China stakes claim to S. Texas oil, gas

State-owned Chinese energy giant CNOOC is buying a multibillion-dollar stake in 600,000 acres of South Texas oil and gas fields, potentially testing the political waters for further expansion into U.S. energy reserves. With the announcement Monday that it would pay up to $2.2 billion for a one-third stake in Chesapeake Energy assets, CNOOC lays claim to a share of properties that eventually could produce up to half a million barrels a day of oil equivalent. It also might pick up some American know-how about tapping the hard-to-get deposits trapped in dense shale rock formations, analysts said. As part of the deal, the largest purchase of an interest in U.S. energy assets by a Chinese company, CNOOC has agreed to pay about $1.1 billion for a chunk of Chesapeake’s assets in the Eagle Ford, a broad oil and gas formation that runs largely from southwest of San Antonio to the Mexican border. CNOOC also will provide up to $1.1 billion more to cover drilling costs. The deal represents China’s second try at making a big move into the U.S. oil and gas market, following a failed bid five years ago to buy California-based Unocal Corp...more