Crescent Point Energy expands Bakken presence

PetroBakken Energy Ltd has agreed to sell certain non-core Southeast Saskatchewan assets to Crescent Point Energy Corp for C$427 million (US$428.341 million) in cash. The assets are located in the water flood area of the Viewfield Bakken light oil resource play. Continue reading here..

67 Unconventional Assets for Sale as of July 2011

There are many unconventional packages put up for sale, with most in the US or Canada. Given the flurry of unconventional deal activity recently, it wouldn’t be surprising if unconventional deal volumes and values reach record highs this year.

Jack Williams, president of the Irving, Texas-based ExxonMobil's XTO unit, which was acquired by ExxonMobil in June 2010, says that Exxon is looking to expand its shale gas holdings in more than a dozen gas-rich shale-rock formations worldwide. Exxon is also getting active internationally, starting hydraulic fracturing on formations in Poland this year and last week agreeing with China Petrochemical Corp. to jointly assess the resource’s potential in China. Although gas prices have been relatively low, Exxon is reportedly pleased with the returns they’re seeing with production from their unconventional assets, and particularly XTO’s assets.

This announcement by Exxon comes on the back of a series of multi-billion dollar deals involving unconventional (shale) transactions. Last week, BHP Billiton agreed to acquire Petrohawk Energy for $12.1 billion to expand its shale gas holdings in the US. Since June 1, companies including Exxon, Marathon Oil Corp. and Malaysia’s Petroliam Nasional Bhd have announced at least $7 billion worth of North American shale-gas deals.

The following table shows unconventional opportunities for sale recorded in Derrick’s “Deals in Play’ database, part of Derrick’s ‘E&P transactions’ database

Table 1: Unconventional opportunities available in US and Canada as of July 2011. Click on squares to get to the detailed deal sheet. Source: Derrick Petroleum Services. *HRB = Horn River Basin.
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There are currently 67 unconventional oil and gas packages for sale in the market. The majority of these packages are located in the USA (46) and most of them are either for unconventional oil (21) or unconventional gas (21). A large number of packages are for investments in undeveloped discoveries (30) and for investments in fields under development (20). Eagle Ford Shale has the most number of opportunities at 12 followed by the Marcellus Shale at 7. Most packages are related to selling undeveloped acreage (36), followed by Joint Venture related opportunities (17)

      

Nearly $1 Billion Worth of Bakken Shale Acreage For Sale in 2011

The Bakken shale is an oil rich shale, present mostly in the Williston Basin, and covers parts of North Dakota, South Dakota, Montana, Saskatchewan and Alberta. Production at the end of 2010 was estimated by Bentek Energy to be 458,000 BOE/d. Some operators (Eg., Continental Resources) estimate that output potential could be a huge 1.2 MMBOE/d by the end of 2016. Continental Resources also estimates that there is ~ 24 billion barrels of recoverable oil, which is a huge jump from USGS estimates of up to 4.38 billion barrels a couple of years ago, and a meagre 151 million barrels in 1995. Therefore, this shale is likely to be a major contributor to US oil production in the near future. The following table gives a list of the top 10 Bakken Shale acreage holders.

Opportunities in the Bakken Shale are presented in the following chart using data captured in the Derrick 'Deals in Play' Database.

Table 1: Bakken Play opportunites sorted by net undeveloped acres. Also shown is the deal value range as estimated by Derrick analysts. Hover over bars for additional information. Click on the bars to get details on individual deals. Source: Derrick ‘Deals in Play’ database.

The following table shows recent transactions involving the Bakken Shale for insight into its recent $/Acre.

Table 2: X axis shows Buyer-Seller. Y axis is deal value. $/acre is given above the bar's in the chart. Data is sorted by quarter. Only recent deals involving primarily acreage transactions are shown. Hover over bars for additional information. Click on the bars to get details on individual deals. *Multiple Sellers = Arkoma Bakken LLC; Long Properties Trust; Reynolds Drilling Co Inc. Source: Derrick Deals Database.  

