E&P Opportunities in Asia in 2011

There are 33 opportunities recorded and analysed in Derrick’s ‘Deals in Play’ database for the 2 previous years till date (July 2011). A sample of these opportunities is shown in the chart below.

Indonesia has the highest number of opportunities at 9 followed by the Philippines at 5, India and Myanmar at 4 each and Vietnam at 3. Pakistan has 2 opportunities and Bangladesh, Brunei, China, Lebanon, Malaysia and Sri Lanka have 1 each.

There is 1 corporate M&A and 18 exploration/ developing undeveloped discoveries opportunities. 1 opportunity is related to producing fields and 3 are related to fields under development. 9 opportunities are for new exploration awards by governments/ NOC’s and 1 opportunity involves a mix of asset types.

Table 1: Sample of E&P Opportunities available in Asia with sellers, country and year of announcement shown. Hover over squares for additional information. Click on squares to go to the deal sheet in the ‘Deals in Play’ database (Pop ups need to be allowed).

Derrick has valued 5 deals where valuation was possible (e.g., asset sales). The sellers here are
a.GeoGlobal Resources
b.Union Fenosa Gas
c.Hycarbex-American Energy
d.Inpex
e.ConocoPhillips
For further information click on the companies above.

For information about Derrick Petroleum Services ‘Deals in Play’ database write to sanjay.samuel@derrickpetroleum.com or sales@derrickpetroleum.com.

Premier Oil reports 2010 annual results; Reserve Replacement Ratio up 138% over 2009; Plan to achieve 2012 production of 75 kboepd through developments in Asia, North Sea and Middle East-Pakistan

Premier oil’s 2010 average working interest production was 42.8 kboepd, down 3% over 2009. This was due to unplanned maintenance requirements on UK North Sea fields in the Balmoral, Scott and Wytch Farm areas and due to some flooding-related downtime at the Zamzama field in Pakistan. In 2010, Premier achieved 57% success rate in exploration and appraisal well activities.

- Premier revealed 2011 capital program of approximately US$ 850 million to achieve production in the range of 45-50 kboepd. The company plan to achieve production rate of 75 kboepd in 2012 from existing 2P reserves of 261 mmboe and through exploration by focusing on core geologies.

- In Indonesia, Premier plan to develop the full potential of Natuna Sea and  Block A Aceh gas positions.
- In Vietnam, the company is working on Dua and Cá Rồng Đỏ (CRD) accumulations as well as by undertaking new exploration activities.

- In North Sea and West Africa, Premier is pursuing actively  new assets that are capable of delivering near-term production

- In Middle East-Pakistan business unit, Premier continues to focus on enhancing the value of our Pakistan producing assets by maximising production through exploration and development within the existing fields.

- Exploration drilling in 2011.

Asians gaining ground in Canada

Heightened foreign investment in Canada’s unconventional oil and gas industry will be driven primarily by Asian NOCs.

Source: Derrick Petroleum M&A Database-www.derrickpetroleum.com

In 2010, the number of inbound oilsands-focused transactions from Asia tripled, as countries like China, Japan, Thailand and South Korea actively sought to secure natural resources around the world and completed several major deals in Western Canada.

The last 12 months have seen several notable transactions in the sector, including Sinopec International Petroleum Exploration and Production Company’s acquisition of ConocoPhillips’ 9.03% interest in the Syncrude Canada Ltd.’s oilsands operation for US$4.65 billion. Thailand made its first foray into the Canadian oilsands with PTT Exploration and Production’s purchase of 40% of the Kai Kos Dehseh oilsands project from Statoil ASA for US$2.28 billion. In all, Asian investment accounted for US$9.2 billion during 2010 (compared to US$5.9 billion in 2009 and virtually nil in 2008).

Source: Derrick Petroleum M&A Database - www.derrickpetroleum.com

About Canadian attractiveness

There are a host of reasons why Canada is such an attractive destination and why foreign companies are investing here. “Rising oil prices, high debt levels of the junior players, a stable financial and regulatory environment, huge reserves, proximity to the United States, vast expertise and a well-established infrastructure are just a few of them. But to make the most of these transactions, Canadian and foreign companies need robust due diligence and careful integration planning.

Challenges ahead

“Foreign interest in the oilsands is expected to continue in 2011 and this investment activity significantly increases the likelihood of integration challenges and complexities, which often occur in the form of cultural and business differences. To date, most investments have been in a non-operated capacity, but as foreign companies begin to take on operator roles, like in Korea National Oil Corporation’s acquisition of Harvest Energy in early 2010, various issues could surface.”

Some of these challenges could include the need for foreign investors to hang on to local talent to ensure the right skills are in place when transitioning to an operator role. A supplier challenge could also arise, with foreign companies wanting to use their own trusted suppliers instead of sourcing local resources. In addition, local companies may have difficulty adapting to new systems and processes, while foreign acquirers may be unfamiliar with local laws, regulations, as well as environmental and security guidelines.

Companies need to recognize cultural differences, embrace innovations that enable growth –
wherever they come from - and integrate systems globally as quickly as possible. A big part of determining success will come from their ability to establish effective knowledge exchange processes and programs to the benefit of all parties involved.

Asian pursuit to continue in 2011

The 2010 trend that saw Canadian and foreign entities partnering through strategic alliances and joint ventures is also expected to continue. This enables risk sharing and the pooling of Canadian technology with foreign financial strength and resources. Technology will also play a strategic role in transactions with foreign buyers looking to reap the benefits from advancements being made by Canadian oil and gas players.