Tuesday, February 15, 2011

Oxy buys Nations Petroleum's California Package; What next?? Run or Rest???

Nations Petroleum’s California package put up for sale in Oct 2010 is reportedly under a $500 million contract to Occidental Petroleum. The transaction values production at US$125,000 per producing barrel per day. Nations Petroleum has retained Macquarie Tristone as the advisor for the transaction.

Nations Petroleum (California) LLC holds operating assets in Kern County, California. The core asset is the Northwest Lost Hills field in the San Joaquin Basin. Production from the field has increased from 700 BOPD to 4,000 BOPD since early 2009, and is expected to peak at over 35,000 BOPD in six to seven years. Recent Monterey Shale activity in the San Joaquin Basin has highlighted unconventional resource potential that could add additional value.

Asset highlights:
-- Nations’ leasehold consists of approximately 4,834 gross and net acres; Total of 27 leases with average WI and NRI of 100% and 78% respectively
-- 271 Producing wells; Producing well count by reservoir: Tulare (204); Etchegoin (22); Williamson (43); Diatomite (2); Most of the wells were drilled in 2007 and 2008
-- According to Miller and Lents Ltd’s reserve report, effective July 1, 2010, the total reserves were: Proved Reserves – 53.328 MMBO with NPV10 of $1,026 million; Proved + Probable Reserves: 79.812 MMBO with NPV10 of $1,544 million and Proved + Probable + Possible Reserves of 103.276 MMBO with a NPV10 of $1,885 million
-- Current oil capacity of 6,500 BOPD with equipment onsite to increase capacity to 15,000 BOPD.

Nations Petroleum, a privately held company based in Calgary, acquired its Lost Hills stake in 2005 when its predecessor Nations Energy won a hostile takeover of Calgary-based Tartan Energy for a mere $63 million. It then is said to have invested about $300 million to get production up to about 4,000 b/d.


What are Oxy’s plans for 2011?  Run or Rest????
Oxy was busy making acquisitions in 2010 for ~$4.5 billion in South Texas, Permian and Bakken areas and discontinued Argentina operations for ~$2.5 billion. In particular, Oxy’s trend in 2010 was about taking over private companies like Anschutz Exploration and Yates Drilling Co. The trend continues with this Nations Petroleum deal. What next???

Oxy says, “We expect capital spending for the total year 2011 to be about $6.1 billion compared to the total 2010 capital of $3.9 billion”. Of the total capital 8% or ~$500 million will be allocated towards new acquisitions. So, Oxy will take rest with this Nations Petroleum deal or it wants to run in search of assets???

Toreador attempts to allay fears about shale gas drilling in France

Toreador Resources and its partner, Hess Oil France, along with select other energy industry companies in France, met with France’s Ministry of Environment and the Ministry of Energy to discuss the government’s decision to instruct the General Council of Industry, Energy and Technology (CGIET) and the General Council on the Environment and Sustainable Development (CGEED) to undertake a study to determine the economic, social and environmental impact of both shale oil and shale gas development in France.

Marc Seng├Ęs, CFO of Toreador and President of Toreador Energy France, spoke on behalf of the Partners and made the following points:
  • There have been over 2,000 oil wells drilled in the Paris Basin. Toreador is a longstanding French operator and has produced over 5 million barrels of oil in 17 years while fully respecting the environment and the local communities where it operates.
  • The concept of hydraulic fracturing in the Paris Basin is not new and the technology itself has 50 years of data and experience supporting its safe application in oil fields around the world.
  • Our ‘proof of concept’ exploration program is aimed at determining the type of petroleum resources contained in the tight rock within the Liassic shale in the Paris Basin (depth of between 2,300 and 3,000 meters) as well as their economic potential.
  • The Paris Basin tight rock oil ‘proof of concept’ program already is providing numerous benefits to the country in the form of investment, job creation, and proceeds to the government. If recovery of the oil is proven to be commercially feasible, then the social benefits will increase with investment levels potentially reaching several billion dollars and job creation measured in the thousands.

Location and hydrocarbon activity map in Paris Basin
Toreador and Hess have concluded the following:
  • The Partners will voluntarily delay their Paris Basin tight rock oil ‘proof of concept’ program until after the interim report is issued (mid-April 2011).
  • The Partners will assist the French Government in the CGIET-CGEED study by providing scientific data and practical experiences regarding oil development and host delegations to observe oil operations in the Paris Basin.
  • The Partners will determine the timing and sequencing of their hydraulic fracturing operations following the disclosure of the final results of the French Government’s study (before end of June 2011).
  • The Partners will initiate baseline environmental studies with third party French environmental experts that will be used to evaluate the quality of groundwater, surface water, surface soils, and air.

Paris Basin: Toreador Permits & Applications

    Craig McKenzie, President and Chief Executive Officer of Toreador, said, 'We fully support the responsible approach the Ministry of Environment and the Ministry of Energy are undertaking with the CGIET-CGEED study. As a longstanding, established operator in France, Toreador welcomes higher standards to ensure all operations are prudent and compliant and deliver net economic and social benefits. Simply put, this is why we chose Hess Corporation as our partner.' He also added that, 'It is important to bear in mind that our project represents a renaissance for the Paris Basin oil industry. What we are pursuing is not oil shale, which is essentially strip-mining, nor is it gas shale'.

    Anadarko shows strong results; 2010 production above guidance; aims for 5-7% CAGR production growth over next 5 years

    Anadarko reported fourth quarter 2010 results. Key highlights are :

    - Increased sales volumes by 7 percent over 2009, including a 13-percent liquids increase

    - Added 359 million barrels of oil equivalent of proved reserves, which equates to replacing 153 percent of production

    - Continued offshore exploration success with an approximate 60-percent discovery rate and 100-percent appraisal success rate

    - Achieved first oil from the Jubilee mega project in a record 3.5 years following discovery


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