Asian companies creating traffic towards Niobrara Shale!! Marubeni acquires Niobrara Shale acreage from Marathon Oil for $270 million.

Marathon Oil signed an agreement with Marubeni Corp under which Marathon will assign a portion of its interest in the Niobrara shale play within the DJ Basin. Under the terms of the agreement, Marubeni will receive a 30% undivided working interest in Marathon's approximately 180,000 net acres in the DJ Basin for a total consideration of $270 million, or $5,000 per acre. Marathon began leasing acreage in the DJ Basin in 2010. The company is currently acquiring 2-D and 3-D seismic data and expects to participate in eight to 12 gross exploration wells by the end of the year. Marathon will be operator of the jointly owned leasehsold. Marubeni’s overall investment in the project, including future development costs, is about $1-$1.5 billion.

Source: Marathon- Howard Weil Energy Conference- Mar 2011

Niobrara Shale- The tasty pie for Asians!!

Recently, Niobrara Shale has gained interests from all the companies. 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.

Last October, the Japanese company ITOCHU stepped into Niobrara Shale with an estimated investment of $390 million. Then, in Jan 2011, the Chinese (CNOOC) entered into a $1.3 billion Niobrara JV with Chesapeake. Now again the Japanese- Marubeni Corp!! The Asians are busy striking the unconventional deals in the US. Very soon Koreans may also enter the Niobrara Shale who had recently clinched a $1.6 billion Eagle Ford JV with Anadarko.

A look at the metrics of liquids rich resource plays: 

Source: Marathon Oil Mar 2011 PPT

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What is interesting in Marathon-Marubeni deal??

In January 2011, Chesapeake sold the Niobara acreage to CNOOC for $4,686/acre. In the three months period since then, the Niobara acreage metrics have increased by ~$300/acre. This is evident from Marathon reported metrics of $5,000/acre. Yes! Marathon is selling Niobrara acreage at a premium price.

Source: Derrick Petroleum E&P Transactions Database

For detailed discussion on Niobrara: http://mergersandacquisitionreviewcom.blogspot.com/2011/03/o-players-interest-towards-niobrara-is.html

Conoil wins $650 million bid for SPDC’s Nigeria OML 30!! Shell to continue divesting Nigeria blocks.

Nigeria's billionaire business mogul, Dr. Mike Adenuga Jnr, has won Shell's most prolific onshore oil block, OML 30, located in the Niger Delta. Adenuga's Conoil Producing had submitted a bid of $650 million for each of OMLs 30 and 42. Adenuga's acquisition covers Shell's 30% stake; Total's 10% interest, and Agip's 5% stake in OML 30. OML 30 is currently producing 45,000 barrels a day. According to a report by Africa Energy Intelligence, OML 30 has 350 million barrels of proven reserves.

Source: Shell Mar 2011 Investor PPT

Shell previously said it is looking to divest $5 billion in assets this year and has sold $30 billion in assets over the past five years. Shell's recently sold its stake in Niger Delta license OML 40 to Elcrest E&P Nigeria, and said it expects to conclude the sale of its stakes in two more onshore licenses soon.

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Shell, which has already sold four of its onshore licenses in the country, launched the process to offload its 30% stakes in OMLs 30, 34, 40 and 42 last year. The licenses were said to be valued at around $4 billion. The sales are part of a Shell plan to reduce its footprint onshore Nigeria, where militant attacks and oil theft have slashed the company's output since 2006. The decision to sell assets in Nigeria is also in line with the government's plan to promote indigenous participation in the industry. Essar offered $800 million for the stake in OML 30. Other bidders were said to be: Afren ($755 million); PanOcean ($750 million); Conoil ($650 million); African Petroleum ($515 million); and Oando ($450 million).

More Nigerian pieces up for grab!!

Source: Derrick Petroleum E&P Transactions Database

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