JXHLY ENEOS Holdings Inc (PK)

ConocoPhillips (COP) has agreed to sell its 9% stake in the Syncrude oil-sands project in Canada to China Petroleum & Chemical Corp. (SNP, 0386.HK) for $4.65 billion--a sign that China's national oil companies have secured a strong foothold in one of the world's most important crude sources.

The deal marks the biggest energy investment of a Chinese government-backed company in North America, and it underscores China's increasingly assertive strategy to secure energy resources around the world. The country's rapid growth and emerging middle class has made it the top automobile market in the world, surpassing the U.S. in 2009, and its state-backed oil companies have been acquiring both oil and gas reserves and storage globally.

Just last month, Cnooc Ltd. (0883.HK), China's top offshore oil explorer, said it agreed to pay $3.1 billion in cash for a stake in one of the largest Argentine oil exploration companies. Last year, Cnooc bought stakes in the U.S. Gulf of Mexico from Norway's Statoil ASA (STO). The Chinese companies' successful bids stand in stark contrast to Cnooc's 2005 attempt to buy Unocal, which the company abandoned after it sparked stiff resistance from U.S. lawmakers.

The move by Sinopec, as the international arm of China Petroleum and Chemical Corp. is known, further strengthens China's presence in Alberta's oilsands, a rich oil-producing area that has enabled Canada to become the largest exporter of crude to the U.S. In February, PetroChina purchased a stake in an Athabasca oil Sands Corp. (ATH.T) project for C$1.9 billion.

Canada has generally been open to investment from China--the last major dispute was over a proposed takeover of Canadian miner Noranda Inc. in 2004 by a state-owned Chinese company, expected to be valued at more than $7 billion. The deal fell apart amid controversy over the Chinese company's human-rights practices in China.

In a press conference in Washington D.C, Canadian Prime Minister Stephen Harper said he had no "immediate reaction" about the deal. "Foreign takeovers of a certain size have to be reviewed to assure they're of net benefit to the country, and we do also have the national security review provision in our legislation as well."

Industry Canada, a federal bureau, reviews all acquisitions of Canadian assets over C$299 million by any foreign company. Factors considered are the effect of the investment on production levels, employment and competition in Canada, as well as "the compatibility of the investment with our economic and cultural policies," said Industry Canada in a statement. Acquisitions by state-owned foreign entities undergo additional scrutiny of the company's "corporate governance and commercial orientation," the statement said.

Syncrude is the largest Canadian oil-sands project, and it produced an average of 280,000 barrels per day last year, or about 10% of Canada's oil production. It's a joint venture operated by Canadian Oil Sands Trust (COSWF, COS.UN.T), Imperial Oil Ltd. (IMO, IMO.T), Suncor Energy Inc. (SU, SU.T), ConocoPhillips (COP), Nexen Inc. (NXY, NXY.T), Murphy Oil Corp. (MUR) and Mocal Energy, a unit of Japan's Nippon Oil Corp. (5020.TO). ConocoPhillips owns the third-largest stake at 9.03%.

The deal increases ConocoPhillips' credibility with investors that it will be able to obtain $10 billion from its asset sale, which was announced last October as part of a restructuring plan to shore up its finances. The deal price almost doubles the best estimates analysts had for Conoco's Syncrude stake, according to Fadel Gheit, an analyst with Oppenheimer & Co. Inc.

"This is a very strong start," Gheit said. "Conoco beat everybody's expectations."

ConocoPhillips, the third-largest U.S. oil company by market value after ExxonMobil Corp. (XOM) and Chevron Corp. (CVX), said in March that a big portion of the asset sales are expected in the second half of the year.

ConocoPhillips has been the hardest hit among U.S. major oil companies, as it amassed more debt and was more exposed than others to the drop in natural gas prices, which hit a seven-year low in 2009.

The transaction to sell the stake to Sinopec is expected to close in the third quarter once Canadian and Chinese government approvals are obtained. Sinopec is Asia's largest refiner by capacity and has been a bit acquisitive lately, as it agreed last month to acquire deep-water oil assets in Angola, its first acquisition of overseas upstream assets.

ConocoPhillips' shares closed at $55.96, up 1.16%, while Sinopec's American depositary shares closed down 1.08% to $84.93.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9208; isabel.ordonez@dowjones.com

(John Kell contributed to this article.)

ENEOS (PK) (USOTC:JXHLY)
Historical Stock Chart
From Feb 2025 to Mar 2025

ENEOS (PK) (USOTC:JXHLY)
Historical Stock Chart
From Mar 2024 to Mar 2025