Chinese firm United Energy seeks acquisition of Canadian oil company

Chinese billionaire Zhang Hongwei intends to acquire a Toronto-listed oil and gas firm through his company, United Energy Group, Limited (United Energy).  His group is currently in consultation with the firm’s representatives and if plans push through, this would be his largest oil investment since the year 2007.

Thomas Pang, United Energy CFO said “We’ve had several rounds of discussions with our target company this year and both sides are seriously considering the terms.”  He further disclosed that his group expects to reach an agreement before the year ends.

It isn’t known which oil firm he is referring to, but Pang let out some details, commenting that it has solid oil and gas production and that the shareholders are bent on selling their shares.

Pang said his group is also eyeing similar oil and gas investments in other regions such as North America, Africa, and Southeast Asia. They are looking into productive oil companies, each with an estimated worth of about 1 billion dollars.

For this year, United Energy stocks went up by more than 20 percent vis-a-vis a 14 percent climb based on Hang Seng Index. It had recently settled at HK$1.67 based on HK trading.

In the United States, the March selling price of natural gas was 14 percent less than its Asian counterpart due to an upsurge in the production of shale.

From January to March 2012 alone, some 8.7 billion dollars in oil and gas transactions were conducted in Canada. Based on Bloomberg data, the first quarter jumpstart is comparable to 2009, when oil industry acquisitions were so rampant that completed deals reached over $40 billion.

Just two years ago, United Energy was investing in oil fields within Pakistan territory to the tune of $750 million. It has also acquired a credit line from China Development Bank amounting to $5 billion, to finance its acquisitions.

Pang disclosed that his group projects to step-up oil production at these oil fields from 24,700 to 30,000 bpd by the end of 2012. It has a majority stake (75%) in the oil fields and would like to team-up with a group that would join the company in further exploring Pakistani oil assets. Pang said they are willing to auction one half of their total holdings.

The Pakistani government holds the remaining 25% controlling interest, and it has given the company a February 2013 deadline to pump in a minimum of $8 million dollars before the state could grant an extension of oil exploration rights.

Pang announced “We have had discussions with several major offshore companies in the past months and we hope a deal can be struck soon.”