Chesapeake to divest Fayetteville assets for ~$5 billion

Chesapeake Energy Corporation has announced that, as part of its 2011-12 strategic and financial 25/25 plan, the company has decided to sell all of its Fayetteville Shale assets, as well as its equity investments in Frac Tech Holdings LLC and Chaparral Energy Inc. If these sales are completed, Chesapeake anticipates that the combined pre-tax proceeds could exceed $5.0 billion. Chesapeake owns 25.8% of Frac Tech, a leading provider of oil and natural gas well stimulation services and products with expertise in high-pressure hydraulic fracturing. Chesapeake owns 20% of Chaparral, which has operations in the Mid-Continent, the Permian Basin, Ark-La-Tex, NorthTexas, the Gulf Coast and the Rocky Mountains, with Proved NPV10 of $1.77 billion.

Fayetteville asset overview:

• Approximately 487,000 net acres of leasehold with 75% of WI; BP is the JV partner with 25% WI
• Current net production of approximately 415 MMcfe/d
• As of 30 Jun 2010, Net Proved reserves were 2,404 Bcfe
• 4,900 Potential net unrisked undrilled wells
• 9,300 Bcfe of Potential net unrisked resource.

Are we seeing Consolidation across US shale plays moving to larger companies????

• In 2008, BP Plc bought 25% interest in Chesapeake’s Fayetteville Shale operations for $1.9 billion after buying producing natural gas properties in the Arkoma Basin Woodford Shale play for US$1.75 billion.
• In 2009, Exxon acquired XTO Energy for $41 billion.
• In 2010, Chevron Corp. bought Atlas Energy Inc. for $4.3 billion to add acreage in the gas-rich Marcellus Shale.
• In 2011, Chesapeake to divest Fayetteville assets for ~$5 billion.

Pan Orient increases South East Asia drilling budget

Pan Orient, an Alberta based oil and gas exploration and production company, will shell out more this year on its exploration and production activities in South East Asia. According to its 2011 Capital Program and Operations Update, the Company is planning to spend around C$71 million as against its 2010 capital budget of about C$67 million.

Highlights:

• Firm capital program of $71 million allocated $44 million to Thailand and $27 million to Indonesia
• Thailand drilling program to include 37 wells comprised of 11 exploration wells and 26 development or appraisal wells intended to grow current production for average 2011 oil sales of 5,000 to 6,000 BOPD
• Indonesia drilling program to include 6 high impact exploration wells, commencing in mid March 2011 with three wells at Batu Gajah

Thailand

• Block L33/44 (60% & Operator): Two 2010 oil discoveries at early stage appraisal
• Block L44/43 (60% & Operator): 3 fields including 1 2010 multi-zone oil discovery at early stage development. Active early 2011 exploration program
• Block L53/48 (100% & Operator): L53-A oil discovery at early stage appraisal. First appraisal well L53-A1 currently drilling and  L53-C exploration well about to test   

Indonesia

• South CPP PSC (90% & Operator): 250 kms 2D Seismic 2011 – 1 well 2012
• Batu Gajah PSC (90% & Operator):3 exploration wells in Q1/11 targeting mid case prospective resources of 109MM bbl and 429 Bcf gas (net POE)
• Citarum PSC (69% & Operator): 3 exploration wells in Q3/11 targeting 966 Bcf gas (net POE)   

Top Oil and Gas Deals of 2010

Top 20 global deals by value – Multiple categories

• Sale of a partial interest in one E&P company by another industry player, e.g., sale of 51% stake in Cairn India by Cairn Energy; Lukoil’s stock repurchase from ConocoPhillips; E.ON’s sale of 3.5% interest in Gazprom; and Shell’s divestiture of a 10% interest in Woodside
• Chinese/Asian NOCs aggressively buying up global assets, in particular in South America e.g., parts of Repsol’s Brazil portfolio and  Pan American Energy, and elsewhere, e.g., ConocoPhillips’ interest in Syncrude project.
• BP’s divestments for funding post-Macondo costs, including sale of interest in Pan American Energy and assets across three countries to Apache.
• Unconventional and conventional acquisitions by Majors, including Atlas Energy by Chevron; Arrow Energy by Shell, Devon’s Brazil and Azerbaijan portfolio by BP.

Global map view of selected, key assets traded during 2010

For more details look at http://www.derrickpetroleum.com/reports1.html

We have also recently published a report for E&P Business Development and New Ventures professionals working on deals globally. This report provides information on $93 billion of global oil and gas assets on the market.

The report provides details on ~500 opportunities:

·         Assets for sale

·         Corporate M&A opportunities

·         JV opportunities

·         Exploration farm-ins

You can view a sample copy of this report at http://www.derrickpetroleum.com/reports2.html

Trades involving partial company stakes accounted for 16% of total Global M&A activity in 2010, e.g., Cairn India, Gazprom, Lukoil

Global Oil and gas Corporate deals back to historic levels around 45%, down from 2009 high

Corporate deals as a share of the total was 45% in 2010, closer to the historic range 34-37% in 2007-2008 than 2009 at 74% (64% without the XOM-XTO deal).

 

Trades involving partial company stakes accounted for 16% of total Global M&A activity in 2010

The total value of trade involving partial company stakes in 2010 was $33bn, whereas the total deal value for such deals put together for previous three years (2009, 2008 & 2007) was only $5.2bn.  Main contributors to that figure was from 2 deals: OMV selling 21% stake in MOL to Surgutneftegas for $1.9bn (2009); and Repsol YPF divesting part of its  stake in the YPF unit to Petersen Group for $2.2bn (2007).

