• 1 day This Will Be the Answer From China On U.S. Tariffs
  • 16 hours Bad News For The Climate: Coal Burning, And Carbon Emissions, Are On The Rise Again
  • 4 hours China's Yaun/Gold backed Futures contracts
  • 1 day France Terrorist Attack?! At Least One Dead In French Supermarket Hostage-Taking
  • 1 day Twitcoin....
  • 2 days Snowden Reveals Bitcoin Transactions Being Tracked by NSA
  • 1 day U.S. Charges, Sanctions Iranians For Global Cyber Attacks on behalf of Tehran. What about sanctions on Russia?
  • 15 hours Canada Bent On Ruining Its Oil Industry
  • 3 days Elon Musk’s $2.6 Billion Tesla Challenge
  • 24 hours The Facebook/Cambridge Analytica Scandal
  • 1 day Surprise! Aramco Scraps International Listing Plans
  • 16 hours Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 2 days Getting out of oil .. now
  • 2 days EU Proposes Online Turnover Tax For Big Tech Firms
  • 2 days U.S. Judge To Question Big Oil On Climate Change
Alt Text

Russia Will Stick To The OPEC Deal

Russia’s energy minister has emphasized…

Alt Text

American Investors Aren't Interested In Aramco

The supposed date for the…

Alt Text

What The Saudi-Russian Alliance Means For Oil Markets

Saudi-Russian relations have improved significantly…

Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

Trending Discussions

Chinese M&A Wave Could Be Bad News For Investors

offshore rig

Up to $35 billion in Chinese investor dollars in the oil industry have been slated for mergers and acquisitions, but this fact may work against the best interest of the country’s capital holders, according to a new report by Bloomberg.

A majority of the $160 billion in M&A in the oil sector over the past 20 years has proved to be disadvantageous to shareholders in China, analysts at Sanford C. Bernstein & Co. said.

Offshore producer CNOOC has spent $15 billion on just the 2013 Nexen purchase. CEFC China Energy invested in Russian state giant Rosneft at a $9 billion rate earlier this year.

“After a period of inactivity, we expect M&A activity to increase,” Bernstein analysts said in the report. “Unlike previous cycles, M&A will be more disciplined and hopefully more value orientated.”

At a $65 barrel, outbound mergers targeted at Europe and Africa have lost investors $23 billion in value, Bernstein says, which uses purchase price, remaining net-present value and free cash flow.

“Given fears of energy security, the perceived wisdom is that Chinese companies are buying resources to make up for the deficiency in domestic oil and gas reserves,” the analysts said. “As such, many investors see outbound M&A as a form of national service, which is largely wasteful.” Related: The 'Mega' Oil Field That Will Never Boom

West Virginia’s shale gas business got a $83 billion investment from the world’s largest power company, China Energy, earlier this year.

Mergers in the domestic space are popular as well, but do not lead to a similar drain of capital resources. Earlier this year, China approved the merger between its biggest coal producer Shenhua Group Corp, and one of the top five state power companies, China Guodian Corp, in a deal that would create the world’s largest power company by installed capacity and with assets worth $271 billion. That company is now called China Energy.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Trending Discussions

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News