On the Prowl in the Permian | Russell T. Rudy Energy LLC
“World Oil” reports that China’s Yantai Xinchao Industries, through its U. S. subsidiary, Blue Whale Energy, is looking for deals in the Permian basin of West Texas and Southeastern New Mexico. Curtis Newstrom, CEO of Blue Whale, indicated that they are looking for deals of up to $1 billion and want to operate any assets purchased.
Blue Whale already has entered into large deals in Texas. Last year, it purchased drilling rights on 7,100 acres from Juno Energy for $315 million. In a separate transaction, it bought assets from Tall City Exploration and Plymouth Petroleum for $1.1 billion. Unlike most Asian investors in U. S. energy deals, Blue Whale wants to operate and already has conducted a water flood project on the North flank of the Permian Basin. Newstrom indicated that “We’re going to continue to look for opportunities. Xinchao is a very aggressive company and it’s looking to grow.”
Blue Whale is up against stiff competition for acreage and mineral rights in the Permian basin. Operators as large as Exxon and Occidental, as well as over 100 private equity firms, are all vying to increase their positions in the area. This competition has, in turn, bid up prices.
While Blue Whale professes to be “agnostic” as to which plays in the U. S. are of interest, Newstrom did concede that the Permian basin is the only area where new wells can make money. He concluded, “In this price environment, the Permian’s the only place that works.”
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/5/24/chinese-company-searching-for-billion-dollar-oil-deals-in-texas .
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