For more details look at http://www.derrickpetroleum.com/reports1.html

We have also recently published a report for E&P Business Development and New Ventures professionals working on deals globally. This report provides information on $93 billion of global oil and gas assets on the market.

The report provides details on ~500 opportunities:

• Assets for sale
• Corporate M&A opportunities
• JV opportunities
• Exploration farm-ins

You can view a sample copy of this report at http://www.derrickpetroleum.com/reports2.html

Conventionals are still conventional, accounting for 69% in 2010, up from 51% in 2009

Share of unconventionals in total deal value reduced from 49% in 2009 to 31% in 2010. However, a significant part of the unconventional deal value in 2009 was due to a single deal, the acquisition of XTO by ExxonMobil (unconventionals’ share without XTO would be 30%).

Number of deals greater than $1bn, both conventional and unconventional, were greater in 2010 than in any of the previous three years. Clearly the deal market was robust for both types of assets. 

Majors continued to acquire unconventional assets, but also got back into the conventional deals market

In 2010, the Majors bought conventional and unconventional assets in more balanced measures unlike 2009 when the Majors focused predominantly on unconventional assets. For 2010, the split was 35% conventionals/65% unconventionals based on the largest deals as show in chart.

The unconventional assets acquired by the Majors included

•       Marcellus: Shell-East Resources, Chevron-Atlas

•       Eagle Ford: Shell from various sellers, BP-Lewis Energy

•       Oil sands: Total-Suncor, Total-UTS, BP-Value Creation

•       Australia CBM: Shell-Arrow Energy, Total-Santos/Petronas

The conventional assets acquired by the Majors included

•       US (ExxonMobil-Ellora)

•       GoM: BP-Devon, BP-Shell, Chevron-Devon

•       Brazil: BP-Devon

•       Azerbaijan: BP/Chevron-Devon

•       Uganda: Total-Tullow

•       North Sea: BP-Total

For more details look at http://www.derrickpetroleum.com/reports1.html

We have also recently published a report for E&P Business Development and New Ventures professionals working on deals globally. This report provides information on $93 billion of global oil and gas assets on the market.

The report provides details on ~500 opportunities:

·         Assets for sale

·         Corporate M&A opportunities

·         JV opportunities

·         Exploration farm-ins

You can view a sample copy of this report at http://www.derrickpetroleum.com/reports2.html

US top region on its own, South America new number 2 for Oil and gas M&A activity

Top region for M&A activity is North America with $112bn or 53% of world total (including GoM). This activity level is almost 2 times the region’s share of global production and asset values. US has consistently been the top ranked region in terms of deal value transacted.

The second ranked region (after US) has been different each of the past few years – in 2007 it was Former Soviet Union as a result of the Yukos asset sell offs; in 2008 it was Australia because of the CBM LNG deals; in 2009 Canada took the position and in 2010 it is South America which has seen a massive step up in activity driven by Asian NOCs as well as OECD oil companies.

For more details look at http://www.derrickpetroleum.com/reports1.html

We have also recently published a report for E&P Business Development and New Ventures professionals working on deals globally. This report provides information on $93 billion of global oil and gas assets on the market.

The report provides details on ~500 opportunities:

·         Assets for sale

·         Corporate M&A opportunities

·         JV opportunities

·         Exploration farm-ins

You can view a sample copy of this report at http://www.derrickpetroleum.com/reports2.html

Unocal-II in 2011 - Will Chinese NOCs do a big acquisition in US in 2011?

Chinese/Asian NOCs acquisitions in 2010

Chinese/Asian NOCs were eager buyers in 2010, accounting for 19% of global activity, or $40bn, having grown steadily from 1% since 2007.  Key region was South America  with 4 of the top 5 deals, including Sinopec’s JV with Repsol, Brazil and CNOOC’s JV with Bridas for Pan American Energy.

In 2010, Chinese NOCs (Sinopec, CNOOC, CNPC, Sinochem and China Investment Corp) did acquisitions amounting to $34bn, Other Asian NOCs (KNOC & PTTEP) did acquisitions amounting to  $6bn.

Four of the top five deals by Chinese NOCs were in South America. Clearly this was their focus region for growth in 2010:

• Sinpopec bought 40% of Repsol’s Brazilian business, marking its entry into Brazil’s pre-salt resources. Among other assets, Sinopec now has an interest in the Guara and Carioca discoveries.
• CNOOC on the other hand grabbed a piece of mature producing assets in Argentina through the acquisition of a net 50% interest (through two deals) in Pan American Energy.
• Relatively smaller Sinochem, went after heavy oil by acquiring a 40% interest in Statoil’s Peregrino field offshore Brazil

Apart from South America, the Chinese also acquired assets in Canada, US, Angola, Australia, Uganda, Indonesia, and Colombia.

Chinese have restricted to JVs in US in 2010

Eagleford JV with Chesapeake was the only deal by Chinese NOCs in US.

So far Chinese have restricted to JVs and small acquisitions in US, will they be doing a corporate acquisition in 2011?

For more details look at http://www.derrickpetroleum.com/reports1.html

We have also recently published a report for E&P Business Development and New Ventures professionals working on deals globally. This report provides information on $93 billion of global oil and gas assets on the market.

The report provides details on ~500 opportunities:

·         Assets for sale

·         Corporate M&A opportunities

·         JV opportunities

·         Exploration farm-ins

You can view a sample copy of this report at http://www.derrickpetroleum.com/reports2.html