Chinese Company Loses Oil and Gas Field Rights in Utah

The company’s stocks were briefly halted on the Hong Kong Exchange after the news emerged.

Bull statues are placed in front of screens showing the Hang Seng stock index and stock prices outside Exchange Square, in Hong Kong on Aug. 18, 2023. Tyrone Siu/Reuters

CHK Oil, a Chinese oil company, said in an Aug. 15 statement that three of its four leases to a gas and oil field in Utah had expired as early as 2020 without the knowledge of its board of directors.

The company’s stocks were halted on the Hong Kong Exchange on Aug. 14 and resumed trading on Aug. 16 after the company’s statement on the situation. CHK, formerly Pearl Oriental Oil Limited, operates in Hong Kong and the United States.

The U.S. Department of Interior Bureau of Land Management issued written orders on Nov. 14, 2022, stating that three of CHK Oil’s leases expired on July 31, 2020, and March 31, 2021.

According to the company’s statement, the board was not notified until Aug. 9.

“The Company is in the course of seeking legal advice from its legal advisers in Utah to assess the legal implications and penalty, if any, and the possible legal actions that may be taken under the applicable laws in respect of the Relevant Leases and the orders of the BLM (Bureau of Land Management),” the statement reads.

CHK Oil Limited Chair Yu Jiyuan, in the statement, said that the company had “been strategically increasing its focus on the trading of oil, oil-related products and other products business” and that “no operation and mining activities” were conducted in the Utah sites with expired leases “in the past few years.”

In the company’s most recent annual report, published this April for the year 2023, Yu noted the “uncertainty in US-China relations, leading to a layer of political risk that cannot be ignored” to preface updates on the Utah fields.

“We maintained basic operational levels in our natural gas and liquefied petroleum gas fields in Utah throughout the year, highlighting the need to balance investment considerations with escalating political risks,” the report reads. The report cited fluctuating oil prices and the cost of labor and transportation as the risk factors related to the Utah site.

According to the report, CHK maintained daily operations at the Utah site throughout 2023 at a cost of about $155,000 and had no plans for expansion.

Besides its rights in Utah, the group’s business is in trading. The majority of gross profit was “contributed by the trading of oil and oil-related product in Mainland China.”

“The Group expects that, with the heavy and manufacturing industry sector gradually resuming normal in [China], the domestic demands for cruel oil and oil-related products and the Group’s trading business will be improving in 2024,” the report reads.

The Bureau of Land Management did not immediately respond to an inquiry from The Epoch Times.