Rock Energy divests Montney assets for $46M

Rock Energy Inc has agreed to sell its entire Montney natural gas assets in Elmworth area of Alberta for C$46 million (US$46.185 million). Rock Energy has closed the sale of some of its Montney gas assets (Transaction 1) to a Canadian oil and gas producer for C$36 million (US$36.177) on 9-Feb-2012. The remaining assets are being sold (Transaction 2) to a second Canadian oil and gas producer for C$10 million (US$10.008 million). Closing of Transaction 2 is anticipated to occur before the end of Feb-2012, subject to necessary approvals. Continue reading here..

Petsec Energy acquires interest in Alberta Shale oil project

Petsec Energy has signed an agreement to acquire 24.5% WI in Alberta Shale oil leases covering 17,280 acres. Petsec will have to pay 35% of the costs to drill one initial commitment well and 35% of the costs of drilling up to 3 optional wells. The initial commitment well is expected to spud before the end of Feb-2012. Continue reading here..

Talisman Energy to Divest Shaunavon Asset

Talisman Energy Inc has initiated a process to divest its Shaunavon assets in southwest Saskatchewan and has retained FirstEnergy Capital Corp as its exclusive financial advisor. This package is a part of company’s 2012 divestiture program which was announced in Jan-2012. Continue reading here...

Sonde Resources sells Duvernay Shale acreage

Sonde Resources Corp has sold 26,240 gross undeveloped acres (24,383 net acres) in its Kaybob Duvernay play in Alberta for aggregate proceeds of C$75 million (US$75.29 million). Sonde continues to own approximately 39,000 net undeveloped acres in Duvernay and Montney oil plays, in the Ante Creek and Bezanson area. Continue reading on the deal valuation here..

Cutpick Energy Considers Strategic Alternatives

Cutpick Energy Inc, a private Calgary-based corporation, has engaged FirstEnergy Capital Corp to evaluate a range of strategic alternatives, including possible liquidity events, aimed at enhancing shareholder value. Continue reading here..

Cenobus seeks JV partner with broader market access

Cenovus Energy Inc is looking for a JV partner for its Telephone Lake oilsands project and expects to have an update on its search by the end of March. Continue reading here..

No Significant Change in Number of 'Deals in Play' So Far In 2011 In North America

There are no big changes in the numbers of 'deals in play' as measured on 1 Jan, 2011 & 1 Aug, 2011. Apart from an increase by 10 in Aug 1, 2011, the number of opportunities and their spread between country, sub-region/ plays, shales, and conventionals/ unconventionals remains largely the same. This analysis is based on opportunities recorded in Derrick’s “Deals in Play’ database as on 2 different dates: 1 Jan, 2011 and 1 Aug, 2011. Only opportunities where deal values are equal to or greater than $100 million have been considered for this analysis. The following charts show the split up of the number of opportunities vs Sub Region/ Play Type. Additional insights gleaned from this information are presented below.

Chart 1: Number of opportunities Vs Sub Region/ Play Type on 1 Jan, 2011. Source: DPS

Chart 1: Number of opportunities Vs Sub Region/ Play Type on 1 Aug, 2011. Source: DPS


On  Aug 1, 2011, there were 78 assets for sale in North America (US and Canada) with asset/ project values greater than $100 million. This is an increase by 10 in the number of deals in the market in this region as compared to Jan 1, 2011.

On Aug 1, 2011, the most number of deals in play were from Alberta, Canada at 14 (17.94%), for conventional assets/ projects. Deals in play from Alberta were also on top on Jan 1, 2011 at 11 or 16.17% of all opportunities.

Marcellus Shale related packages hold 2nd and 3rd place, in terms of number of packages for sale, as of Jan 1, 2011 & Aug 1, 2011, at 10 & 8 respectively. These numbers have remained constant for both these periods.

On Jan 1, 2011, there were 45 opportunities in the US (66%) and 23 in Canada (34%) as compared to 47 in the US (60%) and 31 in Canada (40%) on Aug 1, 2011.

On Jan 1, 2011, there were 28 (41%) shale opportunities as compared to 34 (44%) on Aug 1, 2011.

