Pioneer investing $1.6 billion for 2011 drilling program (69% for Spraberry); Aims for 18% compounded annual growth for 2011-2013

Pioneer's capital program for 2011 totals $1.8 billion, consisting of $1.6 billion for drilling operations and $0.2 billion for vertical integration and facilities. The 2011 drilling capital of $1.6 billion is focused on oil and liquids-rich drilling, with 75% of the capital allocated to the Spraberry and Eagle Ford Shale plays. The company is projecting 18% compounded annual growth for 2011-2013.

Spraberry

Pioneer estimates that the company will drill approximately 700 wells into the Spraberry formation during 2011. This will increase its net production to between 38,000 boepd and 44,000 boepd by the final quarter of 2011. The company plans to substantially increase the number of rigs drilling the Spraberry formation in West Texas over the course of 2011.

“Our most recent drilling program called for 30 rigs to be operating in the Spraberry during 2011, but we now plan to increase the rig count to 35 rigs by mid-year,” revealed Pioneer Chairman and CEO Scott D. Sheffield.

Other companies working the Spraberry include Cheapeake Energy, which has 680,000 net acres in the Spraberry and three other plays in the Permian Basin.

Source: Derrick Petroleum E&P Transactions Database

Eagle Ford Shale

In 2011, Pioneer Natural Resources will ramp up its development of the Eagle Ford Shale as well. The company will drill 70 gross wells within its joint venture area with Reliance Industries. In 2010, the company drilled 26 wells into the Eagle Ford Shale. The company estimates that this development will increase production from the Eagle Ford Shale to between 10,000 and 13,000 BOEpd in 2011, triple the level of production in 2010.

Pioneer holds 310,000 gross acres in the Eagle Ford Shale, which is growing in popularity among producers because it holds natural gas and oil.

Pioneer Natural Resources plans continued exploitation of its large acreage position in the Spraberry trend in 2011, along with increased development of the Eagle Ford Shale as the company seeks to boost its oil and liquids production. This accelerated drilling program, which is planned to ramp up further in 2012 and 2013, is expected to increase the company’s current compound annual production growth target of more than 15 percent for the 2011 through 2013 period.

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RWE to sell 20% interest in Clipper South gas field in UK North Sea

RWE Dea is planning to sell down 20% interest in the Clipper South gas field, UK North Sea. The gas field is located on Blocks 48/19c, 48/19a and 48/20a and straddles Production Licenses P008 and P465.

Highlights
 -- The blocks has reserves of about 180 Bcf.
-- The gas at Clipper South is located in a tight Permian Rotliegend reservoir which contains approximately 500 Bcf of gas in place.
-- The development plan for Clipper South field was approved by the Department of Energy and Climate Change in March 2011.
-- The field will be developed by five horizontal wells, each containing up to six hydraulic fractures, connecting to a wellhead platform and then piped to the Lincolnshire Offshore Gas Gathering system (LOGGS) PR platform.
-- The first gas is expected in the Q1-2012, and the production is anticipated to reach a maximum rate of 100 MMcf/d.
-- Current ownership of the field: RWE (50%, Operator), Bayerngas (25%) and Fairfield Energy (25%).

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Nexen joins Marathon to explore Poland shale gas resources.. Exxon seeks partners for its shale gas licenses in Poland.

Marathon Oil Corporation has signed an agreement with Nexen under which Nexen will acquire a 40% working interest in 10 of Marathon's concessions in Poland's Paleozoic shale play. This partnership provides not only financial risk mitigation but combines the extensive unconventional drilling and completion experience of Marathon and Nexen to fully evaluate the potential of these concessions.

Source: Marathon Oil Website

Marathon currently holds an interest in 11 concessions in Poland, encompassing 2.3 million acres. The shales are Lower Paleozoic and located at depths of between 8,000 and 13,000 feet. Marathon plans to acquire 2D seismic during the first half of 2011, potentially followed by the drilling of one to two wells in the fourth quarter of 2011 and seven to eight wells during 2012. Marathon will remain operator of the 11 concessions.

