Wednesday, March 30, 2011

Marathon to divest non-core Marcellus acreage, where the metrics run at $7,000 per acre

Scotia Waterous (USA) Inc has been retained as exclusive financial advisor by Marathon Oil Corporation for sale of the company’s non-core Marcellus Shale assets in West Virginia and Pennsylvania. The offering has been organized into two packages: the operated leasehold and the non-operated leasehold. The total acreage for the offering is 81,397 gross (51,679 net) acres.

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Investment Highlights:
-- Operated leasehold: This package is comprised of 21,961 gross (net) acres with 100% WI in West Virginia, primarily in Randolph, Preston and Tucker Counties.
-- Non-operated leasehold: This package is comprised of 59,436 gross (29,718 net) acres with 50% WI in West Virginia and Pennsylvania. The acreage is operated by Triana Energy LLC, a Morgan Stanley backed private company, and is located primarily in Fayette County, Pennsylvania and Preston and Randolph Counties, West Virginia.
-- Joint Venture with Triana in which the leasehold is included within an Area of Mutual Interest to be developed by Triana on behalf of both parties. Triana has committed to $45 million drilling carry to earn 50% of AMI leasehold. Minimum drilling commitment in 2011 to drill 4 wells.
-- Encouraging results from Marathon’s drilling activity provides valuable technical data to partnership. Nine wells drilled to date with a focus on data collection and delineation of acreage. Seven operated, frac’d vertical wells with core and fluid efficiency test data. Two OBO horizontal wells providing production data and conventional core data.
-- Additional assets enhance ability of buyer to develop the asset base. Full compliment of regional geological and engineering analysis used to define the play. 100 square miles of 3D seismic currently being acquired over core leasehold. Company owned, buried 3D micro seismic array for stimulation monitoring. Two taps on major interstate pipelines.

Metrics for recent deals in Marcellus

Deal Value ($MM)
Epsilon Energy and Chesapeake form Marcellus JV
Atlas Energy  and Reliance to form Marcellus JV
Anadarko and Mitsui form Marcellus JV
Williams acquires Marcellus acreage from Alta Resources
BG and  EXCO form Marcellus JV
EXCO and BG acquire Marcellus assets from Chief Oil & Gas
Rex Energy and Sumitomo form Marcellus JV
Shell acquires Marcellus acreage from East Resources
Reliance enters into Marcellus JV with Carrizo
EQT Corp acquires additional Marcellus acreage
Trans Energy and Republic Energy form Marcellus JV
Magnum Hunter acquires additional Marcellus assets
Atlas Energy and Reliance jointly acquire Marcellus assets
Antero Resources acquires Bluestone Energy Partners
Statoil acquires Chesapeake’s additional Marcellus acreage
Gastar and Atinum Partners form Marcellus JV
Williams acquires additional acreage in Marcellus Shale
EXCO Resources acquires additional Marcellus properties

Source: Derrick E&P Transactions Database

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TransGlobe Energy acquires Epedeco's West Bakr Concession in Egypt for $60 million

TransGlobe Energy agreed to acquire a 100% working interest in the West Bakr Concession agreement in the Arab Republic of Egypt from The Egyptian Petroleum Development Co Ltd for $60 million. EPEDECO is a joint venture established by a consortium including INPEX and Mitsui & Co.

The produced oil ranges from 17° to 20° API and is pipeline connected to the Ras Gharib terminal on the coast, which is the same export terminal that West Gharib production is currently trucked to. The West Bakr blend has historically received Brent minus 25% pricing.

The West Bakr Concession production sharing terms are as follows:  cost oil of 30%, production sharing of 15% to the Contractor and 85% to the Government, excess cost oil goes 100% to the Government, capital investments are amortized over five years and operating expenses are amortized in the quarter incurred.  All Government royalties and taxes are paid out of the Government’s share of production sharing oil.

Strategic breakthrough for Total and CNOOC - acquire one-third of Tullow Oil's Ugandan assets for $2.9 billion!!!!

Tullow Oil plc (Tullow) announced that it has signed a Sale and Purchase Agreements (SPAs) with CNOOC and Total in respect of the sale of a one third interest to each party of the interests Tullow holds in Exploration Areas 1, 2 and 3A in Uganda. Tullow will retain a one third interest. The terms of the transactions include a total cash consideration payable to Tullow of US$2.9 billion.
With the signing of these SPAs, a key condition of the Memorandum of Understanding (MoU) agreed between Tullow, the Government of Uganda (GoU) and the Uganda Revenue Authority (URA) on 15 March 2011, has been satisfied. The next step is for Tullow to make certain tax related payments to the GoU, on receipt of which all relevant consents become final and the other provisions of the MoU become effective.
Under the MoU, Tullow and its new Partners, CNOOC and Total, have been granted new licences over EA-1 and an onshore area of EA-3A and the partnership's rights to develop the Kingfisher discovery have been confirmed. A clear plan for the resolution of tax disputes on the various asset sales has been agreed by the GoU, the URA and Tullow.
Tullow and its Partners will now reactivate the significant programme of exploration and appraisal drilling and progress their development plans for the basin which they will jointly present to the Government of Uganda for approval

Marathon Oil reported 2010 annual results; Added nine onshore exploration licenses with shale gas potential in Poland for a total of 11 licenses; Announced $5.27 billion capital, investment and exploration budget for 2011

Marathon’s annual 2010 sales volumes averaged 391,000 boepd down 2% over 2009 average of 400,000 boepd from continuing operations. This is due to the result of planned downtime associated with the turnaround of production facilities in Equatorial Guinea completed in the second quarter 2010, natural field declines and asset dispositions. The company achieved 95% reserve replacement ratio for the annual year 2010.

Marathon announced $5.267 billion capital, investment and exploration budget for 2011, consistent with prior guidance and a 9% increase from 2010 capital spending. The company aim at liquids rich opportunities such as the Bakken, Anadarko Woodford, Eagle Ford and Niobrara resource plays in the U.S.

The company’s capital spending in the upstream segments is approximately $3.7 billion or 71% of total spending for 2011. This Upstream program includes spending of $1.3 billion on base assets ($1 billion on E&P base and $300 million on Oil Sands Mining and Integrated Gas), $1.9 billion on growth assets such as liquids resource plays in the U.S., and $465 million specifically for impact exploration.

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