China's state-owned energy company,
China Petroleum & Chemical Corp.
or Sinopec (
) is mulling over acquiring assets worth billions of dollars from
the cash-strapped U.S. natural gas producer
Chesapeake Energy Corporation
Per a report from 'Financial Times', Sinopec's top management
visited Oklahoma, U.S. to carry out due diligence in connection
with the Chesapeake assets. The details regarding the assets, which
have raised Sinopec's interest, have not been revealed.
In the backdrop of falling gas prices, the U.S. based gas giant
has been on a spree to divest assets valued at about $11.5 billion,
as it is struggling to fund its capital budget amid diminishing
The assets which have been put up for sale include - the
Mississippi Lime in Oklahoma, the Utica Shale in Ohio and the
Permian in West Texas and New Mexico. Among these, the 1.5 million
acres of Permian assets are considered to be the most reputed area
for oil development in the U.S. The analysts have estimated this
land alone to bring in over $6 billion through sale.
Earlier in June 2012, Chesapeake had struck an asset sale deal
with private equity firm Global Infrastructure Partners related to
its pipeline properties for a total consideration of $4 billion in
cash. Further, the sale of the Permian acreage will greatly help
Chesapeake in reducing its debt burden.
Meanwhile, Sinopec is in pursuit of opportunities to augment its
earnings by expanding its upstream segment through mergers and
acquisitions. The company is in the process of restructuring to
accommodate increased activities worldwide. Sinopec has been slower
in entering the U.S. compared to its Chinese rival
). Earlier this year, Sinopec inked a $2.5 billion deal with U.S.
oil and natural gas company
Devon Energy Corporation
Both Chesapeake and Sinopec hold a Zacks #3 Rank, which is
equivalent to a Hold rating for a period of one to three
CNOOC LTD ADR (CEO): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis
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