Shell acquires ~A$2 billion worth stake in Wheatstone LNG project from Chevron!

Chevron has signed agreements with Shell regarding the A$30 billion Wheatstone Project as a natural gas supplier and equity participant. Under the unitization agreement with Chevron's Australian subsidiaries, Shell will assume an 8% participating interest in the Wheatstone and Iago natural gas fields in the Chevron-operated permits WA-253-P, WA-17-R and WA-16-R, located offshore northwest Australia. The Wheatstone and Iago gas fields will supply Trains 1 and 2 of the Wheatstone Project, located onshore at Ashburton North in Western Australia. Shell will also assume a 6.4% participating interest in the project facilities, with Chevron remaining project operator with 73.6% stake. Financial terms weren’t disclosed. However, the media sources are estimating the value of the stake to be around A$2 billion.

Source: Chevron Mar 2011 PPT

The front-end engineering and design activity on the Wheatstone Project is nearing completion. A final investment decision is expected in the second half of this year once environmental approvals and other associated agreements are finalized with various levels of government. The first phase of the Wheatstone Project consists of two LNG processing trains with a combined capacity of 8.9 MTPA and a domestic gas plant. The project is expected to come online in 2016.

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Asian customers for Wheatstone LNG!!

Apache and KUFPEC hold 13% and 7% stake, respectively, in the project. Chevron Australia managing director Roy Kryzwosinski said Chevron planned to divest more equity in Wheatstone to its foundation customers, including KOGAS and TEPCO, but its interest would never fall below 50%. Chevron is in negotiations with its Wheatstone customers TEPCO, KOGAS and Kyushu Electric, which are also set to take equity stakes in the project, said Chevron's spokeswoman. The three Asian LNG buyers have inked deals to lift 4.1 million mt/year, 1.5 million mt/year and 700,000 mt/year of Wheatstone LNG respectively.

Asians hunger for LNG will continue!!

The Asian spot LNG prices settled at $11.6/MMBtu in the last week of March 2011. Approximately 60% of the global LNG is delivered to the Asian markets. The Wheatstone project notably has three Asian customers (nearly 80% equity LNG under contract). With the high LNG prices and strong Asian market conditions, the project is in a robust state!! In addition, Shell's entry into the project will speed up the project's development pace. 

The following snapshot shows the LNG deals of 2010-

Source: Derrick Petroleum E&P Transactions Database

Aurora Oil & Gas 2011 March Investror PPT

http://docsearch.derrickpetroleum.com/pageNav/view1/docId/11791-0000/Aurora-Oil-Gas-2011-March-Investror-PPT.html

Penn West 2011 April Investor Update

http://docsearch.derrickpetroleum.com/pageNav/view1/docId/11792-0000/Penn-West-2011-April-Investor-Update.html

Comstock 2011 April Corporate Presentation

http://docsearch.derrickpetroleum.com/pageNav/view1/docId/11793-0000/Comstock-2011-April-Corporate-Presentation.html

Lundin 2011 corporate presentation

http://docsearch.derrickpetroleum.com/pageNav/view1/docId/11796-0000/Lundin-2011-Latest-corporate-presentation.html

Spring Energy - Company Presentation April 2011

http://docsearch.derrickpetroleum.com/pageNav/view1/docId/11797-0000/Spring-Energy-Company-Presentation-April-2011.html

Hess Corporation Announces Capital and Exploratory Budget of US$ 5.6 billion for 2011; More than 35 percent are devoted to Unconventional Oil projects

Hess announced 2011 capital and exploratory budget of US$ 5.6 billion, of which US$ 3.1 billion for production, US$ 1.6 billion for developments and US$900 million for exploration. More than 35 percent of capital and exploratory expenditures in 2011 are devoted to unconventional oil projects. The company also plans to increase reserves and production by atleast 3% a year.

Production expenditures of approximately US$ 3.1 billion include:

- Bakken oil shale in North Dakota, where Hess plans to operate 15 rigs and expand production facilities

- Drilling production and water injection wells at Valhall (Hess 64% working interest) in Norway and Shenzi (Hess 28%) in the deepwater Gulf of Mexico

- Well workovers and completions at Ceiba and Okume Complex (Hess 85% - operator) in Equatorial Guinea

Field development expenditures of US$ 1.6 billion include:

- Expansion of the Tioga Gas Plant and construction of a crude oil rail loading and storage facility to support the development of the Bakken oil shale in North Dakota

- Field redevelopment work at Valhall to increase production capacity and extend field life by 40 years is expected to be completed during 2011

- Pony (Hess 100 percent - operator) and Tubular Bells (Hess 40 percent - operator) in the deepwater Gulf of Mexico, where engineering and design work is progressing

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Exploration expenditures are budgeted at US$ 900 million, including:

- Conventional deepwater drilling in Egypt, Ghana, Indonesia and Brunei

- Unconventional onshore drilling in the Eagle Ford Basin in Texas and the Paris Basin in France

Source: Derrick Petroleum Planned Exploration Well Database

Oil companies to invest $1.38 billion in Ecuador

Oil companies and consortiums operating in Ecuador under service provider contracts will invest $1.38 billion in the Andean country during the 2011 to 2025 period.

As per UK Trade & Investment Report of May 2010, Ecuador is the fifth-largest producer of oil in South America and the smallest oil producer in OPEC., with an assigned production quota of 520,000 bbl/d from which 368,000 bbl/d exported and 152,000 bbl/d consumed locally.

