Wednesday, June 8, 2011

Eagle Ford acreage metrics skyrocketing.. Marathon acquires Eagle Ford acreage at ~$20,850/acre while most of the analysts report at $25,000/acre.. Read this to know how..

Marathon Oil reached a definitive agreement with Hilcorp Resources Holdings LP to purchase its assets in the core of the Eagle Ford shale formation for $3.5 billion. Hilcorp Resources Holdings is a partnership between affiliates of Hilcorp Energy Company and Kohlberg Kravis Roberts & Co. LP.
Hilcorp acreage acquisition highlights:
  • ~141,000 net acres (217,000 gross acres) primarily in Atascosa, Karnes, Gonzales and DeWitt counties in Texas
  • Resource potential of 473 mmboe
  • Potential to book up to 100 mmboe of proved reserves by the end of 2011
  • Potential additional 14,000 acres from tag-along and other leasing
  • Approximately 90% operated with a 65% average working interest
  • Current net production 7,000 boepd, 2011 exit ~ 12,000 boepd (80% liquids)
  • ~ 80,000 net boepd by 2016.
$/acre is ~$20,850. Know how...
Value of Production and Undeveloped Acreage/Resources
  • The current production of 7,000 boepd is valued at $560 million based on $80,000/boepd- an average metric of the oil focused deals according to Derrick Database.
  • The remaining value of $2,940 million is assigned to undeveloped acreage of 141,000 or the resource potential of 473 mmboe. This $2,500 million puts the $/acre at $20,851 and leaves the resources at $6.22/boe.
Eagle Ford acreage metric is skyrocketing
This is the biggest deal in Eagle Ford Shale, in terms of deal value. Recently, KNOC clinched $1.55 billion Eagle Ford JV with Anadarko early this year. The acreage metric of Marathon deal is at a 49% premium compared to the KNOC-Anadarko deal which was at a 27% premium compared to the 2010 acreage metrics in Eagle Ford.

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