Noble enters Marcellus shale in a $3.4 billion JV with Consol Energy.

Consol Energy has agreed with Noble Energy for the joint development of Consol's 663,350 Marcellus Shale acres in Pennsylvania and West Virginia for aggregate payments to Consol of approximately $3.4 billion.

Noble Energy will acquire 50% of Consol's undivided interest in the Marcellus Shale acres held by Consol in exchange for $1.07 billion, payable in three equal installments. Noble will also pay $2.13 billion in the form of a 1/3 drilling carry of certain Consol working interests obligations as the acreage is developed. Also, Noble Energy will pay $160 million at closing for Consol's existing Marcellus Shale wells, which have proved developed producing reserves of 89 Bcf and production of 35 MMcfe/d, net to Noble. Finally, Noble Energy will pay $59 million to acquire a 50% interest in Marcellus gathering assets.

Key operational aspects of the joint venture include:

• Acreage estimated to contain 7.4 Tcfe risked resources net to Noble Energy's interest, of which 400 Bcfe were proven reserves at year-end 2010
• More than a decade of development activity anticipated, which includes the drilling of approximately 4,400 gross well locations
• Net production to Noble Energy's interest has the potential to reach 600 MMcfe/d in 2015 and is expected to continue growing into the next decade
• Leasehold position is over 85% held by production, almost entirely operated with close to 100% working and 88% net revenue interests
• A pre-defined long-term development plan forecasts drilling activity to increase from 4 rigs to 16 rigs in 2015 
• Operations to be shared between the partners with Noble Energy's initial focus on the wet gas portion of the acreage
• Sharing of midstream infrastructure and access to water handling capabilities.

Accelerated Development Plan:

The joint development plan calls for the rig count to increase from four rigs currently drilling in the Marcellus to 8 rigs in 2012 and 12 rigs in 2013, eventually reaching a plateau of 16 horizontal rigs in 2015. In terms of operating areas, Consol will operate the dry gas areas of 570,000 acres and 3,700 locations in a stretch from Jefferson and Clearfield counties through Westmoreland, Fayette and Greene counties and into West Virginia. Noble will operate 95,000 acres and 630 locations of wet gas regions that include the western half of Washington County into Marshall County, West Virginia, and elsewhere in West Virginia.

Noble Energy- Expands international operations and plans to divest non core assets

Noble Energy, with its core operations in Africa and East Mediterranean, has started expanding its international operations in US. In the last two years, Noble Energy accumulated approximately 430,000 net acres in the Niobrara shale at a low entry cost of $480/acre. Noble Energy has allocated $875 million to develop its properties in the Denver Julesburg basin, where the company is working on the Niobrara formation. The company plans to drill 70 horizontal wells in 2011 targeting this formation.

Now, Noble Energy has targeted another unconventional play- Marcellus Shale. The $3.4 billion deal marks Noble's entry into the Marcellus Shale development. What's next in Noble Energy’s target list???

Noble Energy had been hesitant to move the company into the Marcellus. However, the area has become a hub of natural gas production as advanced methods, including hydraulic fracturing and horizontal drilling, have allowed energy producers to extract oil and gas from dense shale rock. Now, Noble has entered Marcellus area and considers this $3.4 billion JV opportunity beneficial due to its enormous resource potential, its proximity and access to premium markets, and its competitive cost structure.

In a conference call, Noble executives said the company would consider selling some of its North American assets to focus its drilling program on the Marcellus, the Gulf of Mexico and the DJ Basin in the western United States.

A fair deal by Consol Energy:

In April 2010, Consol paid $1.88 billion for Dominion’s Marcellus acres, or $3,827 per acre. Now the same acreage is being sold by Consol to Noble for ~9,650/acre. Over the past 15 months, Consol has largely de-risked these acres which made the $/acre increase by $5,823.

Source: Consol Energy

The following table summarizes the metrics of the recent major Marcellus deals. The adjusted $/acre denotes the value of the acreage after allocating some value to the reserves, production or midstream assets.

