China’s banks becoming financial giants
China’s banks becoming financial giants
Houstonian Jim Trippon, CEO of Trippon Wealth Management, wrote this month’s cover story on the phenomenal growth of China’s banking system. A frequent contributor to Oil & Gas Financial Journal, Trippon has 23 years’ energy industry experience and has written a new book, China Stock Guru, due out in 2008. He is considered one of the country’s top experts on investing in China. China’s banks have soared back from the edge of collapse a few years ago to become financial giants. They did this by restructuring and forging alliances with foreign retail and investment banks, including Bank of America, Citigroup, HSBC, Goldman Sachs, Merrill Lynch, Royal Bank of Scotland, and Commonwealth Bank of Australia. Last year Industrial & Commercial Bank of China (ICBC) beat Citigroup and Bank of America, becoming the world’s largest bank by market value. Due in part to their alliances with several large American investment banks, don’t be surprised to see China’s banks become participants in the US oil and gas industry.
Chevron inks long–term deal with China
Speaking of China, Chevron Corp. last month signed a 30–year production–sharing contract with China National Petroleum Corp. (CNPC) for the joint development of the Chuandongbei natural gas area in central China. Chevron will serve as operator and hold a 49% participating interest, while CNPC will hold 51% of the project. Chuandongbei, in the Sichuan province, has an estimated resource base of 5 tcf of natural gas. Design capacity at the proposed gas plants is expected to be 740 MMcf per day. Dave O’Reilly, Chevron’s chairman and CEO, noted, “[This contract] demonstrates our worldwide focus on large–scale E&P projects and our long–term strategy to grow our business in China.”
GE makes equity investment in drillship
Did anyone notice that GE Energy Financial Services, with $16 billion in assets, is making its first equity investment in offshore drilling? On Dec. 18, GE reported it will invest $54 million and co–finance the acquisition of a drillship to drill for oil in the deepwater off the coast of Brazil. An affiliate of GE Energy Financial Services, GE Capital Markets, is a mandated lead arranger for $259 million in senior debt facilities along with WestLB, New York branch, which will serve as the agent and other mandated lead arranger. GE Transportation Finance joined with GE Energy Financial Services in underwriting the debt. Peregrine I is rated to drill in 5,200 feet of water to a depth of 25,000 feet. A Brazilian offshore rig operator will operate the vessel under a contract with Petrobras. Mike Mullen Energy Equipment Resources, a Dallas–based offshore assets investor, and Pareto World Wide Offshore, a Norwegian private equity fund, are also investors in the Peregrine I.
Arrowhead retained for Paradox basin play
Arrowhead Energy Partners LLC has been retained by Harvey V. Risien, former president and director of Harken Energy Corp., and his partner, Liberty Pioneer Energy Source Inc., in connection with obtaining a capital commitment of nearly $300 million for the joint development of holdings in and around Delta Petroleum’s discoveries in the Paradox basin in Utah, says Chuck Watson, Arrowhead’s managing partner. Delta Petroleum has described their reserves in the basin as “immense” with one well producing 7.5 MMcf of gas and 1,379 bbl of oil over the first 48 hours. Arrowhead Energy Partners is a recent spin–off from Arrowhead Financial Services Ltd., an institutional asset management firm, that focuses on A&D opportunities in the exploration, production, oilfield service, and midstream segments of the domestic and international energy industry.
SEC taking close look at disclosure rules
At long last, the US Securities and Exchange Commission will consider the possibility of revising oil and gas reserves disclosure requirements. On Dec. 11, the SEC issued a statement recognizing that significant changes have occurred in the business in the three decades since the federal securities regulator first adopted oil and gas disclosure rules. Over the years, numerous investors, analysts, and energy companies have urged the SEC to adopt new oil and gas disclosure requirements in order to better reflect a company’s reserves and how they are managed. The SEC took note of this in its decision to seek public comment on the possibility of updating reserves disclosure requirements.
Houston oilman reports to prison
Oscar Wyatt, the founder of Coastal Corp., now owned by El Paso Corp., reported to federal prison in Beaumont, Tex., on Jan. 2 to begin serving a one–year sentence for conspiring to make illegal payments for Iraqi oil under the United Nations’ Oil–for–Food program. Three weeks into his trial on federal charges of conspiracy, wire fraud, and violating US laws governing dealings with Iraq, Wyatt pleaded guilty and acknowledged orchestrating a $200,000 “surcharge” payment to Iraq. The government claimed that such payments went into a bank account controlled by former dictator Saddam Hussein. As part of his plea agreement, Wyatt will forfeit $11 million and serve one year in a minimum security facility. He is 83 years old.