Encana is looking for new partners to develop its Cutbank Ridge assets following the collapse of its C$5.4 billion deal with PetroChina. The companies were unable to achieve substantial alignment with respect to key elements of the proposed transaction, including the joint operating agreement.
The assets in the terminated JV included the majority of Encana’s Montney, Cadomin and other natural gas assets, on a portion of the company’s British Columbia and Alberta lands. According to Encana, the Cutbank Ridge assets hold reserves of: Proved-1.8 Tcfe, Probable-0.6 Tcfe and Possible- 0.4 Tcfe; and Contingent resources of 3.1 Tcfe, on a best estimate case.
Foreigners’ invasion into Montney Shale:
The Encana-PetroChina JV was the largest amongst several recent deals in the Canadian Shales. Following are the few snippets of the other significant Montney deals:
In early June 2011, Petronas agreed to form a Montney JV with Progress Energy Resources, to develop the Altares, Lily and Kahta shale gas assets in north-eastern British Columbia and acquire 50% of Progress’ interest in the three areas, for a total consideration of C$1,070 million.
Recently, Talisman clinched back-to-back Montney JVs with Sasol. In December 2010, Sasol agreed with Talisman to acquire a 50% interest in the Farrell Creek assets located in the Montney basin for C$1,050 million. In March 2011, Sasol agreed with Talisman to acquire a 50% interest in Cypress A acreage, located in the Montney basin for C$1,050 million.
In early 2010, Kogas agreed with Encana to spend C$565 million over three years to explore new shale gas reservoirs in largely undeveloped areas of Encana's land, in the Horn River and Montney formations.
This is an interactive chart to compare the Montney deals since 2007.
In April 2011, Encana announced plans seeking investors in two joint ventures on Encana assets outside Cutbank Ridge in northeast British Columbia – one on undeveloped Horn River shale lands and the other in the company’s Greater Sierra resource play. Discussions are well underway on these potential transactions, as well as on a potential divestiture of producing assets in the northern portion of Greater Sierra. Encana expects that these transactions, plus other divestitures and joint venture pursuits that the company has initiated, will generate proceeds and joint venture investments in 2011, of between $1 billion and $2 billion, a level that exceeds Encana’s net divestiture target of $500 million to $1 billion for 2011.
Potential buyers of Encana’s assets
The termination of this Encana-Petrochina JV opens doors for other companies who are interested in shale gas. These companies could be ExxonMobil, ConocoPhillips and other Asian investors like Kogas, Mitsui, Mitsubishi, CNPC, CNOOC, etc.
The Deals-in-Play report from Derrick Petroleum Services is a must-have for business development professionals working on oil and gas deals. The report provides information on approximately 250+ Assets for sale, Corporate M&A opportunities, JV opportunities and Exploration farm-ins. The deals have been categorized according to the value range: $1,000-$10,000 million, $500-$1,000 million, $100-$500 million, $25-$100 million, $5-$25 million and less than $5 million.
Here is the sample of the report pertaining to only producing assets worth around $11.335 billion. The data for this report has been sourced from the Derrick E&P Transactions Database.
Highlights
1. Total value of the assets- $11.335 billion
2. Value by Region:
United Kingdom- $3.93 billion (~$3 billion worth of assets available from ConocoPhillips’ $5-10 billion divestiture program)
United States - $3.06 billion
Canada- $2.77 billion
Vietnam- $1.5 billion
Colombia- $77 million
3. Value by Hydrocarbon:
Oil- $3.3358 billion
Gas- $3.046 billion
Oil+Gas- $4.931 billion
The assets from the US and Canada account for nearly 51% of the total deal value. Inspite of the high oil prices and low gas prices, the breakage between oil and gas deals is 50:50.
Top Billion Dollar Deals-in-Play
Top Deals-in-Play in the US
Top Deals-in-Play in Canada
For more information on the report, do write at anitha.bharathi@derrickpetroleum.com
Corridor Resourcesannounced that it received notification that Apache has elected not to proceed with the second phase of the farm-out program with Corridor in respect of the potential shale gas resource development near Elgin, New Brunswick. This option is part of the following 2009 agreement-
As a result of Apache’s withdrawal, Corridor will entertain discussions with potential joint-venture partners who wish to engage in a program to develop the Frederick Brook shale and who can add value to the potential development. The information and data obtained to date from Corridor's and subsequent Apache programs will be of significant value as this program advances.
The evaluation of the Frederick Brook shale gas resources is still in its early stages, and that the best estimate of gross discovered resources is 67.3 trillion standard cubic feet (as estimated by GLJ Petroleum Consultants Ltd. in the GLJ shale resources report, effective June 1, 2009.