Companies investing in the oil sector include China's Andes Petroleum and PetroOriental, Italy's Eni, Spain's Repsol YPF, and Chilean state oil and gas company ENAP.

Andes Petroleum Ltd operates in Tarapoa Block and the Lago Agrio Storage and Transfer Station (Sucumbios).

PetroOriental S.A. operates in blocks 14 and 17 (Orellana).

Eni has been operating in the Campo Villano oilfield (Pastaza province).

• The investments will be made in 14 oil fields, with about $1.1 billion going into production while the rest will be invested in exploration
• 87% of the investment  will be invested up to 2014
• For this year oil companies are seen investing $468 million, of which $409 million will be invested in production activities and $59 million in exploration.

In January Ecuador's government concluded almost three years of negotiations aimed at gaining more control over its natural resources and increasing its oil revenue by replacing production-sharing deals with services contracts. The services contracts turn the companies into service providers for the exploration and extraction of hydrocarbons. Companies will receive a fee rather than sharing profits.

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BHP expected to put in $49 bn bid for Woodside!!!

BHP Billiton Ltd. (BHP) will make a A$46 billion ($48.5 billion) bid for the Australian oil and gas producer. BHP is in talks to buy Royal Dutch Shell Plc (RDSA)’s 24 percent stake in Woodside and make a full takeover offer. BHP would swap some of Woodside’s assets, including the Sunrise natural-gas field, for Shell’s holding.

Woodside shares have risen from this year’s March 15 low to A$47.26 on April 8 on speculation of a bid from BHP and an increase in gas demand following Japan’s nuclear crisis. BHP and Tokyo-based Mitsui & Co. and Mitsubishi Corp. may be potential buyers of Shell’s stake or of the entire company, Credit Suisse Group AG said in an April 7 report.

“If BHP buy the whole of Woodside and bolt it together with their own assets, I think they could look to make $3 or $4 billion worth of synergies out of this deal.

Woodside to get 23% premium

A $48.6 billion bid would represent a 23 percent premium to Woodside’s value, in line with the average premium paid for oil and gas assets worldwide in deals announced in the past 12 months.

While talks on Woodside have intensified in recent weeks, BHP is concerned that securing the support of Woodside’s management may be too costly.

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Weighing the Acquisition

More than half of BHP’s assets are in Australia, where the resources industry is undergoing its biggest boom in a century as Chinese demand for coal and iron ore climbs. Company announced in February it is still considering acquisitions after completed takeovers in the mining industry reached $80.7 billion in 2010. Also BHP is left with $16 billion of cash due to surging prices for iron ore, copper and oil.

“Asian LNG prices are the highest in the world, and Australia, being in relatively close proximity to Asia, acquisition would put BHP in strong position to sell to that market.

Woodside acquisitions and divestitures 

Year	Heading	Deal Value ($MM)
2009	Woodside divests 51.55% interest in Otway project for $641m	641.31
2007	Petronas acquires Mauritanian assets of Woodside Petroleum for $418m	418
2008	Woodside Petroleum acquires Shell's North West Shelf, Australia, oil assets for $399m	398.5
2008	Woodside Petroleum wins bids for 10 GoM blocks	89.85
2010	Woodside Petroleum divests Sierra Leone and Liberia assets to Anadarko	65
2007	Apache acquires Woodside's interests in certain Australian properties for $65m	65
2008	Origin Energy acquires remaining 62.5% interest in offshore Australia permit from Woodside Petroleum for $12m	12.2
2007	Karoon Gas acquires Woodside's interest in Australian permit for $0.9m	0.9
2010	Woodside acquires remaining 50% interest in offshore Australian permit from Hess
2010	Woodside acquires 65% interest in offshore Western Australia permit
2010	PTTEP acquires 20% interest in three permits offshore Western Australia
2009	Korea Gas to acquire interest in three offshore Australian permits from Woodside
2008	Woodside Petroleum awarded three exploration permits offshore Australia
2008	Anadarko acquires 50% interest in two blocks offshore Sierra Leone from RepsolYPF and Woodside
2008	Anadarko acquires 65% interest in three blocks offshore Liberia
2008	Woodside Petroleum and Reliance farm into Pluspetrol's exploration block in Peru
2008	Woodside farms out interest in three Australian exploration permits to Mitsui and Toyota Tsusho Corp
2008	Toyota Tsusho Corp acquires 7.5% interest in offshore Australian permit from Woodside and BHP Billiton
2007	Tokyo Gas and Kansai Electric acquire 5% stake each in Australian permit from Woodside
2007	Tokyo Gas Co to acquire 5% interest in Australia exploration permit from Woodside Petroleum
2007	Eni acquires 40% stake in two Timor Sea oilfields from Woodside Petroleum
2007	Woodside and Hess awarded exploration permit offshore Australia
2007	Woodside Petroleum sells 40.45% stake in offshore PNG lease to Merrill Lynch
2007	Tap Oil acquires 8.2% interest in Australian exploration permit from Woodside
2007	Woodside and KNOC jointly awarded  exploration blocks offshore South Korea
2006	Woodside acquires 25% interest in nine Brazil exploration blocks from Repsol YPF
2006	Repsol YPF farms into Woodside's offshore Kenya blocks
2006	Santos acquires additional interest in Australia gas field from Woodside
2006	Woodside, Total and Japan Australia LNG awarded two Australia exploration blocks

Source: Derrick Petroleum E&P Transactions Database

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