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
Scotia Waterous has been retained as the exclusive financial advisor by El Paso Corporation to divest its interests in the House Creek Field area of the Powder River Basin, Wyoming. The assets include oil-weighted production of approximately 1,600 boe/day from the Sussex and Parkman and significant undeveloped Niobrara acreage. The value of the assets put up for sale may be around $130-$160 million based on $80,000-$100,000/boe.
Bids due by late July, 2011.
For more information on the offering, follow up with these contacts -
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The following table shows Scotia Waterous-advised deals since the beginning of 2010.
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
Spain's oil refiner Cepsa is looking to boost its upstream operations by buying assets or companies and has the financial capacity to spend 2 billion to 2.5 billion euros ($2.93 billion to $3.67 billion), says the company’s chief executive, Dominique de Riberolles.
“Abu Dhabi's IPIC has asked us for more presence in upstream. It’s probable that we will have to make one or two acquisitions of oil and gas blocks or companies," de Riberolles said. IPIC, in February 2011, offered a bid to acquire the remaining 52.94% stake in Cepsa for $5 billion. A brief look at the deal is as follows-
Where will Cepsa venture into??? Try new areas or add to the existing portfolio???
The company, which has small upstream operations in Latin America (Peru and Colombia) and North Africa (Algeria and Egypt), has not yet identified companies or areas where it plans to invest.
Cepsa, going on acquisition spree, will most likely venture into North American shales. In the recent days North American shales have become the new pie to taste. Since the beginning of 2010, these shales have been acquired by Chinese, Japanese, Koreans and South Africans… This is justified with the following snapshot.
In addition, with the rising oil price it is quite obvious that Cepsa will be no different from the other foreigners to venture into American shales...
