A pump jack draws oil from the ground at a hydraulic fracturing operation.JEFF McINTOSH/The Globe and Mail
A southeastern Saskatchewan oil producer funded by a pair of Chinese companies has attracted a new investor from China to hunt for more energy assets with a $500-million war chest.
Canada Capital Energy Corp. said it entered into a partnership with Hony Capital Management Ltd., which is owned by Legend Holdings Corp., the controlling shareholder in Lenovo Group.
Canada Capital, meanwhile, is owned by ZhongRong Group and Zhejiang Rongsheng Holding Group Co. Ltd. It has large working interests in 100,643 gross acres of land in the Williston Basin.
The company is looking for low-risk light oil and liquids-rich gas opportunities, it said.
The arrangement brings together Chinese private equity and Canadian energy expertise, said Robert Giles, vice-president and business development officer at Canada Capital. He said Hony was a pioneer in the private equity sector in China.
Chinese and other national oil companies were effectively barred from acquiring controlling interests in oil sands assets, except in extraordinary circumstances, in late 2012, when Ottawa approved the $15.1-billion takeover of Nexen Inc. by CNOOC Ltd. The government said at the time that it was concerned that too much of the resource was being snapped up by companies run by governments.
The more stringent rules led to a major drop in takeovers of energy assets by foreign SOEs in 2013.
(Editor's note: An earlier version of this story misidentified companies investing in Canada Capital Energy Corp. as being state-owned.)
Jeffrey Jones