Chesapeake Plans $10-$12 billion worth Asset Sales in 2012

Chesapeake Energy Corp, the second biggest US natural-gas producer, in its 2012 financial plan report said that it is seeking to raise between $10-$12 billion through assets sales and joint ventures. The proceeds from these sales are expected to help them cope with a cash crunch amid rising debt and tumbling gas prices. Continue reading here..

US O&G Majors' Presentations in May - June 2011

BP:
China's Energy Future

ConocoPhillips:
Investor Update - June 2011
UBS Energy Conference

Chevron:
Australasia Overview - June 2011

Anadarko:
2011 Energy Capital Markets Energy & Power Conference

Devon Energy:
Annual Meeting - June 2011

Shell:

Credit Suisse European Oil & Gas Conference

Chesapeake:
June 2011 Investor Presentation

2011 Annual Meeting of Shareholders

Occidental Petroleum:
2011 UBS Global Oil & Gas Conference

Investor Presentations of O&G Majors in 2011

Anadarko:

2011 Investor Conference Call

2011 Investor Day Presentation

Apache:

Investor Day - May 2011

2011 Annual Meeting Slides

Sanford Bernstein Strategic Decisions Conference

BHP Billiton:

Citi Global Resources Conference

Howard Weil Energy Conference

BP:

BP 2011 Statistical 60 Years Review

Chesapeake:

February 2011 Investor Presentation

March 2011 Investor Presentation

April 2011 Investor Presentation

May 2011 Investor Presentation

June 2011 Investor Presentation

ConocoPhillips

June 2011 Investor Update

2011 Analyst Meeting

ExxonMobil

Exxonmobil 2011 Business Model & Fundamental Strategies

Chesapeake - June 2011 Investor Presentation

- Accelerating drilling of liquid-rich plays until YE'12 when CHK's drilling capex is 25/75% between natural gas plays and liquids-rich plays
- Targeting 32-34 tcfe (~5.5 bboe) of proved reserves by YE 2015 in addition to lowering debt

http://docsearch.derrickpetroleum.com/files/12940/Request-Latest_IR_Presentation.pdf

Chesapeake hunting for JV partners for Utica and Mississippian plays.. Coming up billion dollar JVs!!

Chesapeake has reported in its Q1-2011 report that its leasehold has reached 1.2 million net acres in the Utica Shale Play in the Appalachian Basin and 1.1 million net acres in the Mississippian Carbonate Play in Northern Oklahoma and Southern Kansas. The company expects to initiate a joint venture process in the 2011 second half for both the Mississippian and Utica plays. In addition, the company has sold 180 Bcfe of reserves through ninth VPP for approximately $845 million. The sales are as part of their 25/25 plan - reduce debt by 25% and increase production by 25%.

Utica Shale Play:

In 2010, the company was the first to identify the potential of the Utica Shale and to initiate large scale leasing efforts in Ohio and western Pennsylvania for the Utica. To date, the company has drilled nine operated Utica wells and is currently drilling with three operated rigs. Chesapeake plans to increase its operated drilling activity in the Utica to six rigs by the end of the 2011 third quarter. Proved reserves are not yet booked for this acreage position.

Mississippian Play:

In 2007, the company was the first to initiate large-scale horizontal drilling in the Mississippian Carbonate play in northern Oklahoma and southern Kansas. To date, Chesapeake has drilled 53 operated Mississippian horizontal wells and has participated in the drilling of 36 non-operated Mississippian horizontal wells on its inventory of approximately 1.1 million net acres. Chesapeake is currently drilling with five operated rigs in the Mississippian play and plans to increase its operated drilling activity in the Mississippian to seven rigs by the 2011 fourth quarter.

