Wednesday, March 23, 2011

Newfield Exploration acquires oil acreage in Uinta basin for $308 million. Newfield’s 2011 capex- $1.7 billion- 100% for oil/liquids rich gas plays!!

Newfield Exploration Company signed two separate agreements to acquire assets in the Uinta Basin from Harvest Natural Resources and an unnamed private company for an aggregate $308 million. The transactions will add approximately 70,000 net acres to the company’s acreage position in the Uinta Basin. The acreage is largely undeveloped and located adjacent and north of the company’s largest oil asset – the Monument Butte field. Newfield said last month it expects the Monument Butte field to grow more than 15% this year and domestic oil volumes to rise by about half. Harvest Natural will receive $215 million for the Antelope project which consists of approximately 69,000 gross acres (47,600 net acres). Harvest owned a working interest of approximately 70% in the Uinta assets.

Newfield Exploration 2011 strategy moves to oil plays!!

At the end of last year, Newfield agreed with EOG Resources to acquire gas rich Marcellus assets. However, it was subsequently cancelled for mysterious reasons. Now it becomes clear with their 2011 strategy…
Nearly 60% of Newfield's 2010 investment was focused on oil and "liquids rich" gas assets within the company's portfolio. However, Newfield’s 2011 budget of approximately $1.7 billion will be spent 100% on oil/liquids rich gas plays.

Eagle Ford Shale - the next big thing on the global exploitation map!!!!

Eagleford shale play extends about 400 miles across South Texas in a 50-mile-wide band, from the Mexican border, below San Antanio and up into East Texas. Some of the world’s biggest oil companies – including Shell, BP, Statoil and CNOOC – recently have entered the Eagle Ford and are helping to put it on the global energy map with aggressive exploration drilling planned for coming years. In 2010 in the Eagle ford, about 1,018 drilling permits were issued through November, which means that this area is definitely the next big thing to look out for. Not only the drilling permits issued in number increased but also the number of rigs have increased in number.

EOG, in 2010 averaged seven rigs in the Eagle Ford and drilled 110 wells. This year, it expects to have 14 rigs and drill 256 wells. Chesapeake, the largest leaseholder with 625,000 acres, also expects to double the dozen rigs it has working in the area. Petrohawk Energy also expects to spend more than twice as much as it did in the region in 2010. And ConocoPhillips, another major leaseholder, just leaped from seven to 11 rigs in the region.

Why Eagle Ford ?

What makes this shale play different is that it produces oil, condensate, gas and finally drier gas as drilling proceeds down dip. The carbonate content (up to 70% calcite) of the shale makes it very brittle and easily fractured during stimulation treatments, resulting in impressive production figures of both oil and gas. 

What are others thinking?

  • EOG Resources, one of the major players in the Eagle Ford shale, is planning to drill about 250 wells in the area in 2011. 
  • Rosetta Resources has allocated 90% of its $360 million budget for its activities in this area.
  • Due to lower natural gas prices companies are focusing more on the upper, oil laden section of the Eagle Ford. Since the price of oil is high due to international demand, the upper side of the shale is where much of the new drilling activity in 2011 will take place.

There has been a huge increase in the demand for this acreage , from about $100 to $200 per acre in 2007 to more than $10,000 per acre at present, which signifies that the companies are confident to reap huge profits from this area!

Following the footsteps......
  • Like other companies, Anadarko is focusing more on its liquids-rich Eagle ford acreage where it has increased the average estimated ultimate recoveries of its existing wells to more than 450,000 barrels of oil equivalent per well in the liquids-rich Eagle Ford shale.

  • The Company plans to double its drilling activity at these assets with more than 200 wells planned for 2011.
  • With $5.6 to $6 billion as capex for 2011, about $3.19 billion seems to be allocated to US onshore.
  • The Company estimates to spend $5 to $5.5 million per well which totals up to about $1.05 billion to drill 200 wells in the Eagleford.
How Long Will Eagle Ford Shale Oil Wells Last?

What makes Eagle ford shale play the most sort after thing these days is its wide expanse and the ability to drill essentially “risk free”oil wells in a time when bankers are reluctant to lend any oil company money for exploratory drilling.  With the vast amount of infill drilling that will occur as the play is exploited we may see more than a couple of decades worth of production.

Interoil Morgan Stanley Gas Conference Presentation 2011

ATP 2011 Northeast Investor Presentation

Cairn Energy Investor Presentation 2011

Shell 2011 Strategy Update Presentation

CNOOC reported 2010 Annual Results; Production up 44.4% over 2009; Plan to invest US $5.05 billion for Development projects in 2011

CNOOC’s 2010 net production reached 328.8 mmboe, reached 2010 production guidance of 327-329 mmboe. The production growth is mainly attributable to production from new fields brought on stream since 2009, outstanding performance of the producing fields and the production contribution from newly acquired projects. In 2010, the Company’s reserve replacement ratio amounted to 202%.

In 2010, the Company achieved 12 independent discoveries and successfully appraised 12 oil and gas structures by 18 appraisal wells in offshore China. In respect of exploration under production sharing contracts, besides the deepwater discovery of Liuhua 29-1, 3 oil and gas structures were successfully appraised by 5 appraisal wells.

CNOOC plan to invest US $8.77 billion in 2011, in which US$5.05 billion allocated for development projects.

CNOOC’s 2010 overseas acquisitions and JV’s:

The company projected 6-10% production growth for 2011-2015


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