China National Offshore Oil Company (CNOOC) Ltd., China's largest producer of offshore crude oil and natural gas, announced Tuesday that the company signed an agreement with MEG Energy Corp., a Canadian company, to acquire a 16.69 percent stake of MEG.

According to Yang Hua, Chief Financial Officer and Senior Vice President of the company, CNOOC Ltd. paid 150 million Canadian dollars for 13,636,364 common shares of MEG, representing a 16.69 percent stake at the close of the transaction.

Based in Calgary, MEG is a pure play oil sands company, owning 100 percent working interest in oil sand leases of 52 contiguous sections covering an area of 32,900 acres in Alberta.

It is estimated that there are more than four billion barrels of geological bitumen in these sections with a total recoverable reserves of about two billion barrels.

"I am excited with our low cost entry into oil sands, marking a footstep in this potential area. Lower operating costs and higher recoveries resulting from recent advances in technologies have made many similar projects economically viable," said Yang.

According to the Alberta Energy & Utilities Board, the total geological reserves of bitumen in Alberta is about 1.6 trillion barrels, with 300 billion barrels of which are expected to be recoverable with current technology.

"The investment hits on our focus on long-term growth. At the same time, this move provides a good chance for us to exploit the advanced technology and expertise of oil sand development," said Fu Chengyu, Chairman and CEO of CNOOC.

China has discovered large reserves of oil sand and shale in recent years.

"These technologies and skills may facilitate the exploitation of oil sand and shale in China,"said Fu.

Source: Xinhua