Following is the table showing all the unconventional JV deals of Chesapeake

Source: Derrick Petroleum- E&P Transactions Database

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Total value of the package is estimated as follows -

Utica Shale (1.2 million acres):

• Considering that Chesapeake will sell 30% interest (consistent in all Chesapeake JVs) in its Utica position, the number of acres under valuation is 360,000 acres. Chesapeake, in its Q1-2011 transcript call, disclosed that the company acquired Utica acreage for $1,500/acre. Taking a premium side, it is believed that Chesapeake would sell Utica acreage at $2,000-$2,500/acre or $720-$900 million. $2,000-$2,500/acre is also consistent with the recent Gulfport Energy's acquisition in Utica Shale ($2,300/acre).

Mississippian Play (1.1 million acres):

• Chesapeake's Mississippian play constitutes 55% of its total Anadarko Basin acreage position. The proved and risked unproved reserves for Mississippian play are approximately taken as 50% of the total Anadarko Basin proved reserves (2,184 bcfe) and risked unproved reserves (12,900 bcfe).
• Considering that Chesapeake will sell 30% interest in its Mississippian position, the acreage position, proved reserves and risked unproved reserves under valuation are 330,000 acres, 328 bcfe (~55 mmboe) and 1935 bcfe (~323 mmboe).

-- Value based on acreage and proved reserves: It is reported in Chesapeake’s Q1-2011 transcript call, that Utica acreage is more expensive than the Mississippian acreage. Therefore, the acreage cost for Mississippian play is taken half of the Utica acreage cost. At $1,000-$1,250/acre and $10/BOE of proved reserves, the value of the asset to be sold would be $880-$960 million.

-- Value based on acreage and risked unproved reserves: At $1,000/acre and $1.5/BOE of unproved reserves, the value of the asset to be sold would be $810-$900 million.

Hence, the total value of the assets to be sold could be in the range of $1,500 million to $1,800 million.

Chesapeake divests certain mid-continent assets through its ninth VPP for $850 million or $28/BOE!

Chesapeake has agreed to monetize certain of its producing assets in the Mid-Continent through a ten-year volumetric production payment (VPP) to an affiliate of Barclays PLC for proceeds of approximately $850 million. The transaction includes approximately 180 bcfe of proved reserves and approximately 80 mmcfe per day of current net production. The reserves in the package are approximately 80% gas, 20% liquids.

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Source: Chesapeake - April 2011 Investor Presentation

Chesapeake has retained drilling rights on the properties below currently producing intervals and outside of existing producing wellbores and the production tail beyond ten years. The transaction will be Chesapeake's ninth VPP and is expected to close in the 2011 second quarter. Inclusive of the pending VPP sale and the company's eight previously closed VPPs, the company will have sold 1.215 tcfe of proved reserves for total proceeds of $5.619 billion, for an average sales price of $4.62 per mcfe.

The following table shows the other VPP deals of Chesapeake -

Source: Derrick Petroleum- E&P Transactions Database

Chesapeake 2011 April Investor Presentation

http://docsearch.derrickpetroleum.com/pageNav/view1/docId/11689-0000/Chesapeake-2011-April-Investor-Presentation.html

Chesapeake’s “25/25” plan for 2011-2012; Plan to increase hydrocarbon production by 25% and to reduce long-term debt by 25% over 2010

Chesapeake, currently the number two producer of natural gas in the US and number one natural gas driller with respect to activity also has made a major change to its business strategy. The company is planning a two-year (2011-12) hydrocarbon growth rate of 25%, net of asset sales (reduced from prior target of 30 - 40%). The company is planning to increase liquids production by ~190% and natural gas production by ~6%. Expected hydrocarbon production in 2011 is ~3.065 bcfepd and 2012 is ~3.560 bcfepd.

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Chesapeake deals in 2011 as part of implementing “25/25” plan:

Chesapeake and CNOOC formed a JV for the Niobrara Oil Shale, whereby CNOOC owned 33.3% undivided interest in Chesapeake’s 800,000 net oil and natural gas leasehold acres in the Denver-Julesburg (DJ) and Powder River Basins in northeast Colorado and southeast Wyoming.

