SK buys two oil fields in the U.S.

April 7, 2014

By Kim Yoo-chul

Korea’s top oil refiner SK Innovation (SKI) announced Monday that it will enter the oil-exploration business in the United States by taking over managerial rights of two oil fields.

This is the first time that the company has entered the oil exploration business in the U.S.

“SK E&P America, a wholly-owned U.S. subsidiary, has agreed to purchase major stakes in two U.S. oil-development companies, Plymouth and KA Henry. Total investment was 387 billion won ($366 million),” said the statement.

The U.S. unit was set up in Houston in March to handle the oil-exploration business in the U.S..

SK E&P acquired a 75-percent stake in an oil field in Grant and Garfield counties, Oklahoma. It also purchased a 50-percent stake in an oil field in Crane County, Texas.

The oil field in Grant and Garfield counties has been producing 2,500 barrels of oil on a daily basis since 2011. The Crane County field has been producing 750 barrels a day since 2012, said the statement.

“Thanks to the acquisition, our oil production per day will rise to 74,250 barrels from the previous 71,000 barrels,” according to the release.

Ha Seok, head of the firm’s public relations office, said that with the acquisition, it can entirely control management of the purchased U.S. firms.

In 1997, the company had invested in five oil fields in Texas and Louisiana. However, it failed to get managerial rights.

“The acquisitions will help us learn business knowhow and cutting-edge technologies in oil-exploration projects in the United States, the world’s third-biggest oil producer,” said Ha.

Encouraged by SK Group owner Chey Tae-won, SKI has been consistent in boosting its portfolio in oil-exploration projects in a strategy to expand its business territories other than telecom and memory chips, upon which the group now heavily depends.

SKI has been engaged in seven production assets and 15 exploration assets in 12 countries, globally.

SK Innovation’s operation spans over 22 oil fields, with seven in production and 15 in exploration, in 15 countries, plus four gas-field-development projects.