Thursday, February 10, 2011

Chesapeake to divest Fayetteville assets for ~$5 billion

Chesapeake Energy Corporation has announced that, as part of its 2011-12 strategic and financial 25/25 plan, the company has decided to sell all of its Fayetteville Shale assets, as well as its equity investments in Frac Tech Holdings LLC and Chaparral Energy Inc. If these sales are completed, Chesapeake anticipates that the combined pre-tax proceeds could exceed $5.0 billion. Chesapeake owns 25.8% of Frac Tech, a leading provider of oil and natural gas well stimulation services and products with expertise in high-pressure hydraulic fracturing. Chesapeake owns 20% of Chaparral, which has operations in the Mid-Continent, the Permian Basin, Ark-La-Tex, NorthTexas, the Gulf Coast and the Rocky Mountains, with Proved NPV10 of $1.77 billion.
Fayetteville asset overview:
  • Approximately 487,000 net acres of leasehold with 75% of WI; BP is the JV partner with 25% WI
  • Current net production of approximately 415 MMcfe/d
  • As of 30 Jun 2010, Net Proved reserves were 2,404 Bcfe
  • 4,900 Potential net unrisked undrilled wells
  • 9,300 Bcfe of Potential net unrisked resource.

Are we seeing Consolidation across US shale plays moving to larger companies????
  • In 2008, BP Plc bought 25% interest in Chesapeake’s Fayetteville Shale operations for $1.9 billion after buying producing natural gas properties in the Arkoma Basin Woodford Shale play for US$1.75 billion.
  • In 2009, Exxon acquired XTO Energy for $41 billion.
  • In 2010, Chevron Corp. bought Atlas Energy Inc. for $4.3 billion to add acreage in the gas-rich Marcellus Shale.
  • In 2011, Chesapeake to divest Fayetteville assets for ~$5 billion.

Pan Orient increases South East Asia drilling budget

Pan Orient, an Alberta based oil and gas exploration and production company, will shell out more this year on its exploration and production activities in South East Asia. According to its 2011 Capital Program and Operations Update, the Company is planning to spend around C$71 million as against its 2010 capital budget of about C$67 million.

  • Firm capital program of $71 million allocated $44 million to Thailand and $27 million to Indonesia
  • Thailand drilling program to include 37 wells comprised of 11 exploration wells and 26 development or appraisal wells intended to grow current production for average 2011 oil sales of 5,000 to 6,000 BOPD
  • Indonesia drilling program to include 6 high impact exploration wells, commencing in mid March 2011 with three wells at Batu Gajah

  • Block L33/44 (60% & Operator): Two 2010 oil discoveries at early stage appraisal
  • Block L44/43 (60% & Operator): 3 fields including 1 2010 multi-zone oil discovery at early stage development. Active early 2011 exploration program
  • Block L53/48 (100% & Operator): L53-A oil discovery at early stage appraisal. First appraisal well L53-A1 currently drilling and  L53-C exploration well about to test   

  • South CPP PSC (90% & Operator): 250 kms 2D Seismic 2011 – 1 well 2012
  • Batu Gajah PSC (90% & Operator):3 exploration wells in Q1/11 targeting mid case prospective resources of 109MM bbl and 429 Bcf gas (net POE)
  • Citarum PSC (69% & Operator): 3 exploration wells in Q3/11 targeting 966 Bcf gas (net POE)   

Top Oil and Gas Deals of 2010

Top 20 global deals by value – Multiple categories
  • Sale of a partial interest in one E&P company by another industry player, e.g., sale of 51% stake in Cairn India by Cairn Energy; Lukoil’s stock repurchase from ConocoPhillips; E.ON’s sale of 3.5% interest in Gazprom; and Shell’s divestiture of a 10% interest in Woodside
  • Chinese/Asian NOCs aggressively buying up global assets, in particular in South America e.g., parts of Repsol’s Brazil portfolio and  Pan American Energy, and elsewhere, e.g., ConocoPhillips’ interest in Syncrude project.
  • BP’s divestments for funding post-Macondo costs, including sale of interest in Pan American Energy and assets across three countries to Apache.
  • Unconventional and conventional acquisitions by Majors, including Atlas Energy by Chevron; Arrow Energy by Shell, Devon’s Brazil and Azerbaijan portfolio by BP.

Global map view of selected, key assets traded during 2010

We have also recently published a report for E&P Business Development and New Ventures professionals working on deals globally. This report provides information on $93 billion of global oil and gas assets on the market.
The report provides details on ~500 opportunities:
·         Assets for sale
·         Corporate M&A opportunities
·         JV opportunities
·         Exploration farm-ins

You can view a sample copy of this report at


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