SK Innovation goes into U.S. production businessSK Innovation, the holding company of Korea’s largest oil refiner, SK Energy, said yesterday it acquired operation rights for two oil production fields in the United States in order to boost its exploration and production (E&P) business.
This is the first time the company will run oil production fields since it started the overseas E&P business in 1983.
SK Innovation said that SK E&P America, a subsidiary that was established last month in Houston, Texas, sealed the $360 million agreement with Plymouth Exploration and KA Henry, an affiliate of Kayne Anderson Energy Total Return Fund, a U.S. energy private equity investor.
SK E&P America bought a 75 percent working interest in production assets located in Grant and Garfield counties, Oklahoma, and a 50 percent working interest in a production asset located in Crane County, Texas.
SK Innovation said net oil production from its international assets will increase from 71,000 barrels of oil equivalent per day (BOED) to 74,250 BOED through the acquisition. Current net production from the Grant and Garfield county assets is about 2,500 boed while the Crane County assets’ net production is about 750 BOED.
SK Innovation, one of the largest E&P investors in Korea, has been engaged in seven production assets and 15 exploration assets in 12 countries globally.
“We are very pleased with this initial transaction that establishes our E&P platform in the U.S. and we look forward to rapidly expanding our presence and long term growth,” SK E&P America President C. Brian Boutte said in a statement.
SK Innovation said this is the first time it will operate oil production assets, especially in the United States where it has the latest technology for oil exploration. The company invested in five oil production fields in Texas and Louisiana in 1997 but didn’t acquire operation rights. It sold its stake in the U.S. oil fields in 2000.
However, it started to boost its U.S. E&P business from the mid-2000s, establishing a E&P technology center in Houston in 2010 and it eventually expanded it into a U.S. headquarters last year.
“Under the management strategy of SK Chairman Chey Tae-won to make the E&P business a new growth engine, SK Innovation has been pushing hard to expand the business,” said Kim Jeong-gi, SK Innovation’s public relations chief.
“We will raise our competitiveness in oil E&P in the U.S. market in the near future and in the long term, we also want to build E&P abilities in shale gases as well.”
BY JOO KYUNG-DON [firstname.lastname@example.org]