Announcement Date	Heading	Deal Value ($MM)	Quick $/Acre	Adjusted $/Acre
6/2/2011	Exxon acquires Marcellus Shale assets for $1.7B	1,690	5,331	4,280
5/16/2011	Enerplus sells certain Marcellus assets for $575M	575	6,319	5,982
12/21/2010	EXCO and BG acquire Marcellus assets from Chief Oil & Gas and partners for $459M	459.4	9,188	7,055
11/9/2010	Chevron acquires Atlas Energy for $4.3B	4,300	8,848	2,836
5/28/2010	Shell acquires Marcellus acreage from East Resources for $4.7B	4,700	7,231	6,462
5/25/2010	Williams acquires Marcellus acreage from Alta Resources for $501M	501	11,929	11,929
5/10/2010	BG forms $950M JV with EXCO to develop Marcellus Shale	950	10,215	7,809
4/9/2010	Atlas Energy forms $1.7B JV with Reliance to develop Marcellus Shale	1,699	14,158	14,158

CIC acquires 30% stake in GDF’s E&P unit for $3.3 billion. Chinese companies on acquisition spree again.

China Investment Cop (CIC) has inked Memorandum of Understanding to acquire a 30% stake in GDF Suez's gas exploration and production unit. It is believed that CIC will acquire the stake for as much as €2.3 billion ($3.27 billion) and finance GDF to expand power projects in Asia-Pacific.

Facts of GDF

GDF deploys its exploration and production activities in the Netherlands, Germany, the United Kingdom, Norway, Algeria, Egypt, and, in a more limited way, in Mauritania, the Ivory Coast, the USA, Indonesia, Denmark and France. The Group is also present in Azerbaijan, Libya, Australia and Greenland. The key figures concerning the exploration-production sector are as follows:

• 51.2 MMBOE (Gas- 74% and Oil- 26%) produced in 2010
• 815 MMBOE (Gas- 74% and Oil- 26%) in 2P reserves at year end 2010.

Source: GDF SUEZ

Comments on this Chinese Alliance

• There are some uncertainties about this MoU getting finalised. On the other hand if it is finalised, it will be beneficial to GDF to reduce its liabilities by €10 billion to €4 - €5 billion, and to meet the rapidly growing power demand in Asia-Pacific.
• GDF Suez has plans to put the exploration and production business into a separate unit ahead of the capital increase by the end of the year. As part of this, are there any chances for other potential candidates to acquire a strategic stake in GDF following the dilution of 30% stake?
• In 2009, China Investment made significant investments in Russia (Nobel Holdings) and Kazakhstan (KazMunaiGas EP). Last year, CIC formed an oilsands JV with Penn West Energy and committed to invest approximately $800 million in Penn West’s assets. Now, CIC has taken an initiative to venture into Europe. CIC- Quite active in overseas investment and posted 11.7% return on its overseas investments last year.
• Since January 2011, when CNOOC struck a Niobrara JV, there were no acquisitions by the Chinese companies. This $4.28 billion alliance and the recent CNOOC-OPTI oilsands (~$2.1 billion) deal have ended the long break the Chinese companies had taken from acquisition mode. Looks like the acquisition spree has again started!

SandRidge ropes in Korean partner, Atinum, to exploit Mississippian Play in a $500 Million JV. Chesapeake offers $1.5 Bn-Mississippian parcel for sale.

Slow M&A activity in the first week of August has ended with SandRidge Energy's $500 million JV with Atinum.
SandRidge Energy has entered into a joint venture with an affiliate of Atinum Partners Co Ltd, a leading investment firm located in South Korea. The JV area of mutual interest (AMI) covers, substantially, all of SandRidge's original Mississippian Play area, located in Northern Oklahoma and Southern Kansas, other than wells and acreage within the associated spacing units spudded prior to the effective date and all wells and acreage associated with SandRidge Mississippian Trust I.