Poland shale gas- A Game Changer??

Poland's Lower Paleozoic shale play may be the largest and most significant opportunity for unconventional gas in central Europe and is evolving rapidly in the wake of successful shale plays in North America. Natural gas demand in the large and growing European market is approximately 50 to 55 billion cubic feet per day, with imports from outside the European Union accounting for approximately 50% of total gas requirements.

Source: Marathon - Howard Weil 2011 Energy Conference

In the last three years, Poland had issued more than 70 licenses for shale gas exploration which could make Europe less dependent on supplies from Africa and Russia. However, extraction of resources in Europe is more complex than in the US because of population density. Poland has 5.3 trillion cubic meters of shale natural gas, equal to more than 300 years of the country’s annual gas consumption, the Energy Information Administration of the U.S. Department of Energy said in a report. The companies are now drilling in Poland, but it will take at least a year to determine if shale gas production will be commercially feasible.

Lots more available on Poland table??

Poland’s shale resources are being targeted by Majors like ExxonMobil, Chevron, ENI, ConocoPhillips, Marathon, and Talisman as well as small independents like San Leon Energy, Realm Energy and BNK Petroleum. The following tables show the list of Poland shale gas deals.

Source: Derrick Petroleum E&P Transactions Database

As the companies' interest towards shale gas exploitation in Poland is heating up, few companies are calling for partners to give them a helping hand. Below is the list of Poland assets available for sale!!

Source: Derrick Petroleum Deals In Play Database

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Quicksilver - April 2011 Presentation

Growing production 20% - Maintaining low full cycle unit cost structure to maximize margins - Commercializing Horn River natural gas resource development - Validating Niobrara and Exshaw exploratory opportunities for oil
http://docsearch.derrickpetroleum.com/files/12106/Quicksilver%20-%20April%202011%20Presentation.pdf

W&T Offshore acquires Permian assets for $366 million

W&T Offshore Inc has agreed with private sellers to acquire approximately 21,900 gross leasehold acres (21,500 net acres) in the West Texas Permian Basin for a purchase price of $366 million. The reserves are over 91% oil and natural gas liquids. At January 1, 2011, estimates of proved reserves to be acquired are approximately 27 mmboe; and estimates of proved and probable reserves to be acquired are approximately 53 mmboe. The current wells produce around 2,800 barrel equivalents per day. Since the effective date of Jan 1, 2011, the proposed acquisition, production has increased from about 1,900 barrel equivalents.

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The sellers have three active rigs drilling in the field and ongoing completions are being made on the new wells. There is significant upside potential in the acquisition with hundreds of proved undeveloped and probable well locations. Capital expenditures associated with planned development activities for these properties for the rest of 2011 are currently estimated at $35 to $40 million.

Permian Basin Acquisition Metrics




Source: Derrick Petroleum Global E&P Transactions 2010 Review
(Note: 2010 M&A report is available for free- If interested in getting a copy of the same, please write to anitha.bharathi@derrickpetroleum.com)

In 2010, the Permian Basin received the highest production multiples, $80,000-$110,000 per flowing barrel. The current transaction values the proved reserves at $288 million ($10.67/BOE or ~$103,000 per flowing barrel equivalent) and the probable reserves at $78 million ($3/BOE).

With the reserve life index to be 26 years, the $/proved reserves going at $10.67 is certainly high. The metrics reflect the high oil price and the buyers are willing to pay for oil reserves; future drilling opportunities, behind pipe potential and reserve quality.

Following is the list of significant deals in Permian Basin in the last three quarters.

Source: Derrick Petroleum E&P Transactions Database

Another private company, Element Petroleum LP has put its Wolfberry assets for sale. The following slide shows the overview of the package:

Goodrich Petroleum Corporation shifting towards Oil and Liquids development from Natural Gas; Allocated 70% of its 2011 Capital Program to Oil Exposure (62% Eagle Ford Shale Trend)!!

