Quantum Energy Partners forms Renaissance Offshore

Quantum Energy Partners, a leading private equity firm, has announced the formation of Renaissance Offshore by a $300 million equity commitment. Renaissance will primarily engage in acquiring and redeveloping legacy oil producing properties in the shallow water Gulf of Mexico. Continue reading here..

Newfield Exploration to sell more assets

Newfield Exploration Company has announced its plan to divest non-strategic GoM assets. The company expects proceeds of about $335 million from the sale which is expected to close in early 2012. More info on Newfield’s GoM asset overview: 

SandRidge Energy to increase GoM presence through $1.3B acquisition

SandRidge Energy Inc has signed an agreement to acquire Dynamic Offshore Resources LLC for in a cash plus share consideration of $1.275 billion. Continue reading here..

Apache Production increased by 25% in Q1 2011; Plans to Raise 2011 Capital Expenditures by 8% to $8.12 billion

Apache Corporation posted Q1 2011 production up 25% to 732,000 boe from 586,000 boe in the first quarter 2010. Liquids production increased 57,000 bpd to 358,000 bpd, which enabled Apache to achieve stand-out earnings and cash flow as a leading beneficiary of rising oil prices. Liquid hydrocarbons represented 49% of quarter production. Approximately 60% of the company’s oil production came from operations outside North America.


Apache’s operational data for year end 2010 comparing to peers:



Last year, Apache grew substantially with three large acquisitions. A $2.7 billion takeover of Houston’s Mariner Energy gave the company its first significant presence in the deep-water Gulf of Mexico. It also paid BP $7 billion for production in Canada, the U. S. Permian Basin, and Egypt; and struck a $1 billion deal with Devon to acquire shallow-water properties in the Gulf of Mexico.

Source: Derrick Petroleum - Global Oil & Gas M&A 2010 Review Report


Milestones during the Quarter:

- Development well in the Forties field (North Sea), which came online at approximately 11,800 boepd.

In the Permian Basin, Apache is operating 24 rigs, up nearly five-fold from a year ago. Targeting primarily oil objectives, Apache drilled 110 wells including 15 horizontals during the first quarter.

- Drilled six wells in Anadarko basin’s Granite Wash formation, every well has tested in excess of 1,000 barrels of oil and 2 mcfpd.

- In Egypt, Apache operated 22 rigs during the quarter, drilling 33 wells, including the company’s first wells in the Tayim development lease in West Kalabsha producing from deeper Paleozoic pay. Apache’s production remained online throughout the quarter, increasing sequentially from the previous three months.

"We continue to strengthen our land position, both in North America and internationally. Our LNG initiatives, Kitimat in Canada and Wheatstone in Australia, are steadily progressing toward project sanction with their respective joint venture partnerships," Farris said.

Plans to raise capital expenditures by 8%

The company now plans to spend $8.12 billion in 2011, up from its forecast for $7.5 billion. “The bulk of the increase will be spent in the second half of the year, so the company's 2011 production outlook for growth of 13% to 17% remains unchanged”, Chambers said.

The company is in the planning stages for the Kitimat liquefied natural gas terminal in northwestern Canada, and expecting a final investment decision on that facility later this year or early next year, with first gas expected in 2015.

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ConocoPhillips increases 2011 capital budget by $2.5 billion to $16 billion!! ConocoPhillips to venture in to GoM, shale areas and Angola.

ConocoPhillips intends to target shale gas and deepwater acquisitions as part of the company's current asset management program. The company will increase planned capital spending of $13.5 billion by $2.5 billion for 2011 for favourable opportunities, the Gulf of Mexico in particular. Conoco is also looking at deep-water prospects off the coast of Angola. Shale assets are being sought in the US, Canada, eastern Europe (Poland) and China. ConocoPhillips’ chief executive Jim Mulva said, “The Company has its sights set on shale plays outside the key Marcellus and Eagle Ford regions”.

Source: Conocophillips - Howard Weil Conference- Mar 2011

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Why is ConocoPhillips on shopping spree?? May be these reasons-

• Steady increase in oil price which is reaching approximately $120/barrel, the highest since July 2008 when it had hit $147/barrel
• Unconventional fever is spreading across US, Canada, Europe and China. Recently, the Asians- in particular Chinese are striking back to back deals in US/Canada shale areas. Then, why not the US supermajor?? To make use of the robust oil price season, is ConocoPhillips looking at Bakken and Niobrara plays, if they are looking at the plays outside Marcellus and Eagle Ford.
• Angola- Possesses similar characteristics to the pre-salt play located offshore Brazil. Many companies are active in exploring this pre-salt play in Angolan waters including Cobalt International, which is the operator of three blocks. Other operators that were awarded blocks by the Angolan government include Statoil, Total and BP. So, even ConocoPhillips may like to step into Angola.

