Skip to content
AidData logo

Overview

Bank of China provides $103 million USD loan to Yanchang Petroleum International for the acquisition of all the issued shares of Novus Energy, Inc.

Commitments (Constant USD, 2023)$106,499,043
Commitment Year•2013Country of Activity•CanadaDirect Recipient Country of Incorporation•BermudaSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Sep 1, 2013
Start (actual)
Jan 14, 2014
End (actual)
Jan 14, 2014

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% Chinese ownership

Funding agencies

State-owned Commercial Banks

  • Bank of China (BOC)

Receiving agencies

Private Sector

  • Yanchang Petroleum International Limited

Loan description

Bank of China provides $103 million USD loan to Shaanxi Yanchang Petroleum International for the acquisition of Novus Energy in Canada in 2013

Interest type•Unknown

Narrative

Full Description

Project narrative

In early September 2013, the Bank of China (BOC) reportedly entered into a $103 million USD loan agreement with Yanchang Petroleum International Limited — a Bermuda-incorporated, Hong Kong-based publicly-listed subsidiary of the Chinese state-owned enterprise Shaanxi Yanchang Petroleum Group (29.96% stake), active in oil and gas exploration, development, and operations — for the acquisition of all the issued shares of Novus Energy, Inc., a Canadian oil and gas producer. The proceeds were used by the borrower to support its $3.2 billion CAD acquisition of Novus Energy. Novus had operations across Western Canada, including the Dodsland area of southwest Saskatchewan, the Wembley area of northwest Alberta, and the Provost area of east-central Alberta. Its main assets were located in the Viking oilfield at the border of Saskatchewan and Alberta — a mature, shallow, light oil-producing basin known for its relatively low drilling costs and low exploration risk. According to a report by the technical consultancy Sproule, Novus held 14.85 million barrels of oil equivalent (BOE) in proved reserves, and 22.72 million BOE in proved plus probable reserves. In the first half of 2013, Novus produced an average of 3,767 barrels of oil per day (81.1% crude oil), marking a 20% year-over-year increase. The company was expected to exceed 4,000 barrels per day in average production for the full year. The agreement for the acquisition was signed on September 3, 2013. The acquisition was completed on January 14, 2014.

Staff comments

1. The loan contract is not available. 2. Novus Energy Inc. was a Canadian junior oil and gas company focused on the acquisition, exploration, and development of oil and natural gas properties in Western Canada. Its core assets were located in the Viking light oil play in Saskatchewan and Alberta, known for its low-cost, shallow drilling. Prior to its acquisition in 2014, Novus had over 166,000 acres of undeveloped land and produced approximately 4,000 barrels of oil equivalent per day. 3. Although Yanchang Petroleum's largest shareholder was a Chinese state-owned enterprise, the total amount of this acquisition was below the threshold for federal government review under the Investment Canada Act, and it did not involve the more sensitive oil sands sector — therefore, it was not subject to Canadian government review. 4. It is likely that the loan proceeds are in Canadian dollars. However, only the USD estimate is known as reported by Boston University's report. 5. Shaanxi Yanchang Petroleum announced its intent to acquire Novus Energy in early September. However, it is unknown when the company and Bank of China signed the loan agreement. AidData has estimated September 2013 for the time being.