This is an excerpt from a GS report on the 19/10/09 which...

This is an excerpt from a GS report on the 19/10/09 which highlights GS' bullish sentiment on global oil.

Domestic oil supply not expected to grow much, acquisitions being emphasized

A common refrain from the three China majors—PetroChina, Sinopec, and CNOOC—was the maturity of China’s crude oil resource base. We came away believing China oil supply
would likely be flat in coming years and may not even meet our modest 1%-2% annual growth assumption. Promising deepwater acreage in the South China Sea is believed to
primarily contain natural gas and not crude oil.
As a result of the maturity of the domestic oil resource base, all three China majors affirmed in our meetings their intention to pursue international E&P acquisitions, which
has also been well documented in wide-spread media reports (i.e., Wall Street Journal, Financial Times, Upstream magazine, Bloomberg, Reuters). The three companies appeared
interested in assets in most areas of the world, though there was less explicit mention of the United States or the North Sea. The lack of overt interest in the United States is perhaps not surprising in light of CNOOC’s unsuccessful attempt to buy the US E&P company Unocal in 2005. With that said, media articles (i.e., Wall Street Journal, Upstream
magazine, Bloomberg, Reuters) toward the end of last week indicated CNOOC may again be looking at acreage acquisitions in the Gulf of Mexico. In general, property acquisitions were indicated as being of much greater interest than corporate transactions.
In contrast to the perception outside of China that international oil deals are primarily being pursued to ensure security of supply for the country, the three Chinese oil companies emphasized in our meetings the importance of potential acquisitions being
financially attractive (as opposed to merely buying barrels for security of supply). The comments were generally reinforced by what appeared to be conservative planning
assumptions for crude oil prices and the discount rate used. Our own view is that it would be very difficult for any company to consummate acquisitions using conservative pricing and discount rate assumptions, given the generally limited access most publicly-traded oil companies have to sizable oil resource opportunities (and therefore intense competition in acquisition opportunities). In our view, most upstream acquisitions around the world seem
to reflect oil forward curve pricing assumptions, 8%-10% discount rates, and inclusion of some probable/possible reserves.



Im a ROC holder and wanted to know if ROC is a realistic candidate for a chinese acquisition (Sinopec has been mentioned in these forums). If so, what makes ROC attractive and is it just wishful thinking? And has there any precedent in the past where Chinese oil companies (SOE or otherwise) have taken a large stake in relatively small local explorers/producers? Any thoughts?

Cheeers