Below are the significant deals in Angola:

• Post Macondo oil spill, the companies like Shell, Noble Energy and BHP Billiton have been issued drilling permits in the GoM. This shows that the situation is slowly recovering in GoM. This may be one of the reasons why Conoco is interested towards GoM.

Following are the GoM packages which may be attractive to ConocoPhillips:

Source: Derrick Petroleum E&P Transactions Database

ConocoPhillips, currently being focused onshore US and Canada, wants to establish the company as a diversified player stepping into new areas like GoM, Angola, China, Poland, etc.,

Murphy Oil targets hydrocarbon production of 300,000 boepd by 2015; Planned exploration and development activities in Asia, America, Africa and Middle East for the year 2011

Murphy oil projected 2011 production ranging from 200-210 kboepd, which represents a 7% to 13% increase over 2010 volumes. The company approved capex of $2.2 billion for the year 2011; approximately 88% of it slated for the E&P segment, about $1.5 million for the development projects, the remainder or about $500 million to be spent on exploration activities.

Murphy’s 2010 exploration program delivered three new discoveries from eight wells drilled and found mainly oil reserves in amounts well above our produced volumes for the year. The company added new acreage to Eagle Ford Shale position as well as our Montney position. The company also added a new oil play, the Exshaw/Bakken, in Southern Alberta. Murphy signed an agreement with the Kurdistan Regional Government of Iraq to acquire a 50% working interest and operate the central Dohuk well.

Murphy planned exploration activities in Indonesia, Suriname, Congo, Brunei, Kurdistan and GOM for the year 2011.

In Canada, the EOR pilot work kicked off at our Seal heavy oil project in Northern Alberta late in the year 2009. On the gas side, development work in Canada at Tupper and Tupper West continued on plan through the 2009. Gas plant capacity at Tupper was expanded to 105 mcf a day and first gas at 180 mcf capacity. Tupper West plant is expected in first quarter of 2011.

The company has development projects in Malaysia with oil development at Patricia, Serandah along with Siakap North in Block K, a floating LNG development and Block H is also under consideration for 2011. Schiehallion redevelopment and the Hibernia South Extension are also on the slate for sanction this year.

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Traffic towards Marcellus is high!! Seneca Resources divests GoM assets and focuses on Marcellus assets

Seneca Resources agreed to sell its Gulf of Mexico oil and natural gas producing properties for $70 million.

David F. Smith, Chairman and Chief Executive Officer of Seneca says, “We look forward to redeploying these proceeds to Seneca’s long-term growth opportunities in the Marcellus Shale. While our well costs have increased as a result of additional frac stages and increased service company charges, this has been offset by higher anticipated estimated ultimate recovery (EUR) factors. We are now anticipating well costs of $5.0 - $6.4 million for wells with up to 20 frac stages and lateral lengths reaching over 6,000 feet. Taking these factors into account, we expect to see results continue to improve over time, with some of our best wells achieving EURs of 8 Bcf. At a natural gas price of $4.00 per MMBtu, the pre-tax internal rates of return are still exceptional, ranging from 20 percent to better than 65 percent.”

As a result of the above, Seneca’s capital spending in the Exploration and Production segment for fiscal 2011 is now expected to be in the range of $600 to $655 million, up from the previously announced range of $485 to $560 million.

Traffic towards Marcellus!!!

There has been a vigorous traffic towards Marcellus area in 2010 with around $17 billion worth transactions as against ~$1.4 billion worth transactions in 2009. Huge difference!!!

In 2009.... 

In 2010....

Seneca’s divestiture of GoM assets and focus on Marcellus is in a way similar to the recent Range’s divestiture of Barnett assets and diversion of maximum capital towards Marcellus. Read more on the Range deal: http://mergersandacquisitionreviewcom.blogspot.com/2011/03/range-drops-barnett-for-900-million-and.html.

Also, Bob Ramsey, an analyst at FBR Capital said, "Marcellus Shale gas will bring an estimated $250 billion in payments to Pennsylvania land owners (more than four times the entire state's deposits) and drive $8 billion to $15 billion of annual spending in the state, based on 2,000 to 3,000 wells drilled per year.”

See more publications on Marcellus: http://docsearch.derrickpetroleum.com/research/q/Marcellus.html