The national oil development agency purchased three oil exploration and production assets in the US, raising the oil self-sufficiency rate from 10.8% to 11.2%.
The Korea National Oil Corporation (KNOC, CEO Kang Yeong-won) has taken over three production and exploration assets from American companies in tandem with Samsung C&T and STX Energy. The combined reserves add up to 80 million barrels. With the acquisitions costing US$973 million in total, Korea has succeeded in raising its ratio of petroleum self-sufficiency from 10.8% to 11.2%. The state-run oil company invested US$190 million to secure 14 million barrels of reserves.
Momentum for Private-sector Players to Participate in Petroleum Development Projects
According to industry experts, the newly acquired assets are highly valuable in various aspects. First of all, the production asset which belonged to Northstar, and which is located in the shallow sea area of the Gulf of Mexico, is relatively less developed, with most of its platforms open to immediate production following additional drilling. Located near the ANKOR offshore field run by KNOC, a synergy effect is also anticipated.
The on-ground production facility bought from Parallel is characterized by low management risks, while the SS217 exploration lease from Houston Energy is situated along an extension line of a reservoir whose productivity and exploration success rate have already been proven.
“Through the process, we absorbed many top-class engineers and advanced technologies, shoring up our competitiveness in natural resources development,” said KNOC, adding, “We believe this will lead more private-sector companies to join oil development projects down the road.” It estimated that the domestic daily production volume will increase by 13,100 barrels, to reach 353,100 barrels.
In the meantime, a special private equity fund for acquiring Parallel’s oil fields is in the making. The tentatively named RG Consortium, which includes RG Energy Asset Management, Samsung Securities, Woori Investment & Securities and Mirae Asset Securities, decided on December 11 to acquire up to 39% of the firm’s American oil field asset shares. It is now working on the fund to this end, dubbed the RG Prize Special Private Equity Fund for Overseas Resources Development No. 1. The target amount is 380 billion won.
“Parallel’s assets have a continuous production history, allowing us to expect a stable cash flow, while reserves and production capacity may rise with time. Furthermore, business stability is high since KNOC and Samsung C&T own the field operating rights,” said RG Energy Asset Management.