Wednesday, April 13, 2011

Interoil Corporation 2011 IPAA Oil & Gas Investment Symposium

- Resource estimate on Elk and Antelope fields
   2010 YE Best Case estimate of 8.6 Tcf of gas and 128.9 MMbbls of condensate gross contingent resources
- Proposed Condensate stripping project JV with Mitsui
   World  FEED nearing completion, FID in conjunction with Energy Corp. and Flex LNG
   Option for up to 5% in Elk and Antelope resource

GMX RESOURCES INC. Announces Record First Quarter 2011 Production and Guidance for Second Quarter 2011; Plan to increase liquidity through asset sales and Joint Ventures

GMX RESOURCES INC., has reported hydrocarbon production of 6.0 Bcfe for the first quarter 2011, up 14% over the fourth quarter of 2010 and up 89% increase over the first quarter of 2010. The Company’s second quarter and full year 2011 guidance is 6.1 Bcfe with an expected range of 25.0-26.0 Bcfe, respectively, which represents an increase of 42% and 43%-49% in the second quarter and full year 2010.

GMX plan to deploy capital in high value opportunities. The company initiated Bakken and Niobrara acreage development plans by allocating capital across three basins to diversify commodity price and basin risk.

The company announced $168 million capital program, of which 24% is allocated for oil developments and projected 54% of its 2012 capital program for oil developments.

Recent JVs Increase Value of GMXR Acreage

The company announced JV between Marathon Oil & Marubeni Corp. values nearby acreage at ≈ $5,000/acre
JV between CHK and CNOOC values nearby acreage at over $4,750/acre

Penn Virginia 2011 IPAA OGIS Conference

- 75% of 2011 Capital Spending Allocated to Oil & NGLs

2011 Activity
- 2 rigs drilling; 1 more rig by mid year
- 29 (23.7 net) wells
- $165 million of CAPEX
- 7% of 2011E production

Eagle Rock Energy acquires Crow Creek Energy for $525 million!! Cana Shale acreage runs at ~$5,000/acre.

Eagle Rock Energy Partners LP agreed to acquire all of the equity interests in CC Energy II LLC with reserves located in multiple basins across Oklahoma, Texas and Arkansas, for total consideration of $525 million. The total consideration includes approximately $303 million of Eagle Rock equity to be issued to the sellers, $15 million of cash and $207 million of assumed debt.

Highlights of the Crow Creek properties include the following:
  • Net production in the first quarter of 2011 of approximately 47 MMcfe/d
  • Total proved reserves of 268 Bcfe (80% gas and 66% proved developed)
  • Total 3P (proved, probable and possible) reserves of 740.5 Bcfe
  • Core operating areas include 327 operated wells and 1,040 non-operated wells on approximately 115,500 net acres across the Golden Trend Field, Verden Field and the Cana Shale Play
  • 182 proved drilling locations and more than 450 probable drilling locations
  • Approximately 12,700 net acres with 434 identified drilling locations in the emerging Cana Shale play in Oklahoma. This area has recently experienced a high level of horizontal drilling activity, with 54 rigs currently active across the trend
  • Reserve life index of over 20 years
  • 75% operated (based on 2011 expected production)
  • Assumption of Crow Creek Energy's current commodity hedges which had a mark-to-market value of approximately $10.8 million as of April 6, 2011.

Cana Shale at ~$5,000/acre is booming up like senior shale gas producers!

The following slide from Cimarex gives the economics of Cana Shale well

Cana is the world’s deepest commercial horizontal shale play (11,500 – 14,500 ft TVD). The active operators of the play include Cimarex Energy, Continental Resources and Devon Energy. Cimarex Energy holding 100,000 net acres in Cana Shale play had drilled 112 gross wells in 2010, completing 86 of these. In 2011, Cimarex Energy plans to drill 100 gross wells equipping 8-9 rigs. Cimarex’ estimated 2011 drilling capital allocated for this play is $340 million. Devon drilled 87 new wells in play in 2010, and plans to drill over 200 wells in 2011.

With the industry players’ increasing interest in Cana Shale play and a new metric milestone set at $5,000/acre, Cana play is yet to magnetise many more oil and gas players. Cana Shale play - the new born shale is booming well!

The following snapshot shows the other significant deal in Cana Shale.

