While analysts worldwide debate the finer points of whether China's demand for oil and resources will taper off in the face of skyrocketing commodity prices, China continues to send clear signals that the Chinese themselves share no such expectations.
Thus far in 2008, cross-border acquisitions by Chinese companies have quadrupled to $41.1 billion. China Oilfield Services Limited, or COSL, a subsidiary of the China National Offshore Oil Corp., or CNOOC, has now formally announced a $2.5 billion bid for Norwegian drilling rig operator Awilco Offshore.
Before we move forward, let's be clear on CNOOC's corporate structure. CNOOC is a state-run parent company, counting CNOOC Ltd. (NYSE:CEO), the oil and gas exploration arm of CNOOC the parent, and oilfield services provider COSL as subsidiaries. Now, back to the deal.
My colleague Toby Shute alerted Fools to a possible deal last month, and suggested it would either mean a move onto the international stage for COSL, or a purchase of rigs to be used by other subsidiary CNOOC Ltd. With the announcement, we find the former scenario is at play. According to COSL's chief financial officer, "Our aim is to become an international oilfield services company with strong competence in global markets by 2010."
With the additional units, COSL would be able to push its rig count up to 22. While COSL has a long way to go before it can truly compete with the likes of Noble's (NYSE:NE) 62 offshore rigs or Transocean's (NYSE:RIG) massive fleet of 136, today's acquisition is certainly a step in the right direction: Eastward.
