Held in Burnaby, the hub of Chinese Population in Vancouver on February 4th, 2012, the Financial Expo of GCFF Vancouver Conference 2012 will bring North American public companies and financial service providers to you and create lasting business and investment connections. With its unique blend of informative knowledge on economy and in-depth business market outlook, the Vancouver Conference 2012 will provide emerging investment opportunities in resources and energy sectors.
Time: Feburary 4th, 2012 (Saturday)
Location: Hilton (Metrotown), 6083 McKay Avenue, Burnaby, BC V5H 2W7
Location: Hilton (Metrotown), 6083 McKay Avenue, Burnaby, BC V5H 2W7
Daily Top Story
U.S. Shale Gas: Marubeni’s Latest Energy Venture
Posted Fri, 2012-01-06
Being one of the largest general trading companies in Japan, Marubeni Corp. rarely fails at sticking to the latest trend. Today, the business conglomerate has committed $1.3 billion to crash into shale gas: a newly arising hot-spot in the resource sector.
With the $1.3 billion investment, Marubeni will acquire a 35% working interest in Eagle Ford, a shale oil & gas property in Texas owned by Hunt Oil Company. As a joint venture, Marubeni and Hunt will expand the property in the future through expanding acreages. According to Marubeni’s press release, Eagle Ford is currently producing high-quality light crude oil, and has “several hundred wells” with a life of 5-10 years.
Hunt Oil is one of the first U.S. firms to venture into the shale gas business, with projects all over the U.S. including the famous Marcellus shale formation in Pennsylvania. With the interest in shale gas resources on the rise in Europe and Asia, U.S. oil & gas companies in the field have become popular targets for joint venture and cooperation. International energy giants including Royal Dutch Shell and Sinopec have made their moves into the U.S. shale gas plays at the turn of the year.
Located in Tokyo, Japan’s Marubeni has been actively participating in the energy sector with a series of investment and acquisition actions abroad last year. In November, Marubeni acquired Canadian coal producer Grande Cache Coal in a joint takeover with Hong Kong’s Winsway Coking Coal Holdings. The company also bought stakes in a LNG in Papua New Guinea owned by Exxon Mobil in the same month. In December, Marubeni acquired a 40% interest in APT Allgas Energy, an Australian energy firm running gas distribution networks in the country. On a slightly different note, Marubeni also made its mark in the renewable energy industry by investing in the construction of offshore wind farms in the U.K.
Marubeni’s frequent natural gas moves fits well with the background of rising gas demand all over the world, especially in Asia. Restructuring its energy consumption, the Chinese demand for natural gas will expand dramatically in the near future (as covered by yesterday’s Daily Top Story). Hit by the nuclear disaster in last March, a similar shift to gas has become a possibility in Japan—despite the inevitable conflict of interest with a number of existing electronic monopolies on the island nation.
Timely Demand: China Opens Shale Gas For Development
Posted Thu, 2012-01-05
Last week, China’s Ministry of Land and Resources announced an official recognition of shale gas as the 172nd type of resource on the government’s list. The authorities have welcomed all businesses, including smaller companies, to join in developing shale gas. Mainly in North America, shale gas has been exploited in the last decade and gradually became an energy staple. Due to China’s heavy governmental control on natural resources, the shale gas move well reflects the country’s high-level support on its development.
Despite the recent recognition, China’s rush for shale gas is well-contemplated: In late 2011, ChinaPetro and Royal Dutch Shell conducted joint operation on shale gas projects in Sichuan Province. The project also witnessed the drilling of China’s first horizontal well, which is necessary for fracking- the main method of liberating and extracting shale gas. Yesterday, China’s state-owned oil & gas company Sinopec announced that it will invest $2.2 billion in joint ventures with Devon Energy Corp. on five of its shale gas projects. Operating in Midwest U.S., Devon Energy is one of the largest and most experienced company when it comes to shale gas resources. Be it in China or abroad, joint developments with veteran players would no doubt accumulate precious technical know-how and operation experiences for extracting China’s own shale gas resources.