As per the terms of the agreement, SandRidge will transfer an undivided 13.2% non-operated working interest in approximately 860,000 acres, or approximately 113,000 net acres to Atinum for a total transaction value of $500 million. Atinum will pay $250 million in cash at closing. Atinum has also committed to a drilling carry obligation to pay 13.2% of SandRidge's share of drilling and completion cost for wells drilled in the AMI up to a total amount of $250 million, which is anticipated to occur over a three year period.

Mississippian Oil Play- A new comer to the Unconventional Sector

The Mississippian Oil Play is an emerging horizontal play that has the potential to become one of the most profitable domestic onshore oil plays. This play is led by Chesapeake Energy, SandRidge Energy, Range Resources, Devon Energy and Eagle Energy of Oklahoma LLC. SandRidge Energy is the most active driller in this play with 3,400 drilling locations and 12 horizontal rigs.

The interesting fact about the Mississippi horizontal wells is the rate of return, when compared to other areas being drilled in the industry. The IRR for a Mississippi horizontal well is 120% and better than the average Bakken Shale well at 92%.

Economics of Mississippian Oil Play

• The Mississippian play exists in the shallow depths of less than 6000 feet.
• The cost to drill and complete a well is $3 million.
• The EUR for a well in this play ranges between 300 and 500 Mboe (52% crude oil).
• Low horsepower rigs (< 1,000 hp) and low pressure pumping (~12,500 hp).
• With the availability of extensive existing infrastructure and high IRR, as compared to the Bakken and Eagle Ford oil plays, the exploitation and development of Mississippian play is feasible and profitable.

The following table illustrates the comparison of single well economics of the unconventional oil plays-

SandRidge has made a good deal with Atinum. Chesapeake to follow.

SandRidge had accumulated the Mississippian acreage over a period of 3 years at an average cost of ~$200/acre or ~$170 million. However, the current transaction returns a value of $4,425/acre to SandRidge Energy and $/acre is increased by more than 20 times. This value of the acreage should also be attractive for Chesapeake who holds approximately 1.1 million net acres in this play. Chesapeake, in May 2011, had initiated a joint venture process for the same play. The highlights of Chesapeake holdings in the play are as follows- 

Chesapeake’s Mississippian play:
-- ~1.1 million net acres.
-- As of May 2011, Anadarko Basin had total of 1,990,000 net acres; Proved reserves of 2,184 Bcfe; Unrisked unproved resources of 33,500 Bcfe; April 2011 daily net production of 510 MMcfe.
-- As of October 2010, Mississippian play completions: ~230,000 net acres; 21 MMBOE of Proved reserves; ~145 MMBOE of risked unproved resources; ~385 MMBOE unrisked unproved resources; Net production in October 2010 was 3 MBOE/d.
-- To date, Chesapeake has drilled 53 operated Mississippian horizontal wells and has participated in the drilling of 36 non-operated Mississippian horizontal wells.
-- Currently drilling with five operated rigs.
-- Plans to increase its operated drilling activity in the Mississippian to seven rigs by the end of Q4-2011.

Source: Derrick Petroleum "Deals in Play" Database

CNOOC to acquire OPTI Canada for $2.1 billion. Nexen gets a healthier and wealthier partner.

CNOOC has agreed to acquire OPTI Canada, for a consideration of approximately US$2.1 billion, subject to regulatory and shareholders approvals. Through this acquisition, CNOOC will own a 35% working interest, with Nexen holding the balance 65% in the four oil sands projects- Long Lake, Kinosis, Leismer, and Cottonwood, located in Alberta.

Source: CNOOC


Acquisition Highlights (OPTI’s interest):

• 195 million barrels of proved reserves
• 534 million barrels of probable reserves
• 1,100 million barrels of contingent resources
• 335 million barrels of prospective resources
• ~10,000 bbl/d bitumen production at Long Lake
• 90,944 net acres owned by OPTI
• Existing Upgrader built and operating at the Long Lake site
• Increases CNOOC’s reserves and production by 5.3% and 1%, respectively

Source: CNOOC

Deal Valuation
It is estimated that the value of Contingent Resources for Long Lake and Kinosis projects to be $415.20 million (at $0.60/BOE). The remaining deal value of $1,660.30 million is ascribed to Proved plus Probable Reserves of Long Lake project ($4.90/BOE or $158,124/Daily BOE).