On Jan 1, 2011, there were 34 (50%) opportunities related to conventional hydrocarbons compared to 38 (49%) on Aug 1, 2011. On Jan 1, 2011, 34 (50%) opportunities were for unconventional hydrocarbons and on Aug 1, 2011, 40 (51%) were for conventionals.

Husky Seeks JV Partner for Accelerated Development of its Ansell, Liquids Rich, Gas Assets

Husky’s chief executive, Amit Ghosh, said in its 2nd quarter conference call, that the company is seeking a joint-venture partner to accelerate development of an emerging liquids-rich natural gas play in western Alberta.

Husky has created a preliminary development plan which could potentially see up to 2,600 Cardium and deeper Manville formation wells drilled in its Ansell assets, most of which would be horizontal. In the first two quarters of 2011, Husky drilled 21 Cardium Formation wells at Ansell. A further 12 Cardium and nine deeper multi-zone wells are planned to be drilled in the second half of 2011. The company is currently constructing additional offload capacity on its own, which will increase total production capacity at Ansell to 56 MMcf/d and over 2,000 Bbls/d liquids.

As prices for natural gas continue to remain low, North American natural gas producers have shifted focus towards fields rich in natural gas liquids, which trade at prices close to crude oil, and the Ansell property is one such liquids rich gas field, which could benefit from further development. 

Analyst Comment

Assuming a 50% JV for the undeveloped acreage of 150,000 acres, we value the 50% JV to be between $60 - $80 million. This valuation is based on similar recent deals in the vicinity involving the Cardium Formation acreage where the acreage metric was between $1,200/acre - $1,800/acre. 

Derrick 'Deals in Play'

Derrick has aggregated all publicly announced properties for sale. Derrick’ Deals in Play is the most comprehensive data set of its kind in the industry. This special feature includes every deal ranging from the large packages being brokered through investment banks to the much smaller, non-brokered prospects. For more information click 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)

      

Shell opts out of Mackenzie Gas Project in Canada

Shell is looking to divest its interest in the Mackenzie Gas Project which consists of
      a. Development of one of 3 natural gas fields in the Mackenzie Delta region, and its production facilities, that is planned to be tied into the Mackenzie pipeline; Taglu (Imperial Resources Canada 100%), Parsons Lake (ConocoPhillips 75% and ExxonMobil 25%) and Niglintgak (Shell Canada 100%). Approximately 6 Tcf of natural gas has already been discovered in the three fields.
     b. A gathering pipeline system
     c. A gas processing facility near Inuvik (the Inuvik area facility)
     d. A natural gas liquids pipeline from the Inuvik area facility to Norman Wells
     e. A 11.4% stake in the long delayed, 1,196-kilometre natural gas pipeline from the Inuvik area facility to        northwestern Alberta.

The Niglintgak natural gas reservoir is located at the southern end of the Niglintgak Island in the Mackenzie Delta, about 120 km northwest of Inuvik and about 85 km west of Tuktoyaktuk. Niglintgak is held 100% by Shell Canada. The field holds 1 Tcf of gas, and according to regulatory filings, its development would cost C$800 million. Subject to regulatory approval, drilling activities could begin in the winter of 2011. Drilling is expected to take three winters. Based on this schedule, production of natural gas would begin in 2014. The estimated operational life of the Niglintgak field is estimated to be about 25 years.

Derrick values the upstream portion of the deal to be between $300 - $350 million. The 1 Tcf of recoverable reserves is valued at $1.8 - $2 /BOE. This metric is based on a similar deal in the region involving MGM Energy and KOGAS in Dec 2010, where the contingent resources of the Umiak SDL 131 field was valued @ $2/BOE. The gas from the Umiak field is also to be tied up with the Mackenzie Valley Pipeline.

The Mackenzie pipeline has hit many delays and questions are being raised about its economic viability, given the abundance of shale gas that is being developed in North America, high construction costs and low gas prices. However, the chief executive of Imperial Oil, the lead partner in the project, has affirmed that they are still committed to going forward with the pipeline project. It is planned that the pipeline will carry 1.2 bcf of gas daily. Shell says it wants to focus on other opportunities.

Buyers have until August 31 to make their bids.

Shell Canada also recently announced they are looking for a JV partner to develop its Nikanassin Play in its Chinook Asset in Canada’s Deep Basin.

ConocoPhillips to shed $5- $10 billion worth assets in UK and North America......Who are the probable buyers???