The shale gas potential in China is not to be overlooked: according to Chinese statistics, the ready-for-extraction resources amount to 310 trillion cubic metres. China’s 12th five year plan expects the completion of exploration and evaluation for the country’s shale gas reserves by 2015, and raise annual production to 6.5 billion cubic metres. IEA’s account suggests a 360 trillion cubic metres of shale gas reserve in China, which is on par with the U.S.
As covered in Daily Top Story earlier, shale gas resources are facing a crisis in the U.S. due to the controversial “hydraulic fracking” operation. The U.S. health watchdog has designated the operation hazardous to drinking water, and could potential impact entire cities including New York. With the go-ahead, similar problems could occur in China. The country will have great incentive to work out a remedy, though, for the cost of not developing shale gas is enormous: in the future half decade, Chinese natural gas consumption will accelerate at an annual rate of 25%. The growth indicates that by 2015, the Chinese “gas deficit” will be more than 1.2 trillion cubic metres. Currently, China is depending heavily on imported natural gas from Russia and Central Asia. To mend this burning hole on China’s pocket, building self-sufficiency on natural gas is hardly a matter of choice.
New Start: Another Chinese Copper Deal In Australia
Posted Wed, 2012-01-04
Despite a number of major setbacks last year, Chinese firms are stepping up on resource acquisition prospects overseas in 2012. Today, Australia’s KBL Mining (formerly known as Kimberley Metals) announced an official MOU to sell 15% interests of KBL, 25% joint venture interests of its Mineral Hill Mine and a discount copper price scheme to Guangxin Holdings, a state-owned foreign trade group in Guangdong. The total proceeds from the deal will be $89 million.
According to Will Beaurepaire, KBL’s senior advisor of investment and strategy, the proceeds from the Guangxin deal is apparently significant against the company’s $50.82 million market cap and will be “used intelligently”. While being assured of the prospect to expand the Mineral Hill project, Mr. Beaurepaire mentioned the company’s intention to avoid “over investment”, and a possible diversification to other projects. While the deal allows Guangxin to enjoy a discount in copper, the same does not apply to gold and silver, which is a good deal for KBL.
From the financial perspective, the developments on KBL’s properties have been carried out on a “hand to mouth” basis, which is typical for a small-cap junior mining company. Close to double KBL’s market cap, the $89 million dollars will allow the company the opportunity to advance from a small exploration company to a mid-sized multi-mine producer, according to Mr. Beaurepaire.
Furthermore, KBL is hoping to get more attention through the deal. In today’s mining circle, dealing with a large Chinese firm has its pros and cons, yet the story alone will definitely put you under the spotlight. Down the road, the deal’s progress is going to take time as several hurdles lies ahead: the approval from both the Australian and Chinese government, plus that from KBL’s own shareholders.
Typical for a Chinese SOE, Guangxin Holdings used to be an unchallenged foreign trade entity with a governmental decree. The privileges, however, were no-longer existent by 2005 when China relaxed its control on foreign trade and investment. As thousands of peers fail, Guangxin spent hundreds of billions to expand itself in the overseas mining industry, and acquired projects in countries including Australia, Madagascar and Bolivia. Emerged as a survivor and strong competitor, Guangxin has secured its stakes in the Australia base metals industry with a special emphasize on copper concentrates. With the depression mentalities lingering in the base-metal market, the “hunting season” of Chinese resource acquirers is likely to extend far into 2012.
Up Your Game: Athabasca’s New Year Oil Sands Sale
Posted Tue, 2012-01-03
Calgary’s oil & gas producer Athabasca Oil Sands Corp. announced today that the company has exercised an option to sell its 40% ownership in MacKay River project to PetroChina, the joint owner of the property since 2009. The proceeds from the MacKay River transfer amounts to CAD 680 million, with the help of which chairman Bill Gallacher claims the company could achieve a production balance between its oil sands and light oil divisions.
According to Athabasca’s website, the MacKay River project is one of the company’s key exploration and development areas, mostly oil sand plays located within Alberta’s Athabasca basin. The joint venture project started back in 2009 when PetroChina bought shares of MacKay River and Dover projects with CAD 1.9 billion. Later developments in the area confirmed a potential to produce more than 35,000 barrels of bitumen per day by first production starting 2014, according to Athabasca’s press release on the transfer. Further down the road, Athabasca is expected to sell its remaining shares in the Dover project to PetroChina in an identical transfer.
