Libya crisis forces operators to move out....What next for them???.......Is it sell off.

Immediate impact of Libyan crisis

The ongoing Libyan civil war and Western military intervention is set to take about 860,000 barrels per day of production, over a period of 90 days, out of the oil market this year.

An unresolved crisis may also lead to long-term exits by international oil companies from the North African country, putting Libya’s state-owned National Oil Corporation’s ambitious production growth goals under pressure.

Long term impact of Libyan crisis

Almost all international oil companies operating in Libya have evacuated their staff and cannot be certain when normal operations will resume. There are a number of uncertain factors affecting its estimates of the impact of the crisis on Libyan output, including how long the current abnormal situation lasts, which will determine how rapidly production can be returned to normal levels.

Operations at some projects are at “hot standby” as Italian player Eni has indicated, ready for a quick restart. Other projects will require major work before a return to normalcy.

More fields have been shut in as the unrest continues to spiral. We think it will take more time to resume production than previously estimated (30 days). Hence, we recommend raising the estimated production cut by another 60 days for the fields identified earlier, as well as for the newly impacted fields. The rate at which output recovers after the current crisis is over will to a great extent depend on which side wins.

What is next for IOC’s

With Gaddafi’s forces now apparently halted, Eni, BP, Wintershall, OMV, the big American players such as Hess, Marathon and ConocoPhillips, and a long list of other players and hopefuls, not least supermajor Shell at its gas exploration site, all have to consider two relatively simple options.

The worst option for the oil firms is that Gaddafi succeeds in dragging out the confrontation or wins the day. In these circumstances, it has become clear that neither Eni nor any of the others will really return to Libya while Gaddafi remains in power. Admittedly, Eni has an unusual position and may be granted a special status to continue producing gas for the local Libyan market.

Nearly all the companies with assets in Libya will now find that they are rooting for an early end to Gaddafi’s regime as the only clear way for their return. The Libyan leader is threatening to bring everything else – possibly including some vulnerable oil facilities - down with him if he has to leave the scene after 42 years in power, but it may be too late for him to follow through on the bluster.

 Acquisitions and divestitures in Libya - 2006 to 2011

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

Eagle Ford Shale - the next big thing on the global exploitation map!!!!

Eagleford shale play extends about 400 miles across South Texas in a 50-mile-wide band, from the Mexican border, below San Antanio and up into East Texas. Some of the world’s biggest oil companies – including Shell, BP, Statoil and CNOOC – recently have entered the Eagle Ford and are helping to put it on the global energy map with aggressive exploration drilling planned for coming years. In 2010 in the Eagle ford, about 1,018 drilling permits were issued through November, which means that this area is definitely the next big thing to look out for. Not only the drilling permits issued in number increased but also the number of rigs have increased in number.

EOG, in 2010 averaged seven rigs in the Eagle Ford and drilled 110 wells. This year, it expects to have 14 rigs and drill 256 wells. Chesapeake, the largest leaseholder with 625,000 acres, also expects to double the dozen rigs it has working in the area. Petrohawk Energy also expects to spend more than twice as much as it did in the region in 2010. And ConocoPhillips, another major leaseholder, just leaped from seven to 11 rigs in the region.

Why Eagle Ford ?

What makes this shale play different is that it produces oil, condensate, gas and finally drier gas as drilling proceeds down dip. The carbonate content (up to 70% calcite) of the shale makes it very brittle and easily fractured during stimulation treatments, resulting in impressive production figures of both oil and gas. 

What are others thinking?

• EOG Resources, one of the major players in the Eagle Ford shale, is planning to drill about 250 wells in the area in 2011. 
• Rosetta Resources has allocated 90% of its $360 million budget for its activities in this area.
• Due to lower natural gas prices companies are focusing more on the upper, oil laden section of the Eagle Ford. Since the price of oil is high due to international demand, the upper side of the shale is where much of the new drilling activity in 2011 will take place.

There has been a huge increase in the demand for this acreage , from about $100 to $200 per acre in 2007 to more than $10,000 per acre at present, which signifies that the companies are confident to reap huge profits from this area!

Following the footsteps......

• Like other companies, Anadarko is focusing more on its liquids-rich Eagle ford acreage where it has increased the average estimated ultimate recoveries of its existing wells to more than 450,000 barrels of oil equivalent per well in the liquids-rich Eagle Ford shale.

• The Company plans to double its drilling activity at these assets with more than 200 wells planned for 2011.
• With $5.6 to $6 billion as capex for 2011, about $3.19 billion seems to be allocated to US onshore.
• The Company estimates to spend $5 to $5.5 million per well which totals up to about $1.05 billion to drill 200 wells in the Eagleford.

How Long Will Eagle Ford Shale Oil Wells Last?