Note: Although OPTI has reported probable reserves for Kinosis project, it is believed that as the project is not yet developed, the probable reserves are counted under the contingent resources. The contingent resources associated with Leismer and Cottonwood projects are not included for valuation as they are not planned to be developed in the medium term.

CNOOC- the healthier partner for Nexen

Last week, Opti Canada had filed for bankruptcy protection in Alberta as the company ran out of cash to fund its oil sands operations. In this regard, CNOOC’s proposal to acquire OPTI rescues not only OPTI but also Nexen as it has got a wealthier partner for its oil sands assets. Nexen has revealed that it will ramp up the drilling at its Long Lake oil sands project to use the processing plant more effectively.

Source: OPTI Canada

Canadian Oil Sands - resources and related deal activity

Alberta’s oil reserves are located in three main areas: Peace River, Cold Lake, and Athabasca. The Athabasca oil sands area, where OPTI and Nexen own substantial resources, is the richest of the three and has the most concentrated oil sands development.

Canada's oil sands are estimated to hold as much as 175 billion barrels of bitumen (Source: Energy Resources Conservation Board (ERCB)). ERCB reports that oil sands bitumen production is currently around 1.5 million barrels per day and expects the oil sands production to reach 2.7 million barrels per day by 2015. The oil sands projects are believed to have a steady production profile of up to 50 years with no decline.

Eighty percent of all bitumen resources in the Athabasca oil sands region are too deep to mine and hence these bitumen resources have to be recovered using in-situ techniques, such as SAGD. It is estimated that Canadian oil sands resources represent 13% of the world’s total crude oil reserves, ranking second only after Saudi Arabia (Source: Energy Information Administration).

Source: CNOOC

The deal activity with respect to oil sands was completely down since the beginning of 2011. The last major acquisition by the Chinese companies in the oil sands was in April 2010, when Sinopec acquired Syncrude project from ConocoPhillips for $4.65 billion.

The following table shows the oil sands deals since 2005.

Source: CNOOC

The Chinese companies were active in acquiring oil and gas assets past one year. The significant (greater than $1 billion) acquisitions include:

• Sinopec acquiring 40% interest in Repsol's Brazilian business for $7.1 billion
• Sinopec acquiring Syncrude project from ConocoPhillips for $4.65 billion
• CNOOC and Bridas acquiring Pan American Energy from BP for $3.5 billion
• CNOOC acquiring Niobrara shale assets from Chesapeake for $3.5 billion
• Sinopec acquiring Argentina unit of Oxy for $2.45 billion

Petrochina failed to acquire Encana's Montney assets in a $5.4 billion bid made in February 2011. Notably, there were no acquisitions made by the Chinese companies since then.

Prior to this $2.1 billion oil sands deal, CNOOC clinched a back to back Niobrara JV with Chesapeake. The acquisition trend of CNOOC in North America discloses an interesting fact that, CNOOC is interested in acquiring oil assets unlike other Chinese or Asian companies who were/are interested in unconventional gas assets.

BHP Billiton to acquire Petrohawk Energy for ~$15 billion. Is BHP/Petrohawk a fair deal? Yes. Deal priced fairly as BHP acquires assets undervalued due to Petrohawk’s capital constraints.

