gas frac, page-8

Here's a small portion of the article from Pimco you spoke of:
Titled "Asia credit perspectives"

The strategic importance of Asian National Oil Companies
The key investment thesis for Asian NOCs resides in strong sovereign support due to their strategic importance. We believe these companies perform four roles that are critical to their economies:
Acquiring overseas assets: Most Asian NOCs are pursuing acquisitive corporate strategies, with distinct interests in unconventional assets in politically stable regions. We think these transactions not only help enlarge and diversify the current asset base, but also provide access to critical technologies that can help unlock large domestic resources. Notwithstanding the execution risks involved, we believe these acquisitive strategies point to a constructive outlook for Asian oil and gas companies.

Managing domestic reserves: China has a meaningful 14.8 billion BOE (barrels of oil equivalent) of proven reserves as of year-end 2011. Some of the country’s largest assets such as Daqing, Shengli, and Bohai Bay have been in production since the 1960s and are still generating sizable production flows (despite some associated costs, as noted above). And Malaysia’s NOC, Petronas, manages all domestic production of the country’s significant natural gas reserves and has added a new LNG facility.

Distributing products in domestic markets: With approximately 60% and 40% respective market share, Sinopec and PetroChina effectively monopolize domestic refinery product distribution. In India, three state-owned oil marketing companies, Indian Oil, Bharat Petroleum and HPCL, collectively control the domestic market and distribute fuel at subsidized prices.

Executing fuel pricing policies: China aims to reform fuel price regulation, whereby CNPC and Sinopec will become the execution arms of the government’s ongoing policy changes. India has a regulated fuel subsidy program under which state-owned oil companies suffer potential losses in the form of “under-recovery”: the difference between the product discounts and government reimbursement.
In the context of high energy prices, regional shortages and growing consumption, most Asian countries have increased support to their NOCs. Korea, for example, has codified sovereign support into the “KNOC Act,” which offers direct government guarantees on KNOC’s debts and allows regular government subsidies. In Malaysia, Petronas derives its powers from the Petroleum Development Act of 1974, which vests in the company the “entire ownership in, and the exclusive rights … of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia.”

Nevertheless, investors must be wary of the risks associated with business models that are highly dependent on sovereign support. Execution risks of aggressive mergers and acquisitions activities are certainly high. Most of Sinopec’s overseas acquisitions, for example, are performed via China Petrochemical Corp., the 100% state-owned parent company. The parent company then spends considerable time and resources to “de-risk” the assets before it injects a select few into its listed subsidiary, China Petroleum & Chemical Corp.

Regulatory headwinds may also present significant challenges. Fiscal uncertainties in India have certainly set limits to its fuel subsidy program and cast valuation overhangs on the country’s state-owned oil companies.

Investment implications
We expect more Asian oil and gas companies to tap the bond market going forward, and more often. Many will likely use the proceeds to finance their overseas acquisitions and ongoing capital needs, as well as to refinance their shorter-tenor bank debt.

In light of the secular trends of energy shortages and greater overseas acquisitions, Asian governments note the critical strategic importance of their oil and gas companies, and offer them strong sovereign support. In evaluating these investment opportunities, we scrutinize the bond structure to gauge the degree of sovereign shareholder support.

We also rely on rigorous bottom-up credit research to assess risks and identify best candidates within the sector. Our general preference is for companies with large upstream assets and limited regulatory headwinds in the downstream segment. Finally, we evaluate the companies based on their standalone credit strength and ability to access alternative sources of funding. We are finding select opportunities in the Asian energy sector attractive due to both major regional trends and company-specific factors.