Goodrich Petroleum increased 2011 capital program to develop the company's new acreage in the Eagle Ford Shale, as the company joins the shift towards oil and liquids development. Goodrich Petroleum increased its total 2011 capital budget by $10 million, from $225 million to $235 million.  The company increased the allocation to the Eagle Ford Shale formation by $45 million, from $100 million to $145 million.

Eagle Ford Shale

Goodrich Petroleum has been focusing its attention and capital over the last few years for developing the company's natural gas assets, including the Haynesville Shale and Cotton Valley formations in East Texas and North Louisiana.

In April 2010, faced with low prices and weak fundamentals for natural gas, the company decided to diversify away from this commodity, and purchased 35,000 net acres in the Eagle Ford Shale in Texas. The acreage is located in La Salle and Frio County, which is considered the oil window of the play. During the fourth quarter of 2010, the company drilled 4 gross or 3 net wells into the Eagle Ford Shale. Goodrich Petroleum is operating two rigs on its Eagle Ford Shale acreage and expects to drill from 22 to 26 wells on its 40,000 net acres.

Recent M&A Deals in Eagle Ford Shale:

Source: Derrick Petroleum E&P Transactions Database

Haynesville Shale

Although Goodrich has been focusing in the Haynesville Shale, the company is deemphasizing development here in 2011 in favor of more oil focused properties in its portfolio. In 2010, the company spent approximately 56% of its total drilling budget, or $156 million, to drill 18 net wells into the Haynesville Shale. In 2011, the company plans to spend only $90 million to drill nine net wells on its Haynesville Shale properties. One area of focus for Goodrich Petroleum in 2011 will be in the Shelby Trough area of East Texas, where the company has 28,000 net acres under lease. The company drilled its first Haynesville Shale well here, and also plans development of the Bossier Shale in 2011. This formation lies just above the Haynesville Shale and produces natural gas.

Recent M&A Deals in Haynesville Shale:

Source: Derrick Petroleum E&P Transactions Database

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EnCana seeks JV partner for development of unconventional gas in British Columbia

Encana Corporation has engaged RBC Capital Markets and Jefferies & Company Inc as its exclusive agents in connection with the proposed sale and/or joint venture of selected interests of the company in Northeast British Columbia. The company’s Greater Sierra area has been divided into two areas of opportunity - an asset sale and a joint venture. A portion of the company’s holdings are also being offered for joint venture.

Greater Sierra: The acquisition area for sale includes all lands, production and related infrastructure. The joint venture area is available for partnering with Encana on its existing production and infrastructure and future development plans.

Acquisition area:
-- Jean Marie: 1,500 net sections of land (95% WI)
-- 73 MMcfe/d (97% gas) - sales October 2010
-- 593 undrilled booked locations
-- Shale Gas: 35 net sections of land (93% WI)
-- 36 Horizontal locations in Muskwa, Otter Park and Evie.

Joint venture area:
-- Jean Marie: 1,281 net sections of land (90% WI)
-- 129 MMcfe/d (96% gas) - sales October 2010
-- 856 undrilled locations (575 booked + 281 unbooked).

Horn River: Offered for joint venture
-- 52 net sections of land (100% WI)
-- 120 Horizontal locations in Muskwa, Otter Park and Evie.

Earlier on 9-Feb-2011, PetroChina and Encana have signed a Co-operation agreement, that PetroChina would acquire a 50% interest in Encana’s Cutbank Ridge business assets in British Columbia and Alberta at a consideration of C$5.4 billion (US$5.451 billion). Under the Co-operation agreement, the two companies would establish a 50/50 Joint Venture (JV) that would ambitiously grow natural gas production from the Cutbank Ridge lands for years ahead.

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