With the CAD 680 million from the sale and a capital expenditure of CAD 190 million saved from disposing the project, Athabasca will diversify heavily to developing LNG and light oil resources. CEO Sveinung Svarte said that the company has “acquired more than 1.7 million acres of promising light oil and liquids-rich natural gas properties”, which is targeting “a production rate of 8,000-10,000 barrels of oil equivalent per day by the end of 2012”. The bold strategic divestiture could be a move directed by Athabasca’s Chairman, oil & gas veteran Bill Gallacher, a Calgary billionaire who is also the owner of the Portland Winterhawks, which made a “miracle comeback” in 2010’s Western Hockey League Championship.
On the buyer side, PetroChina, the dominating Chinese oil & gas giant, has had a considerably grim year in terms of stock market performance: despite being active in both China and the world markets, the trillion-dollar company lost nearly 20% in its Shanghai traded shares through 2011. However, PetroChina is making a comeback at the turn of the year. In yesterday’s trading session, the company rallied by as much as 4.45% along with a number of Chinese “oil stocks”. This rally is partially the result of the expectation of further deregulation in the energy industry by the Chinese government. In the long run, the deregulations could also bring fortune to PetroChina’s expansions abroad, including the billion dollar bet on the Canadian oil sand.
One week performance of NAI 500 Companies
From January 03rd to January 06th, 2012
| Company Name | Exchange | Ticker | Sector | Price Appreciation |
|---|---|---|---|---|
| BioDelivery Sciences International, Inc. | NASDAQ | BDSI | Life Science | 128.40% |
| RVB Holdings, Ltd. | OTCBB | RVBHF | Information Technology | 83.33% |
| Rare Element Resources Ltd. | TSX | RES | Mining Resources | 76.67% |
| CANADIAN INTERNATIONAL | TSXV | CIN | Mining Resources | 60.00% |
| Sunshine Agri-Tech Inc | TSXV | SAI | China Theme | 60.00% |
| International Stem Cell | OTCBB | ISCO | Life Science | 45.00% |
| Glg Life Tech Corp | TSX | GLG | China Theme | 44.44% |
| West African Iron Ore Corp | TSXV | WAI | Mining Resources | 41.67% |
| American Oriental Bioengineering, Inc. | NYSE | AOB | China Theme | 39.29% |
| Vero Energy Inc. | TSX | VRO | Mining Resources | 37.98% |
Recent Performance of NAI500 Companies
| Company Name | Exchange | Ticker | Join NAI | Sector | Price Appreciation |
|---|---|---|---|---|---|
| Procera Networks, Inc. | NASDAQ | PKT | 6/1/2009 | Information Technology | 2236.36% |
| Points International | TSX | PTS | 5/1/2009 | Special Industries | 1634.69% |
| Staar Surgical | NASDAQ | STAA | 5/1/2009 | Life Science | 1190.00% |
| Hydrogenics Corporation | TSX | HYG | 5/1/2009 | Clean Tech | 860.71% |
| interCLICK, Inc. | NASDAQ | ICLK | 6/1/2009 | Information Technology | 649.17% |
| Glowpoint, Inc. | AMEX | GLOW | 5/1/2009 | Information Technology | 581.58% |
| Exall Energy Corporation | TSX | EE | 5/1/2009 | Mining | 566.67% |
| Orient Paper, Inc. | AMEX | ONP | 6/1/2009 | Special Industries | 466.67% |
| RightNow Technologies, Inc. | NASDAQ | RNOW | 5/1/2009 | Information Technology | 457.11% |
| Westport Innovations | TSX | WPT | 5/1/2009 | Special Industries | 448.20% |
| Manitex International, Inc. | NASDAQ | MNTX | 5/1/2009 | Special Industries | 440.24% |
| CHINESEWORLDNET.COM INC | OTCBB | CWNOF | 3/1/2009 | Information Technology | 436.00% |
| Neo Material Technologies, Inc. | TSX | NEM | 5/1/2009 | Special Industries | 381.82% |
| TSO3 Inc. | TSX | TOS | 5/1/2009 | Life Science | 364.10% |
| Pace Oil & Gas Ltd. | TSX | PCE | 5/1/2009 | Mining | 355.24% |
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