A Chinese investor just paid $1.3 billion for oil fields in Texas, a sign of China’s growing interest in the U.S. energy sector.
Yantai Xinchao purchased the oil properties as part of a larger $8.3 billion acquisition of an investment firm. The oil fields were sold by U.S. companies Tall City Exploration LLC and Plymouth Petroleum LLC, who were unavailable to comment on the deal, reports The Wall Street Journal.
U.S. energy assets are in large demand from Chinese investors, who see a potential silver lining in the struggling oil industry in the form of good deals. According to CNNMoney, the stalling economy in China, along with tighter energy regulations, has also pushed Chinese companies to look to opportunities abroad where drilling laws are more stable.
Despite the economy and weakening consumer demand across their industries, the Chinese government says it plans to loosen energy restrictions as part of ongoing reform in an effort to bring capital back to the domestic oil industry.
Specifics on the purchased oil sites are unknown, except that they are in Texas’s Howard and Borden counties, which sit in the lucrative Permian Basin. Known for low drilling costs and easy market access, The Wall Street Journal reports that the region has seen a resurgence in recent years thanks to new technologies like fracking.
Companies in the Permian Basin have been among the few who are weathering the lull in oil prices, boasting $5 billion in new stock sold in 2015. Canadian brokerage firm Canaccord Genuity Group Inc. said, “Permian wellhead economics are the best of any U.S. resource play overall.”
Filings from Yantai Xinchao reveal that the U.S. Committee on Foreign Investment already approved the acquisition in Texas. According to The Wall Street Journal, the U.S. heavily restricts Chinese investment in the energy sector, however that isn’t stopping the increased Chinese interest in American energy.
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