Sinochem to buy stake in Pioneer Natural Resources' Texas shale gas field for $1.7 bn

China's state-owned Sinochem Corporation, the country's fourth largest oil company, yesterday agreed to buy a 40-per cent stake in about 207,000 net acres in the Wolfcamp shale field in Texas from Pioneer Natural Resources Co for $1.7 billion.

The deal comes as Chinese companies invest heavily in energy sources in North America, and amid a prolonged review by Canada on another Chinese state energy giant Cnooc's $15.1 billion bid for Canadian oil-sands operator Nexen Inc.

The transaction also comes two years after India's oil refinery-to-retail conglomerate Reliance Industries bought a 45-per cent stake in Pioneer's Eagle Ford assets for $1.15 billion. (See: RIL to enter into shale gas JV with Pioneer of US)

Beijing-based Sinochem will acquire about 82,800 net acres in the Wolfcamp shale field in Texas and pay $500 million in cash and spend $1.2 billion to fund a part of Pioneer's future drilling costs.

Sinochem is paying a huge premium for the purchase, primarily to gain knowledge on the drilling techinques of shale gas.

Analysts have valued the Wolfcamp shale field acreage at between $10,000 and $15,000 per acre, but Sinochem has paid $18,100 per acre.