Highlights

•   Largest Oil and Gas M&A deal till date in 2011
•   All cash offer at a substantial premium
•   Gives BHP a focused position in Haynesville shale, Eagle Ford shale and Permian basin
•   Price premium is justified based on sum of parts valuation
•   A compelling strategic benefit for BHP
•   Ironically, limited impact on broader market 

Largest Oil and Gas M&A deal till date in 2011

In the largest M&A deal till date in 2011, Australian Mining major BHP Billiton (BHP) and Houston based Oil and Natural gas explorer Petrohawk Energy Corp (HK) have entered into a definitive agreement for BHP to acquire HK. The offer price of $38.75 per share of Petrohawk, represents a total equity value of approximately $12.1 billion and a total net debt of $3 billion (Petrohawk's debt stood at $3.8 billion as of June 30, 2011 and has been adjusted for certain midstream asset sale proceeds of $800 million),

BHP has engaged Barclays Capital and Scotia Waterous while Petrohawk has engaged Goldman Sachs as their respective financial advisors in connection with this $ 15.1 Billion transaction. This is the largest oil and gas deal since the acquisition of XTO Energy by ExxonMobil for $41 billion in 2009.

All cash offer at a substantial premium

Source: BHP Billiton

BHP has made an all cash offer that is hard to    refuse. The offer is at the upper end of target prices given by 27 brokers and is at a substantial premium to not only 30 day trailing price but also to its 52 week high trading prices.

 Not surprisingly, Petrohawk shares surged 63% on the announcement of this deal.

For Petrohawk, an opportunity rich and capital starved company, this is a timely opportunity to unlock the value of its portfolio. BHP is taking no chances with the offer price. It is probably offering at the top end of what it believes is the value of these assets in order to close the deal very quickly. The offer will commence on 25-July-2011 and the deal is expected to close in Q3 2011.

BHP gets a focused position in Haynesville shale, Eagle Ford shale and Permian basin

Petrohawk has a concentrated portfolio of high quality assets in Haynesville and Lower Bossier shale, Eagle Ford shale and Permian basin. The company has approximately 1,000,000 net acres in Texas and Louisiana; estimated 2011 net production of approximately 950 MMcfe/d (90% gas); year-end 2010 reported proved reserves of 3.4 Tcfe (92% gas and 78% located in Haynesville play); current non-proved resources base of 32 Tcfe for a total risked resource base of 35 Tcfe.

Petrohawk resource base 

Source: BHP Billiton

Haynesville and Lower bossier shale assets:
-- Location: Across numerous parishes in Northwest Louisiana, primarily in Caddo, Bossier, Red River, DeSoto, Webster and Bienville parishes and also in East Texas, primarily in Harrison, Panola, Shelby and Nacogdoches counties;
-- Approximately 345,000 net risked acres;
-- As of December 31, 2010, 2,656 Bcfe of proved reserves (38.3% proved developed reserves);
-- Estimated 2011 net production of approximately 650 MMcfe/d;
-- Risked resource base of 22 Tcfe.

Eagle Ford Shale assets:
-- Counties: La Salle, McMullen, Karnes, DeWitt and Zavala counties;
-- Approximately 332,000 net risked acres;
-- As of December 31, 2010, the proved reserves for the region were approximately 736 Bcfe (22.6% proved developed);
-- Estimated 2011 net production of approximately 210 MMcfe/d;
-- Risked resource base of approximately 13.5 Tcfe;
-- Petrohawk has a joint venture in Eagle Ford Shale midstream with Kinder Morgan holding 25% interest and Petrohawk holding the remaining 75% operated interest. The assets include 280 miles gas gathering plus 112 miles of condensate gathering, which is expected to be in service by year end 2011.

Permian basin assets:
-- Estimated 325,000 net acres which Petrohawk acquired in May 2011 for $455 million;
-- 70% of the acquired acreage is located in Delaware basin while 30% of the acreage is split between Northern and Southern Midland basin. 90% of the total acquired acreage is operated and is primarily located in Loving, Reeves and Culberson counties.

Petrohawk’s current production and proved reserves are 90% and 92% gas respectively, but the liquids share is expected to rise over the next two years. BHP has announced its intention to increase capex beyond what Petrohawk had planned. That increase will most likely be focused on liquids production.

