recogniton once drill bit turns

Onlyhave to look around a new deals being done to see how much attention MPO will get once the first well has been drilled in Quebec......Cnooc been busy today
Cnooc Ltd. will pay $1.08 billion for a one-third stake in Chesapeake Energy Corp.’s Eagle Ford shale project in Texas, in the biggest acquisition of a U.S. oil and gas asset by a Chinese company.
Cnooc, listed in Hong Kong, plans to buy 33.3 percent of Chesapeake’s 600,000 oil and gas leasehold acres in Eagle Ford, the companies said in separate statements. Cnooc will also pay $1.08 billion of Chesapeake’s drilling costs in the basin, Chief Executive Officer Aubrey McClendon said in an interview.
The purchase would give Cnooc its first onshore energy asset in the U.S., five years after it dropped an $18.5 billion bid for Unocal Corp. amid political opposition. China’s third- largest oil company has spent at least $3.8 billion on overseas acquisitions in the past year as the nation’s energy demand surges.
“The deal reflects the ambition of Chinese companies to enter the global oil and gas industry, especially when China’s gas demand is expected to rise sharply,” said Grace Liu, an energy analyst with Guotai Junan Securities in the southern city of Shenzhen.
The Cnooc purchase was the second announced in one day for drilling rights in the Eagle Ford shale, which lies across a swath of southern Texas. Statoil ASA of Norway agreed to pay $843 million, or $10,900 an acre, to set up an equal joint venture in the region with Talisman Energy Inc. Cnooc is paying $10,800 an acre, which includes the upfront cash and drilling costs in the basin, McClendon said.
‘Confirming Value’
“Both deals, which were independent, do a nice job of confirming value in the area,” he said.
The per-acre prices are “solid” and should buoy the stock of Chesapeake and other U.S. producers with large holdings in the Eagle Ford shale including EOG Resources Inc., Pioneer Natural Resources Co., SM Energy Co. and Petrohawk Energy Corp., Scott Hanold, an Austin, Texas-based analyst for RBC Capital Markets, said in an e-mail today.
Cnooc jumped 4.5 percent to close at HK$16.80 in Hong Kong trading, the highest level since Oct. 30, 2007. The shares have advanced 38 percent this year, outpacing the 6.1 percent gain in the benchmark Hang Seng Index.
Chesapeake, based in Oklahoma City, rose as much as 5.5 percent. The shares gained 45 cents, or 2 percent, to $23.50 at 2:23 p.m. in composite trading on the New York Stock Exchange.
Chesapeake has 10 wells in the Eagle Ford and will increase to about 40 rigs by the end of 2012 with the Cnooc funds, according to its statement. The company said the project will reach peak production of 400,000 to 500,000 barrels of oil equivalent a day in the next decade.

Chinese Capital
U.S. regulatory approval isn’t needed for the Eagle Ford stake purchase, Jim Gipson, a Chesapeake spokesman, said by e- mail.
“This deal is completely consistent with what U.S. government has said they would like to see Chinese energy companies do, which is to provide capital into America to acquire minority interests and for American companies to use that capital to go out and develop American oil fields and to reduce oil imports,” McClendon said.
Cnooc bought minority interests last year in four exploration licenses Statoil ASA holds in the U.S. Gulf of Mexico. That purchase may have cost less than $80 million, Gordon Kwan, the head of energy research at Mirae Asset Securities, said in November.
Largest Investment
The Cnooc-Chesapeake deal would be the largest investment by a Chinese company in the U.S. oil and gas industry, after Hopu Investment Management Co. bought $100 million of Chesapeake’s convertible preferred shares in May, according to Bloomberg data.
Cnooc joins Reliance Industries Ltd. in buying shale assets in the U.S. as China and India compete for global energy resources. India’s biggest company by market value has spent $3.4 billion since April investing in U.S. shale gas, including a $1.3 billion purchase of areas in the Eagle Ford formation from Pioneer Natural Resources Co.
“You have all these companies that have big acreage positions, but they don’t have the capital to develop the assets,” said Ralph Eads, the Houston-based chairman of energy investment banking at Jefferies Group Inc. Jefferies is advising Chesapeake on the transaction. Tudor Pickering Holt & Co. is advising Cnooc.
Liquid-Rich Shale
The Cnooc purchase at $10,900 an acre is similar to the $11,100 an acre that Reliance paid to Pioneer in June, Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said in a report.

“Cnooc has struck a good deal given the assets are liquid- rich, which is about three times more valuable than gas on an energy equivalent basis,” according to Beveridge.
Crude oil futures have averaged $77.86 a barrel this year on the New York Mercantile Exchange, up 25 percent from last year’s average of $62.10.
Eagle Ford is estimated to have reserves equaling more than 80 billion barrels of oil. Shale is rock that can be heated or treated with chemicals to release oil and gas.
The formation is about 50 miles (80 kilometers) wide and 400 miles long, extending from Texas’s southern border to the east, according to the Railroad Commission of Texas, which regulates the oil industry. Eagle Ford delivers natural gas and “appears to produce much more oil” than other shale fields, the agency wrote on its website.
http://www.bloomberg.com/news/2010-10-11/cnooc-unit-to-pay-1-08-billion-in-cash-for-stake-in-gas-project.html