Vermilion 2011 April Investor Relations Presentation

- Anticipate production growth to between 45,000 to 50,000 boepd by 2015

2010 Drilling activity:
- 13.9 operated wells in 2010 (A Quality)
- 5.3 net non-operated wells in 2010
- Tested water based frac in Q4-2010
- 2011 Budget 30 to 35 net wells
- 17 operated wells (A Quality)
- 6 operated wells (B Quality)
- 10+ net non-operated wells

2011 dealmaking off to a good start in Q1

In Q1 2011 Global upstream M&A activity totalled $52.4 billion in 174 transactions. That was down 37% from the record set in Q4 2010 of $84 billion, but still sets the pace for a second straight year of more than $200 billion in deals. 

North America emerged as the most active region for deal making, followed by FSU                 North America again led the way with 112 transactions totalling $21.2 billion, for 41% of global deal value. The Former Soviet Union ranked second with 12 deals totalling $15.4 billion. Asia saw $7.5 billion and Africa $6.8 billion. Deal making was relatively quiet elsewhere with announcements for Australia, Middle East, Europe (and the North Sea) and totalling less than $1 billion. Transaction value in South America dropped to $1.1 billion in Q1 from a record $23.5 billion in the prior quarter.

Russia led all countries with $14.7 billion of value changing hands
Russia led all countries with $14.7 billion of value changing hands in six transactions, followed closely by the US at $12.8 billion in 67 deals. Canada was third with $8.3 billion in 45 transactions. Three fourths of the value was in the 10 largest transactions, which totaled $39.3 billion and involved 18 companies from 12 countries, reflecting the diversity and competitiveness in upstream M&A. 

BP shifts to growth mode in 2011, did two major acquisition
National oil companies continued to play a prominent role, active in five of the eight largest transactions. BP was in the two biggest deals, leveraging its expertise to work bold deals with India’s Reliance and Russia’s Rosneft for offshore exploration and development stakes. In India BP took a 30% interest in 23 Reliance-operated offshore PSCs for $7.2 billion and formed a 50:50 joint venture with Reliance to source and market natural gas in India.

Rosneft and BP announced a $7.2 billion share swap and an agreement to jointly develop three highly prospective arctic blocks covering 48,000 sq mi in the Kara Sea, roughly equivalent to the prospective area of the UK North Sea. Slighted TNK-BP shareholders sued to stop the deal, Stockholm TNK-BP ruling puts BP Rosneft deal on ice.

CNPC signed the largest shale gas JV till date
In the largest shale-gas JV to date, Chinese major CNPC committed $5.4 billion to a 50:50 venture with Encana to develop Encana’s Montney shale play and other assets in the Cutback Ridge area in western Alberta and eastern BC. That positions CNPC as a potential LNG exporter from Canada’s West Coast.
In other Canadian shale action, South African synfuels major Sasol doubled up on its $1.1 billion Montney JV with Talisman in late 2010, announcing a second $1.1 billion Montney JV with Talisman just 25 miles north of the first.

BHP made its first move into North American unconventional plays
In the US, BHP snatched up Chesapeake Energys Fayetteville shale assets for $4.7 billion in the Australian resource giant’s first move into North American unconventional plays. Until now BHP’s US focus has been almost entirely on the deepwater Gulf of Mexico. China’s CNOOC Ltd kicked off what could be a spate of Niobrara JVs with a $1.3 billion deal involving Chesapeake, at $4,700/acre. Korea’s KNOC closed out the quarter with a $1.5 billion Texas Eagle Ford JV with Anadarko for liquids-rich acreage, setting a new benchmark of ~$13,000/acre for that play. In corporate-level M&A, there was a continued brisk pace of equity sales or swaps. Abu Dhabi’s state-owned International Petroleum Investment Co bought an added 53% in Spain’s CEPSA from Total for $5 billion. Undeterred by Russian politics, Total moved to buy a 12% stake in Yamal LNG operator Novatek for $4.1 billion, with an option to go to 19% within 36 months. Total simultaneously announced the acquisition of a 20% stake in the Yamal LNG project, which targets first output in 2016 and a potential 15 MMmt/yr of LNG. In other Russian deals, ConocoPhillips sold its remaining $1.2 billion equity stake in LUKoil in an ongoing restructuring effort.

Oil or gas?
Gas-related transactions in Q1 totaled $26.3 billion for half of transaction value. Oil deals were $22.6 billion for 43%. Deals with a mix of oil and gas were only 6%, their lowest share since 2009. This may reflect company efforts to rebalance portfolios from one commodity to the other.

Top 20 deals in Q1 2011


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