Huge Potential for Shale Gas in China

According to the US Energy Information Administration, China holds the largest reserves of shale gas in the world, enough to supply China for more than 300 years. There’s no current commercial production of shale gas in China, but several companies have exploratory projects underway, including Sinopec, PetroChina, Royal Dutch Shell, BP and Chevron. Continue reading here..

Can multiple bidders increase the premium on Rockhopper?

Recent media reports have been speculating on a possible takeover or majority acquisition in Rockhopper Exploration Plc by Anadarko Petroleum. According to Sunday Times, several other Texan oil firms, including Noble Energy, Hess Corp and Murphy Oil are interested, as are British oil firms Cairn Energy and Premier. Continue reading here..

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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Hess Corporation Announces Capital and Exploratory Budget of US$ 5.6 billion for 2011; More than 35 percent are devoted to Unconventional Oil projects

Hess announced 2011 capital and exploratory budget of US$ 5.6 billion, of which US$ 3.1 billion for production, US$ 1.6 billion for developments and US$900 million for exploration. More than 35 percent of capital and exploratory expenditures in 2011 are devoted to unconventional oil projects. The company also plans to increase reserves and production by atleast 3% a year.

Production expenditures of approximately US$ 3.1 billion include:

- Bakken oil shale in North Dakota, where Hess plans to operate 15 rigs and expand production facilities

- Drilling production and water injection wells at Valhall (Hess 64% working interest) in Norway and Shenzi (Hess 28%) in the deepwater Gulf of Mexico

- Well workovers and completions at Ceiba and Okume Complex (Hess 85% - operator) in Equatorial Guinea

Field development expenditures of US$ 1.6 billion include:

- Expansion of the Tioga Gas Plant and construction of a crude oil rail loading and storage facility to support the development of the Bakken oil shale in North Dakota

- Field redevelopment work at Valhall to increase production capacity and extend field life by 40 years is expected to be completed during 2011

- Pony (Hess 100 percent - operator) and Tubular Bells (Hess 40 percent - operator) in the deepwater Gulf of Mexico, where engineering and design work is progressing

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Exploration expenditures are budgeted at US$ 900 million, including:

- Conventional deepwater drilling in Egypt, Ghana, Indonesia and Brunei

- Unconventional onshore drilling in the Eagle Ford Basin in Texas and the Paris Basin in France

Source: Derrick Petroleum Planned Exploration Well Database

Libya crisis forces operators to move out....What next for them???.......Is it sell off.

Immediate impact of Libyan crisis

The ongoing Libyan civil war and Western military intervention is set to take about 860,000 barrels per day of production, over a period of 90 days, out of the oil market this year.

An unresolved crisis may also lead to long-term exits by international oil companies from the North African country, putting Libya’s state-owned National Oil Corporation’s ambitious production growth goals under pressure.

Long term impact of Libyan crisis

Almost all international oil companies operating in Libya have evacuated their staff and cannot be certain when normal operations will resume. There are a number of uncertain factors affecting its estimates of the impact of the crisis on Libyan output, including how long the current abnormal situation lasts, which will determine how rapidly production can be returned to normal levels.

Operations at some projects are at “hot standby” as Italian player Eni has indicated, ready for a quick restart. Other projects will require major work before a return to normalcy.

More fields have been shut in as the unrest continues to spiral. We think it will take more time to resume production than previously estimated (30 days). Hence, we recommend raising the estimated production cut by another 60 days for the fields identified earlier, as well as for the newly impacted fields. The rate at which output recovers after the current crisis is over will to a great extent depend on which side wins.

What is next for IOC’s

With Gaddafi’s forces now apparently halted, Eni, BP, Wintershall, OMV, the big American players such as Hess, Marathon and ConocoPhillips, and a long list of other players and hopefuls, not least supermajor Shell at its gas exploration site, all have to consider two relatively simple options.

The worst option for the oil firms is that Gaddafi succeeds in dragging out the confrontation or wins the day. In these circumstances, it has become clear that neither Eni nor any of the others will really return to Libya while Gaddafi remains in power. Admittedly, Eni has an unusual position and may be granted a special status to continue producing gas for the local Libyan market.

Nearly all the companies with assets in Libya will now find that they are rooting for an early end to Gaddafi’s regime as the only clear way for their return. The Libyan leader is threatening to bring everything else – possibly including some vulnerable oil facilities - down with him if he has to leave the scene after 42 years in power, but it may be too late for him to follow through on the bluster.

 Acquisitions and divestitures in Libya - 2006 to 2011

Source: Derrick Petroleum M&A Database - www.derrickpetroleum.com