China beat India again in the race for energy resources with buy-recommended CNOOC Limited (CEO)’s $2.3 billion purchase offshore Nigeria. Apparently an Indian company had bid more for the property, but was overruled by the Indian government. Still in the early stages of development, the project must overcome water depth of a thousand feet or more and the seller is a private company connected to a former military person, according to press reports. The operator, buy-recommended Total (TOT), confers economic, technological, and political credibility.
While the Government of China, 71% owner of CEO, may understand the need to be competitive in buying oil reserves, it appears to be lagging in recognizing comparable value in natural gas. To underscore the latter point, six-year futures of natural gas settled at a new high of $9.05 a million btu in our weekly series. Both CEO and buy-recommended PetroChina (PTR) have long-life natural gas production priced recently at less than a third of current six-year futures.
Kurt Wulff's McDep Associates offers realtime, independent research services for investors in the energy and utilities sectors. For more information, go to www.mcdep.com or email Mr. Wulff at firstname.lastname@example.org.