Penn West Energy Trust (PWE) is partnering with a Chinese
state-owned company to develop its oil-sands assets in northern
Alberta, marking China's latest move into the oil-rich Canadian
province.
Penn West, one of North America's largest conventional oil and
natural gas producers, said it and a unit of China Investment Corp.
will form a joint venture to develop the assets, which are in the
Peace River area. Penn West will contribute assets worth about
C$1.8 billion (US$1.77 billion) for a 55% stake in the venture, and
will act as operator.
China Investment Corp., or CIC, will invest C$817 million for a
45% stake. Of the total, C$312 million will be payable on closing,
with the remaining C$505 million applied to Penn West's future
capital and operating expenses.
The assets include about 237,000 net acres of oil-sands leases
and current production of about 2,700 barrels of oil equivalent a
day. The potential of the project is "substantial," Penn West
said.
Penn West said the Chinese company's support will assist in
moving the project from the current resource-appraisal phase
through to commercial-scale development and production.
CIC has also agreed to subscribe for about 23.5 million Penn
West units, or about 5% of its outstanding units, for gross
proceeds of about C$435 million. The units will be issued at
C$18.48 each. Penn West is up 4.8% to C$20.39 in Toronto.
CIC's investment is just the latest in a series of investments
that China's national energy firms have made in Alberta as China
moves to secure energy resources around the globe. The country is
now the world's biggest automobile market.
Last month, ConocoPhilips (COP) agreed to sell its stake in
Alberta's Syncrude oil-sands project to China Petroleum &
Chemical Corp., or Sinopec. That deal is worth US$4.65 billion.
Earlier this year, PetroChina Co. moved to buy a 60% working
interest in Athabasca Oil Sands Corp.'s (ATH.T) MacKay River and
Dover oil-sands projects for C$1.9 billion.
-By Carolyn King, Dow Jones Newswires; 416-306-2100;
carolyn.m.king@dowjones.com