Petrohawk production and revenue split by hydrocarbon

Source: Petrohawk Energy Corp

This acquisition will result in a 30% increase in BHP’s proved reserves, and together with the Fayetteville acquisition earlier this year increase the resource base by 300%. BHP plans increase production at 10% CAGR to reach one million barrel per day in by FY15.

Source: BHP Billiton

Price premium is justified based on relative valuation of the assets based on acreage in the same or adjacent areas ….

We have estimated the deal value break up as follows:

	Region	Sub-region	Value ($MM)	Acreage/Resources	Metric
1	Haynesville acreage value (1)		3,623	345,000 Acres / 3,224 MMBOE	$10,500/Acre or $1.12/BOE
2	Eagle Ford Shale Acreage Value(2)	Hawkville	2,464	224,000 Acres / 1,673 MMBOE	$11,000/Acre or $1.47/BOE
		Black Hawk	1,224	58,300 Acres / 454.5 MMBOE	$21,000/Acre or $2.69/BOE
		Red Hawk	100	50,000 Acres	$2,000/Acre
		Total	3,788	332,300 Acres / 2,127.5 MMBOE	$11,400/Acre or $1.78 BOE
3	Permian Basin acreage value!		455	325,000 Acres	$1,400/Acre
4	Midstream asset value*		995
5	Proved Reserves value (3)		6,239	565.233 MMBOE of 1P and Production of 158.333 MBOE/d	$11.04/BOE or $39,428/Daily BOE
	TOTAL DEAL VALUE		15,100

                                                                                                                                            (#Source: DPS estimates)

 …. Since it offers a compelling strategic benefit for BHP

BHP management has highlighted strategic benefits from this deal as follows:

•         Exposure to the US market
•        Balance to BHP’s currently offshore weighted portfolio
•        Access to the high quality operational performance of Petrohawk team

Ironically, limited impact on broader market

Immediately after the deal announcement, speculation started on other likely takeovers. But we believe nothing has changed in the market to specifically fuel more deal making. Is there any pressure on any peer group to do a deal? No, BHP is one of its kind. Does Petrohawk being taken out create a shortage of assets that will make buyers scurry to do a deal? No, there are plenty of assets on the market. According to DPS study of Deals in Play, more than $90 billion worth of oil and gas assets are on the market as of July 2011. This volume of supply is the same as what existed at the beginning of 2011 and approximately double the volume of supply in early 2010.

As BHP plans to increase Petrohawk’s capital spend, this deal will result in higher US gas production. This in turn will exert a further downward pressure on gas prices.

Analyst comments

Analysts who see this as a Value buy

-- Peter Chilton, Constellation Capital Management portfolio manager, says "Their view on their first shale buy was they were buying at bottom-of-the-cycle prices…I guess they see value here."

-- Grant Sporre, Rob Clifford and Gaetan De Buyer, Deutsche Bank AG analysts say “BHP has valued this asset for growth….BHP is increasingly confident on the future of gas and shale in particular as they continue their broadened push into the shale gas sector.”

-- Jason Gammel, an analyst at Macquarie says “Petrohawk has an outstanding asset base, but monetary and capital problems have held back its true value."

Analysts who see this acquisition In Line

-- Tudor Pickering Holt & Co gave a net asset value of $38.30 to Petrohawk which is much closer to the $38.75 per share price offered by BHP. TPH said “We’ve never questioned Petrohawk’s asset quality with blocky, core shale assets in the Eagle Ford, Haynesville, and emerging Permian basin.... BHP’s deep pockets and Petrohawk’s deep experience in the shales are a perfect fit.”

-- According to Robert Morris from Citigroup Global Markets, the comparisons are a mixed bag when we look at the per-acre cost in the different shales. Citigroup estimates the cost to BHP for undrilled Haynesville acreage to be about $5,000 per acre. Robert Morris, Citigroup Global Markets analyst, says“… which matches what BHP paid for Chesapeake’s Fayetteville stake earlier this year.” For Petrohawk’s Permian basin acreage, Citigroup estimated the cost to BHP was about $6,200 per acre. Robert comments “… which appears quite aggressive given that Petrohawk’s average cost basis is $1.4k/acre.” And for the Eagle Ford acreage, Citigroup estimated the price to be $22,000 per acre, “… which is arguably the high-end of any public transaction to date” according to Robert.