Source: Derrick Petroleum E&P Transactions Database

Chesapeake sold all its interests in Fayetteville Shale, Central Arkansas to BHP, including $500 million for midstream interests for $4.75 billion.

Source: Derrick Petroleum E&P Transactions Database

Announced details of near-term asset monetization plans which might exceed pre-tax proceeds target of $5.0 billion

- Plan to monetize 25.8% equity investment in Frac Tech Holdings LLC

- Plan to monetize 20.0% equity investment in Chaparral Energy, Inc.

- Plan to use sale proceeds to retire $2.0 - $3.0 billion of senior notes and to also reduce bank credit facility borrowings

Source: Derrick Petroleum E&P Transactions Database

Please try our new free document search tool: www.derrickpetroleum.com

O&G players’ interest towards Niobrara is heating up!! Is Niobrara the next Bakken/Eagle Ford??

Here is the brief discussion about the emerging oil play in the US- The Niobrara Shale!!

The Niobrara shale formation is situated in northeastern Colorado and parts of adjacent Wyoming, Nebraska and Kansas. Samson Oil & Gas is one of the earliest companies to establish a position in the Niobrara. Other operators in Niobrara include EOG Resources, Anadarko, SM Energy, Noble Energy, Chesapeake, Whiting Petroleum, Quicksilver Resources, MDU Resources, and Bill Barrett. Chesapeake and EOG each have about 400,000 net acres in the Niobrara.

Source: Chesapeake Jan 2011- Investor Presentation

Niobrara operators’ 2011 drilling plan

The Niobrara Shale formation was well noticed in 2010 when EOG Resources reported a well here with production of 1,558 barrels of oil per day. With a large number of companies starting their initial exploration programs in the Niobrara shale in 2011, the shale play would witness a significant increase in drilling activities over the next few years.

• Marathon Oil plans to start an exploratory program in the shale play in 2011. Whiting Petroleum and MDU Resources plan to drill their first test well in Niobrara during the first half of 2011.
• PDC Energy plans to drill 14 wells in the Niobrara Shale in 2011. It has budgeted between $205 million to develop the Niobrara play.
• Carrizo Oil and Gas reported its first horizontal completion in the Niobrara in early January 2011. Carrizo has four wells either drilling or being completed. The company hasn't released its capital budget yet for 2011, but has adopted a strategy to increase development of formations that produce oil and liquids. The company spent $60 million in 2010 to acquire leasehold in the Niobrara and another oily play in Texas.
• SM Energy has acreage in the Silo Field in Wyoming that has exposure to the Niobrara Shale. SM Energy has allocated $25 million in capital in 2011 to develop the Niobrara.

The increased interest of the companies in the shale play is also evident from the recent lease sale rounds held by the Wyoming State Lands and Investments Board for area expected to be prospective for Niobrara shale. The overall investments in the state lease sale awards increased from an average of $3.2 million in 2008-2009 rounds to an average of $37.5 million in 2010 lease rounds.

In Wyoming, as per Wyoming Oil and Gas Commission, 202 horizontal well permits targeting Niobrara formation had been issued in the state as of November 24, 2010. In Colorado, during 2009-September 2010, there were 208 approved permits for Niobrara shale formation.

A look at the 2011 Niobrara deals captured by Derrick Petroleum

Why Niobrara Shale??

What makes the Niobrara Shale a prime target is that those companies with experience in the Bakken are looking to expand while companies that missed out on the Bakken Shale and have horizontal drilling expertise in natural gas shales look to take on positions in more profitable oil production.

At the end of 2010, the Japanese company ITOCHU made an entry into Niobrara Shale with an estimated investment of $390 million. This was followed by Chinese in Jan 2011 when CNOOC entered into a $1.3 billion Niobrara JV with Chesapeake. What a good start for Niobrara in 2011! This will be the driving force for the other operators who want to exploit oil plays.

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.