What makes Eagle ford shale play the most sort after thing these days is its wide expanse and the ability to drill essentially “risk free”oil wells in a time when bankers are reluctant to lend any oil company money for exploratory drilling.  With the vast amount of infill drilling that will occur as the play is exploited we may see more than a couple of decades worth of production.

Reliance may buy more US Shale assets, after BP Deal Doubles Cash

Reliance Industries, which has struck three shale gas joint ventures with U.S. firms this year, may make a full buyout next as the cash-rich firm builds the knowledge it needs to run such operations.

Reliance has received about 20 to 25 pitches from investment bankers for shale assets with potential targets include Fort Worth, Texas-headquartered Quicksilver Resources Inc, Denver, Colorado-based Enduring Resources and companies with assets in the Horn River shale formation in Canada.

Major US Shale Assets on the market

Heading	SubRegion	Value Range ($m)
Chesapeake to sell 20% interest in Marcellus Shale	Marcellus	>$1,000
Chief Oil & Gas put up for sale	Marcellus	>$1,000
Seneca seeks JV partner for Marcellus assets	Marcellus	>$1,000
Anadarko seeks JV partner for Eagle Ford assets	Eagle Ford	>$1,000
EOG offers Marcellus acreage	Marcellus	$500 - $1,000
SM Energy considers options for Eagle Ford acreage	Eagle Ford	$500 - $1,000

Why US Shale?

Shale gas accounts for between 15 percent and 20 percent of U.S. gas production, but is expected to quadruple in coming years, touching off a scramble among producers large and small for access to resources. Reliance's overseas ambitions, and is looking to invest in new areas such as shale gas to expand the firm's businesses beyond petrochemicals, refining, oil and natural gas exploration, and retail.

Reliance to generate free cash flow of $18 billion by 2014, giving it plenty of firepower for investment.  Reliance’s India asset sale of $7.2 billion to BP is seen as part the cash generation.

Done Deals

Heading	Deal Value ($MM)	$/Acre
Reliance and Carrizo form Marcellus JV	392	6,258
Reliance and Pioneer form Eagle Ford JV	1,315	11,111
Atlas and Reliance jointly acquire Marcellus acreage	191.9	4,532
Atlas and Reliance form Marcellus JV	1,699	14,158

Probable target

A firm on Reliance's radar may be Houston, Texas-based EOG Resources, which said in early August it plans to sell about 180,000 acres in U.S. shale plays -- underground rock formations that hold reserves of oil and natural gas.

BP Rosneft share Swap in problem – Rosneft may look for new Asian partners to develop the Arctic project

Share swap between BP and state-controlled Rosneft under which they agreed to jointly explore for offshore oil and gas in the areas of the Arctic is in problem after TNK BP won an injunction in a London court that froze the deal and is now seeking to be part of it. 

Rosneft and the Russian government have made clear such move was not welcome. On 2 March the TNK-BP management had proposed buying a $7.6 billion stake in BP and joining the offshore partnership with Rosneft. The deal with Rosneft gives BP more clout in Russia and effectively sidelines TNK BP.

Two months after Rosneft-BP strategic alliance announcement, Rosneft  is considering new partners

After 2 months of BP Rosneft deal, Rosneft is considering partnering with Chinese and Indian energy companies to work on Arctic projects.

Arctic Project Overview

For more: www.deerickpetroleum.com

BP backs off from Algeria Asset sale - What makes BP stay back "Government intervention or Algerian gas potential"???

BP has backed off from plans to sell assets in Algeria, The surprise announcement also comes after Russian joint venture TNK-BP Ltd., which is half-owned by BP, said Tuesday it was still interested in buying the assets owned by the British company--the largest foreign oil and gas investor in the North African nation.

Earlier this year, BP agreed to sell its stake in the two fields, which each have production of up to nine billion cubic metres, for $3 billion, but the government's decision to withhold the data has led to speculation that it is interested in snapping up the assets for itself.

It is not the first time the Algerian government has intervened - in 2000, it blocked BP's proposed sale of a 40% share in the Rhourde El-Baguel field to energy giant Elf, opting to exercise its pre-emptive right of purchase.

A major blow to the potential Russian buyer TNK BP

While confirming its interest in the BP Algerian assets, TNK-BP had cautioned it didn't expect a breakthrough in negotiations soon. Algeria's state energy firm, Sonatrach, had signaled an interest in exercising a right of first refusal to the BP assets. Separately, TNK-BP's Russian shareholders are in a dispute with BP over the possible participation in an Arctic deal signed by the U.K. company with Russian oil company OAO Rosneft. It is unclear if the spat affected the Algerian considerations.

Asset portfolio in Algeria

In Algeria, BP has two large natural-gas projects, In Salah, which covers seven fields in the southern Sahara desert, and In Amenas. BP also participates in the Rhourde El Baguel oil project, and is exploring for oil in the Bourarhet block next to In Amenas. 

For more on BP Algeria: visit: http://docsearch.derrickpetroleum.com/research/q/BP%20+%20Algeria.html