Analysts who consider this deal Overvalued

-- Glyn Lawcock, head of Australian Resources, says "At the current gas price, it doesn't make sense…If the current (U.S.) gas price of low $4 per mmBtu were to hold, then they've paid a big price for something that's not going to generate the returns that they are thinking….You've really got to believe that the U.S. gas price will (climb) back up to a minimum of $6 per mmBtu."

-- Cameron Peacock, a market analyst at IG Markets Ltd, says “the premium is probably a little bit more than expected…paying in advance for future growth is something the analysts often don’t like to see.”

Other comments

-- Charles Kernot, an analyst at Evo Securities says “BHP Billiton would pay around $27 per boe (barrel of oil equivalent) for the proved reserves, which is relatively expensive. However, this ignores the sizeable potential of the non-proved resources which are probably viewed as low risk exploration and therefore easier to convert to proved reserves.”

--  Claudia Mahn, North America energy analyst at IHS  says “While this will help the US getting resources out of the ground in the short- to medium-term, these deals could potentially weigh on the country’s energy security down the road, if foreign companies would gain control over significant volumes of unconventional oil and gas production in the US.”

Context - BHP deals history

BHP has done two quick deals in succession in US shales – the current deal and the February 2011 deal to acquire Chesapeake’s Fayetteville assets for $4.75 billion. However, these two deals came after a very long lull, the last significant oil and gas deal by BHP before these two was in late 2006 when Anadarko sold its Genghis Khan discovery in deepwater GOM to BHP, Hess and Repsol for $1.326 billion.

In this interim period, BHP had unsuccessfully attempted two large acquisitions, Rio Tinto and Canadian Potash Corp, to further build a dominant position in mining. In spite of BHP reiterating its commitment to oil and gas, the market continued to speculate about a potential divestiture of BHP Petroleum. With the two deals in US shales, that issue has been laid to rest.

Context - Petrohawk deals history

M&A deals by Petrohawk since 2008

Announce Date	Buyers	Sellers	Deal Value ($MM)	Deal Type	US Sub Region
7/14/2011	BHP Billiton	Petrohawk Enegy Corp	15,100	Corporate	Haynesville Shale
5/5/2011	Petrohawk Enegy Corp	(Undisclosed)	455	Acreage Only	Permian
12/31/2010	Petrohawk Enegy Corp	(Undisclosed)	303	Acreage Only	Eagle Ford Shale
12/31/2010	Petrohawk Enegy Corp	(Undisclosed)	215	Acreage Only	Haynesville Shale
12/23/2010	ExxonMobil	Petrohawk Enegy Corp	650	Property	Fayetteville Shale
8/9/2010	EV Energy Partners	Petrohawk Enegy Corp	123	Property	Mid-Continent
3/15/2010	WildHorse Resources LLC	Petrohawk Enegy Corp	320	Property	Mid-Continent
3/1/2010	Lime Rock Resources	Petrohawk Enegy Corp	155	Property	Mid-Continent
3/1/2010	(Undisclosed)	Petrohawk Enegy Corp	20	Property	Mid-Continent
2/24/2010	Petrohawk Enegy Corp	Aref Energy Holding Co	117	Acreage Only	Eagle Ford Shale
11/2/2009	Petrohawk Enegy Corp	Swift Energy	39	JV	Eagle Ford Shale
9/21/2009	Merit Management Partners	Petrohawk Enegy Corp	376	Property	Permian
8/6/2009	Petrohawk Enegy Corp	JKX Oil & Gas	10.1	Acreage Only	Haynesville Shale
8/1/2009	Petrohawk Enegy Corp	(Undisclosed)		Acreage Only	Haynesville Shale
7/15/2008	Petrohawk Enegy Corp	Mainland Resources Inc		Acreage Only	Haynesville Shale
4/8/2008	Petrohawk Enegy Corp	(Undisclosed)		Acreage Only	Haynesville Shale
1/8/2008	Petrohawk Enegy Corp	Aspect Energy LLC	222.5	Acreage Only	Fayetteville Shale