Chesapeake 2011 March Investor Presentation

http://docsearch.derrickpetroleum.com/pageNav/view1/q/Chesapeake/docId/10838-0000/Chesapeake_2011_March_Investor_Presentation.html

Eagle Ford oil production to ramp up in 2011. Eagle Ford opportunities worth $3 billion are up for grab

Significant increase in deal activity

Activity in Eagle Ford has stepped up with more than $4 billion worth of assets on the market. Operators are looking to tie up with partners to develop the oil window, as the returns on investment expected from oil window is higher compared to gas window.  

Heading	Type	Value Range ($m)
SM Energy considers options for Eagle Ford acreage	Property	$500 - $1,000
El Paso seeks JV partner for Eagle Ford acreage	JV	$100 - $500
ConocoPhillips offers Eagle Ford/Austin Chalk acreage	Acreage	$100 - $500
Forest Oil seeks JV partner for  Eagle Ford acreage	JV	$100 - $500
Stonegate and TriTech offer Eagle Ford acreage	Acreage	$100 - $500
EOG Resources to sell certain Eagle Ford Shale acreage	Acreage	$100 - $500
Buffco Production seeks partner for Eagle Ford acreage	Acreage	$100 - $500
U.S. Enercorp and partners offer Eagle Ford acreage	Acreage	$25 - $100
Sanchez Oil & Gas offers Eagle Ford acreage	Acreage	$25 - $100
Petro-Hunt to divest Eagle Ford acreage	Acreage	$25 - $100
BlueStone Natural Resources offers Eagle Ford acreage	Acreage	$25 - $100
BTE Energy offers Eagle Ford acreage	Acreage	$25 - $100
Caiman Ranch offers Eagle Ford acreage	Acreage	$25 - $100
Denali Oil & Gas considers sale of certain Eagle Ford assets	Acreage	$25 - $100
Newfield Exploration to sell certain Eagle Ford assets	Property	$25 - $100
Texas HBP to sell certain Eagle Ford acreage	Acreage	$25 - $100
Touchwood Resources to divest 12.5% ORRI in Eagle Ford	Royalty	$10 - $25
Westover Energy offers Eagle Ford oil window acreage	Acreage	$10 - $25
SMSE offers Eagle Ford oil window acreage	Acreage	$10 - $25
Don Poe & Associates offers Eagle Ford acreage	Acreage	$10 - $25
Vander Ploeg offers Eagle Ford and Pearsall acreage	Acreage	$10 - $25
Bald Eagle Land offers Eagle Ford oil window acreage	Acreage	$1 - $5

Significant increase in the rig count in the region

Last year, U.S. operators expressed their intentions to step up drilling programs in the Eagle Ford Shale formation. Strong oil prices and favorable well economics, due to greater concentrations of natural gas liquids, made drilling in this part of Texas appealing. True to their word, the rig count in the Eagle Ford has nearly doubled to 154 rigs, versus 82 reported in March 2010.

EOG is the largest oil producer in the Eagle Ford at 23MM bopd and currently controls 595,000 net acres across the region. After drilling 96 net wells in 2010, EOG has plans for 250 net wells in 2011. Chesapeake Energy currently has the most active rigs in the region at 17 rigs where it holds 445,000 net acres through a partnership with CNOOC. In terms of concentration of resources, ConocoPhillips, with 14 rigs drilling across 254,000 acres held, has approximately half of its currently active U.S. rig fleet operating in the region.

The five largest drilling fleets in the Eagle Ford control 68% of the market.

Shift from gas to oil window

The shift occurring between drilling for natural gas or oil continues to move away from the natural gas. A year ago, the split was 91% gas and 9% oil rigs in the Eagle Ford. Today, the mix is 60% gas and 40% oil.

Operators in the region are responding to the huge return on investment gap that exists between drilling oil wells today versus drilling natural gas wells .On drilling a natural gas well operator gets around $4 per unit of production vis vi drill an oil well and receive around $15 per unit of production.

