoming and create thousands of jobs that pay considerably above the state averages,” Dill said.

He said Chesapeake hopes to operate 10 rigs in Wyoming and Colorado by the end of this year, up to 20 by the end of 2012 and up to 30 by the end of 2013. It’s unknown now how many of those would be in Weld County.

Late last year, the company paid $850 million to Denver’s Anschutz Corp., owned by billionaire Philip Anschutz, for about 500,000 net acres of minerals rights in the Appalachian Basin.

Staff-Reported