China Development Bank provides a $1 billion USD loan to Sinochem to facilitate its acquisition of a 40% stake in the horizontal Wolfcamp shale field

Project narrative

On January 30, 2013, Sinochem Petroleum USA LLC — a U.S. subsidiary of Chinese-owned oil and gas company Sinochem Corporation — signed an agreement with American independent hydrocarbon exploration firm Pioneer Natural Resources Company to purchase a 40% stake — equivalent to 82,00 net acres — in approximately 207,000 net acres leased by Pioneer in the horizontal Wolfcamp Shale field in the southern portion of the Spraberry Trend Area Field in the Permian Basin in west Texas for a consideration of $1.7 billion USD, with Sinochem paying $522 million USD in cash and $1.2 billion USD to fund a portion of Pioneer's future drilling costs. The area included defined portions of the counties of Upton, Reagan, Irion, Crockett, and Tom Green in Texas and consisted of 400 horizontal wells and 35 horizontal well drilling rigs. Pioneer would continue as the operator of the joint interest area and would conduct all leasing, drilling, operations, and marketing activities in the area, which had a production of about 2,000 barrels oil equivalent per day in 2012, with the effective date to be December 1, 2012. The acquisition was expected to close by June 1, 2013 and was completed on May 31, 2013; Sinochem paid $631 million USD in cash, $522 million USD as part of the transaction price and $109 million USD for its 40% share of net expenditures in the Southern Wolfcamp Joint Venture; the remaining $1.2 billion USD would be paid by carrying 75% of Pioneer's share of future drilling and facilities costs until the drilling carry was fully utilized. Sinochem immediately began to receive 40% of the production from the field (nearing 10,000 barrels oil equivalent per day at the time of the close of the deal). Then, in 2014, China Development Bank Corporation (CDB) issued a $1 billion USD loan to Sinochem Corporation to support the acquisition. As of December 31, 2014, the CDB loan had achieved a 20% disbursement rate ($200 million USD out of $1 billion USD). The acquisition was expected to help acquire fuel for China and improve China's knowledge of new drilling methods to enable the exploitation of its domestic shale reserves. It was Sinochem's first investment in the upstream oil and gas industry in the United States. Pioneer was acquired by Exxon Mobil in May 2024. In August 2024, it was reported that Sinochem was planning to sell the 40% stake in the joint venture at Wolfcamp, worth an estimated $2 billion USD and with a field with production of over 44,400 barrels of oil equivalent per day according to the most recent figures available in August 2024. Wolfcamp was Sinochem's largest oil and gas producing asset outside of China, but struggles in the oil exploration business had encouraged a shift to new materials and life sciences.