Status of work program
As was announced by Corridor on March 30, 2011, the two horizontal wells drilled and hydraulically fracture stimulated by Apache (Will DeMille G-59 and Green Road B-41), using similar large slick water techniques, have not generated sustained shale gas production to date. In May, the Will DeMille G-59 well was re-opened and flowed frac fluid at low rates with minor gas shows over 5 days. It is important to note that, when the Will DeMille G-59 well was shut-in after initial testing in early December, 2010, it had recovered only approximately 4% of the total frac fluid.
Corridor previously reported that the Green Road B-41 well had been placed on a 45 day gas lift which ended on March 16, 2011. At that time, the well was shut-in after recovering 17% of the frac fluid. In late May, due to significant well head pressure build-up, the well was reopened and flowed gas at a maximum rate of 0.7 mmscf/d for several hours prior to frac fluids loading the well causing gas rates to decline.
Based on a consensus among third party expert consultants and Corridor technical staff, the most significant issues identified with the G-59 and B-41 well performance relate to the design of the horizontal wells in this high-stress environment and the fracture technique. Corridor believes that a different well design and frac program will lead to a commercial development of the Frederick Brook shale. It should be noted that, as previously reported, Corridor re-tested the Green Road G-41 well in December 2010, which produced gas at a constant rate of 4 mmscf/d for five days at a final flowing pressure of 1306 psi. During Q1 2011, the G-41 well was used to provide gas lift and consistently delivered the required rate of 0.5 mmscf/d during a 45 day test, at a final pressure of 2007 psi.
Corridor intends to drill two vertical appraisal wells in the Elgin area commencing late this year in order to confirm the well productivity required to proceed with a pilot phase. Based on the results of these appraisal wells, Corridor plans a staged approach to demonstrate commercial viability which would include a pilot phase with a capacity of approximately 40 mmscf/d, targeting gas production in late 2013. This program would include vertical wells in a multi-well pad design to take advantage of the shale thickness and the high gas saturations. During the pilot phase, Corridor will evaluate various drilling and completion techniques. Corridor will provide further details on the Frederick Brook shale gas development plans in a corporate presentation to be placed on Corridor's website on June 6, 2011.
Global upstream M&A activity in Q2-2011 has currently reached $18.4 billion in 81 transactions against the total Q1-2011 numbers of $52.4 billion in 174 transactions.
Highlights of Q2-2011
North America leads with $8.14 billion or 44% of the total global deal value
Europe is in second position totaling $3.17 billion
Followed by Asia ($2.15 billion) and Africa ($1.73 billion)
In North America. conventional deals are in majority unlike the Q1-2011 where unconventional deals were dominating
Oil weighted transactions accounted for 44% of the total global deal value.
The asset and corporate transactions are on par in Q2-2011. Of the total corporate transactions, 50% is complete takeovers and the other 50% is minority equity stakes.
Deals in play to be completed by Q2-2011
Atleast $4.4 billion worth of assets in North America are put up for sale and are expected to be sold by the end of June 30, 2011, according to Derrick Petroleum’s “Deals in Play” database.
The unconventional marketplace is being driven by motivated buyers (majors, internationals like KNOC, Marubeni, CNOOC, BHP, etc.,) and opportunistic sellers (Anadarko, Chesapeake, EnCana, Talisman, etc.,). Unconventional transactions dominated the upstream asset transactions in Q1-2011, nearly 35% of the total upstream value. PetroChina’s C$5.4 billion for a 50% interest in Cutbank Ridge assets in the Montney shale play fromEnCanaand BHP Billiton’s $4.75 billion for acquisition of interest inFayettevilleshaleplay from Chesapeake were the two major gas weighted shale deals in Q1-2011. However, number of transactions were more towards oil weighted Bakken and Eagle Ford plays. The following two tables show the significant unconventional deals of Q1-2011 in US/Canada.
A total of $13,671 million worth of shale oil/gas assets are available for sale in the United States and Canada. The Marcellus shale gas assets top the sale activity and account for 44% of the total value. The key and the emerging shale plays and the assets put up for sale in those areas are detailed below-
Key US shale plays:
• Bakken Shale, hybrid shale system with mainly oil production, also exploiting underlying Three Forks tight sands formation
• Marcellus Shale in Appalachia, covering multiple states with Pennsylvania as main state, NE-part dry, SW-part with wet gas area
• Barnett Shale in Texas, dry and wet gas zones, combo area with oil/condensate as well
Canadian oil sands
reported $12.8bn in asset sales, corporate acquisitions and joint ventures for
2010. The Montney (BC &
Alberta) recorded $2.3bn in trades or 5x
times 2009 total and twice 2008 deals less Shell-Duverney.The number of oil
sands deals went up, but the average deal value decreased significantly due to
the 2009 Petro-Canada Suncor $18bn merger. Bakken &
Saskatchewan plays totalled $2.6bn. The Montney and Bakken
unconventional plays made up ~10% of the Canadian transactional market place.
Canadian assets worth $7billion on the market in Q1 2011