   Analyst Comments
      a. Most of the opportunities involving the Bakken shale are in the US, with just 2 in Canada.
b. Mid and small cap, and private companies are looking to sell, possibly due to the higher prevailing oil prices at the moment.
c. The majors are holding on to their assets, possibly signaling that they believe they are high value and are worth keeping.
d.The oil rich Bakken Shale could present a low risk - high reward opportunity as oil prices are high.
e. With increasing technology, the potential to recover far more oil than was previously possible makes this acreage a potential gold mine; to acquire or hold onto.

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Marathon Oil reported 2010 annual results; Added nine onshore exploration licenses with shale gas potential in Poland for a total of 11 licenses; Announced $5.27 billion capital, investment and exploration budget for 2011

Marathon’s annual 2010 sales volumes averaged 391,000 boepd down 2% over 2009 average of 400,000 boepd from continuing operations. This is due to the result of planned downtime associated with the turnaround of production facilities in Equatorial Guinea completed in the second quarter 2010, natural field declines and asset dispositions. The company achieved 95% reserve replacement ratio for the annual year 2010.

Marathon announced $5.267 billion capital, investment and exploration budget for 2011, consistent with prior guidance and a 9% increase from 2010 capital spending. The company aim at liquids rich opportunities such as the Bakken, Anadarko Woodford, Eagle Ford and Niobrara resource plays in the U.S.

The company’s capital spending in the upstream segments is approximately $3.7 billion or 71% of total spending for 2011. This Upstream program includes spending of $1.3 billion on base assets ($1 billion on E&P base and $300 million on Oil Sands Mining and Integrated Gas), $1.9 billion on growth assets such as liquids resource plays in the U.S., and $465 million specifically for impact exploration.

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Bakken is booming with 5x growth increasing resources to 20 billion barrels!!! Production to account for 15% of US output by 2015.

“The Bakken formation in North Dakota and Montana holds about 20 billion barrels of recoverable crude, or about five times the amount previously estimated by federal geologists” said Harold Hamm, chairman and chief executive officer of Continental Resources Inc. The formation also holds 4 BBOE of gas, he said.

Increased rig count!

According to the North Dakota Industrial Commission, approximately 173 rigs are currently drilling in the North Dakota Bakken and Three Forks play, against the Eagle Ford rig count of 154. Bakken/Three Forks is forecasted to account for 15% of US output by 2015, analysts from Raymond James estimated.

Source: Pioneer Natural Resources- Mar 2011 PPT

Continental to spend 73% of 2011 capex on Bakken shale!

Continental Resources is the largest leaseholder in the Bakken shale formation, with more than 864,000 acres in North Dakota and Montana. The company, which has been drilling in North Dakota for 22 years, was among the first to tap a Bakken well in 2004 using horizontal drilling technology. The company was the first to drill a horizontal well in Three Forks formation in 2008. Continental Resources plans to invest $955 million (73% of 2011 capex) in drilling operations in the Bakken and Three Forks this year, adding about 120 wells to the 257 currently producing, the company said.

Source: Sandridge- Simmons 11th Annual Energy Conference Mar 2011

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A new milestone for Bakken Metrics!!

The affinity towards Bakken does not stop only with the largest Bakken leaseholder, but also continues with the large independents like Oxy, Hess, Williams, Pioneer Natural Resources, Sandridge, etc., The last quarter of 2010 had set a new milestone for Bakken acreage metrics, during when Oxy ($7,700/acre), Hess ($6,200/acre) and Williams ($10,700/acre) added Bakken acreage to their asset portfolio. Earlier to this, the Bakken metrics were in the range of $2,000-$4,000/acre.

Updated estimates on the recoverable reserves, increased rig count and a new milestone for the metrics. Bakken Shale is booming!!

Source: Global Oil and Gas M&A 2010 Review