ConocoPhillips plans to sell an additional $5 billion to $10 billion in non-core assets over the next two years, the proceeds to fund its share buyback and capital expenditure programs.

Chief Executive Jim Mulva told analysts the company plans to sell a total of $12 billion to $17 billion in assets in a three-year period, including at least $1 billion in refining and marketing properties this year. The dispositions include non-strategic assets in the North Sea and additional mature assets in the U.S. and Canada. The plan also includes a 15% stake in the Australia-Pacific liquefied natural gas project it agreed to sell last month to Sinopec.

Mulva told analysts that the additional asset sale target is expected to come on top of the $7 billion the company already sold in assets last year and excludes the $8.3 billion from the sale of its 20% stake in Russian oil giant Lukoil.

Shift from debt-fueled acquisition strategy to profitability improvement strategy

Conoco is in the midst of a restructuring plan started in 2010 to shore up its finances by selling assets. It initially didn't plan to sell refining properties until, aiming to avoid selling assets at deep discounts, but in October it said it would ramp up its sale of assets in 2011 amid a rebound in the industry.

The asset sales mark a shift from Conoco's debt-fueled acquisition spree when commodity prices were soaring. It also underscores the company's confidence that its "shrink-to-grow" strategy is yielding positive results among investors.

Impact of asset sale on production

ConocoPhillips expects its oil-and-gas production to be between 1.6 million and 1.7 million barrels of oil equivalent per day in 2013, down from 1.75 million barrels of oil equivalent per day it produced last year due to the impact of the asset sale program. However it expects output to grow 2% to 3% per year in the long term, driven mainly by the startup of projects in Asia, the North Sea and the U.S.

Proceed to be diverted to Capital Expenditure program

The company expects to use proceeds from the asset sales announced Wednesday to fund a $10 billion share repurchase program it had previously unveiled, and for capital investment. In a slide presentation, the company said it expects share buybacks to total $11 billion through 2012.

Conoco plans $13.5 billion of capital spending this year, with the vast majority targeted for exploration and development. It said it plans to invest $14 billion to $15 billion per year from 2012 to 2015.

Conoco said it plans to invest 50% more this year in projects in North America mainly aimed at increasing drilling activity in oil-rich shale areas such as the Eagle Ford in Texas and the Bakken Shale in North Dakota.

Conoco will not make any large-scale acquisitions,it will expand its presence in some areas such as the deepwater of the Gulf of Mexico through small scale deals.

The company said it plans to invest $1.4 billion in the APLNG project, which will be sanctioned by mid-year and have its first liquid natural gas delivery in 2015. Conoco is also planning to ramp up exploratory drilling in the Caspian Sea, with a new well planned for its Kazakhstan N Block offshore for late this year or early 2012. The company is also negotiating a production sharing agreement for Block 19 in Turkmenistan.

Apache to divest certain Canadian conventional assets worth $1B as part of their debt reduction efforts in 2011 - Was the BP bite more than what it could chew?

Apache Corporation is currently planning to divest approximately $1.0 billion worth of legacy conventional properties in Canada to optimize and high-grade the company’s existing portfolio of assets.

Apache’s Canadian conventional operations:
-- Apache has 6.3 million net acres across the provinces of British Columbia, Alberta and Saskatchewan, including approximately 1.3 million net mineral and leasehold acres in Western Alberta and British Columbia acquired from BP in 2010; These acreage includes both conventional and unconventional plays.
-- Conventional assets are focused on oil projects located primarily in Alberta and Saskatchewan.
-- Apache is utilizing horizontal well technology to develop waterflood and enhanced oil recovery projects in the Midale and Provost fields located in southeast Saskatchewan, and the Zama and House Mountain fields located in Alberta.
-- The company will also continue intermediate-depth gas development drilling in Kaybob and West 5 areas in Alberta.
-- During 2011, Apache will run 2-4 rigs in the company’s oil, EOR and liquid-rich areas.

Apache to sell assets as part of the debt reduction effort
During the Q42010 result announcement Apache CEO asserted company will be pursuing debt reduction efforts by pursuing $1 bn worth property sales



For more on Apache: http://docsearch.derrickpetroleum.com/research/q/Apache.html
For more on BP: http://docsearch.derrickpetroleum.com/research/q/BP.html