Context - Corporate acquisitions in US shales

Announce Date	Buyers	Sellers	Deal Value ($MM)	SubRegion
7/14/2011	BHP Billiton	Petrohawk Enegy Corp	15,100	Haynesville Shale
6/2/2011	ExxonMobil	Phillips Resources Inc; TWP Inc	1,690	Marcellus Shale
12/1/2010	Antero Resources Corp	Bluestone Energy Partners	180	Marcellus Shale
11/15/2010	Williams	Dakota-3 E&P Company LLC	925	Bakken Shale
11/9/2010	Chevron	Atlas Energy	4,300	Marcellus Shale
7/27/2010	Hess	American Oil & Gas Inc	384.65	Bakken Shale
7/20/2010	ExxonMobil	Ellora Energy Inc	570	Haynesville Shale
5/28/2010	Shell	East Resources Inc	4,700	Marcellus Shale
4/21/2010	Exco; BG	Common Resources LLC	446	Haynesville Shale
3/21/2010	Consol	CNX Gas Corp	985.8	Coalbed Methane
12/14/2009	ExxonMobil	XTO	41,000	Multiple

Foot Notes:

! Based on MAY-2011 Petrohawk's Permian Basin acquisition

*as estimated by the buyer

(1) Haynesville comparable deals

Based on JUL-2010 Exxon-Ellora transaction in Haynesville, the $/Acre is assumed to be $10,500/Acre.
Out of all recent significant Haynesville deals, the Ellora acreage was the only one in close proximity to the Petrohawk acreage.

The other high value deals in Haynesville involving undeveloped acreage were, Exco/BG acquiring assets from Southwestern Energy and Common Resources, in two separate transactions. The acreage in these two transactions were mainly in Texas, whereas Petrohawk’s majority Haynesville acreage lies in large part in Louisiana.

(2) Eagle Ford comparable deals

Hawkville

The value is derived from JUN-2011 Statoil/Talisman-SM Energy adjusted deal metric of $14,610/Acre and discounted for the higher share of dry gas acreage in Petrohawk's portfolio. Other comparable deals (but slightly more distant from Petrohawk’s acreage) are KNOC-Anadarko at adjusted price of $13,975/Acre and Mitsui-SM Energy at $11,035/Acre

Black Hawk

Based on JUN-2011 Marathon-KKR/Hilcorp deal, the $/Acre is assumed to be $21,000/Acre.

(3) Metrics for US gas producing properties

This is the residual deal value. The implied $39,428/Daily BOE in this deal compares well with the average for all gas weighted US deals since 1-Jan-2010 at $41,052/Daily BOE. The implied metric for proved reserves at $11.04/BOE is slightly higher than the average for all gas weighted US deals since 1-Jan-2010 at $9.84. However, the proved reserves number used in this deal are as of yearend 2010, and the current figure is likely to be higher because of significant ongoing drilling.

Sub Region	$/Daily BOE (Adv. Est.) (avg)	$/Proved BOE (Adv. Est.) (avg)
Eastern	83,149	9.17
GC Onshore	34,114	14.81
Gulf of Mexico (Deep)	14,368	9.48
Gulf of Mexico (Shallow)	14,681	11.60
Mid-Continent	47,891	8.69
Multiple
Permian	40,168	9.88
Rockies	35,809	7.56
West Coast	31,074	15.15
Total	41,052	9.84

Source: Derrick E&P Transactions Database. US producing properties, Deal Value > $10 million, Announce Date on or after 1-Jan -2010, Hydrocarbon = gas

Source Documents: 

Acquisition ppt

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Petrohawk july 2011 ppt

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