Drilling plans for the Eagle Ford operators

EOG Resources commented that the Eagle Ford would be the firm's largest component of year over year oil growth during 2011. EOG also expects that its well costs in the region were anticipated to fall from current levels of $6 million per well to approximately $5 million in 2012 due to frac optimization techniques.

ConocoPhillips has very aggressive development programs going on in the Eagle Ford where they plan to drill probably 140 to 150 wells this year.

ConocoPhillips slows down gas business and accelerates oilsands investment… Many more including Chesapeake and EOG are transiting from gas to oil!!!

ConocoPhillips’ Canadian president, Joe Marushack said, "ConocoPhillips Canada will go in full-speed ahead on its Alberta in situ oilsands investments this year while choking back spending on its natural gas business and maintaining support for liquids-rich conventional plays. The dramatic drop in gas prices, which at $4/MMBTU are a fraction of their level of several years ago, has forced substantial changes at the US energy giant. Late last year, it closed off the taps on 12% of its Canadian gas output for three months. ConocoPhillips is not the only company transiting from gas focus to oil focus but also other majors like Chesapeake, EOG Resources, etc.,

The company also intends to continue selling some non-strategic assets from its gas-heavy Canadian portfolio, although it's not huge numbers compared to the overall size of its operations. “If you go back to 2008, folks were drilling under the assumption of $8 gas. That’s a very different capital profile than what you’d use when you have $3.50 gas,” Mr. Marushack said.


The company’s primary focus remains on the oil sands, despite selling its 9% stake in Syncrude Canada– a transaction with Sinopec that netted it $4.65-billion. ConocoPhillips is investing heavily in developing new oilsands projects. Its expansion comes both through its 50% partnership with Cenovus Energy on several projects, and its Surmont development, which it owns with Total E&P Canada. Last year, ConocoPhillips began work on the second, 83,000 barrel-per-day phase of Surmont. The company is also spending heavily on new technology in the oilsands, where Mr. Marushack said improving environmental performance has become a key goal. Last month, ConocoPhillips, announced a $13.5-billion US capital budget for 2011, with about $6 billion to be spent on North American exploration and development. The following graph shows the trend of oilsands deals since 2006..

A list of the oilsands deals in 2010 captured by Derrick Petroleum

2010 divestitures of ConocoPhillips...

See the publications of ConocoPhillips: http://docsearch.derrickpetroleum.com/research/q/conocophillips.html

Eagle Ford Shale generated around $3 Billion in revenue in South Texas during 2010. A busy year expected for Eagle Ford Shale with $4.0 Billion worth opportunities up for grab!!!

In less than three years of development, the Eagle Ford Shale already accounts for over 6% of the Gross Regional Product for the 24-county South Texas area it encompasses, according to a study released by the Center for Community and Business Research at the University of Texas at San Antonio Institute for Economic Development. In 2010 alone, this newest of the Texas shale plays generated close to $2.9 billion in revenue and provided nearly $47.6 million in local government revenue.

In 2010 in the Eagle Ford, 1,018 drilling permits were issued through November, up from 94 the year before, and output of crude oil, condensate and other liquids nearly quadrupled to 3.9 million barrels, according to Texas Railroad Commission data. 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.

How busy was Eagle Ford in 2010??

The oil and gas companies' interest towards Eagle Ford shale ramped up in 2010 with 43 deals worth $8.8 billion versus 7 deals worth $45 million in 2009. Several majors including Shell, BP, Statoil and CNOOC entered the Eagle Ford shale in 2010.

 $4.0 Billion worth Eagle Ford opportunities up for grab!!!

Recently, the oil and gas companies of all sizes are trying to shift resources to the hunt for oil while natural gas prices remain weak. Therefore, Eagle Ford's large quantities of valuable crude oil and natural gas liquids will attract more interest and dollars in 2011.

To know more on Eagle Ford Shale: http://docsearch.derrickpetroleum.com/research/q/eagle%20ford.html