Cepsa looking to acquire upstream assets for $3-$4 billion!! Will it acquire North American shales or ???

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.

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Source: Cepsa 2009 Annual Report

“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.

Source: Derrick Petroleum E&P Transactions Database

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...

Australian company- Strike Energy acquires Eagle Ford acreage!! May be for $20 million?? Strike increases exposure to OIL

Strike Energy is securing a substantial position in the Eagle Ford shale play. In the last two to three years the Eagle Ford shale play in Texas has emerged as one of the most attractive gas and oil shale plays in North America. Strike has taken a 27.5% position in the Eagle Ford shale play through a joint venture with four Texas-based oil and gas exploration and production companies. This Eagle Ford shale play is located northwest of Strike’s existing production and exploration activities focussed on the gas and condensate rich Wilcox trend.

Leasing activities by the operating partner in the newly formed joint venture have been progressing for some time. The total acreage under lease currently stands at approximately 8,500 acres, with Strike’s net position about 2,300 acres. The leasing is focussed within the interpreted oil fairway where drilling by other operators has resulted in published projected recoveries in the range of 450,000 to 1,000,000 barrels of oil equivalent per well based on 160 acre spacing. Similar recoveries, if extended onto leases secured by the Eagle Ford Joint Venture to date, provide a target potential of 7 to 14 million barrels oil equivalent from Strike’s current net acre position.

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Significant Oil Window Transactions in 2010

Source: Derrick Petroleum E&P Transactions Database

How much Strike would have shelled out of its pocket for this package??

• The acreage is situated primarily within the oil window of the Eagle Ford.

• Strike’s net acreage position of approximately 2,300 acres, which based upon reported Eagle Ford shale recoveries, has a target potential of 7 to 14 million barrels of oil equivalent.

The 2010 Eagle Ford oil window transactions have set an average acreage metric of ~8,000/acre. Based on this acreage metric of $8,000/acre in oil window, this transaction could be valued at $18 million. In addition, the average resource potential of 10 mmboe associated with this transaction can be valued at $2/boe, which leaves the total value for the resources at $20 million.

Either ways, the value of the acreage been acquired by Strike is around $20 million!!

Generic Comparison - Reserves/Production

2010 information Coming Soon.....

Conocophillips - 1st Quarter 2011 Conference Call

$1.82 adjusted EPS - 1.7 MMBOED production - 89% refining utilization - $4 billion cash from operations excluding working captial
http://docsearch.derrickpetroleum.com/files/12146/Conocophillips%20-%201st%20Quarter%202011%20Conference%20Call.pdf

Range Resources 2011 April Company Presentation

25% increase in proved developed producing (PDP) reserves - Seven Years of Double-Digit Production Growth - Since 2007, production has increased 54%, while well count has decreased 43%
http://docsearch.derrickpetroleum.com/files/12141/Range%20Resources%202011%20April%20Company%20Presentation.pdf

Helix - First Quarter 2011 Presentation

First quarter average production rate of 160 Mmcfe/d (63% oil) - Q2 production through April 22 averaged approximately 140 Mmcfe/d (~67% oil) - Phoenix production averaged 10.3 MBoe/d for the same period  - Little Burn on track for first production in July (est. 4,500 bpd net)

http://docsearch.derrickpetroleum.com/files/12128/Helix%20-%20First%20Quarter%202011%20Presentation.pdf

KKR acquires Carrizo’s Barnett assets for $104 million. Production is valued at $10,000/mcfe while peers value at $12,500/mcfe- How?

Carrizo Oil & Gas agreed to sell substantially all of its Barnett Shale Tier 1 properties to KKR Natural Resources, the partnership formed between an affiliate of Kohlberg Kravis Roberts & Co LP (KKR) and Premier Natural Resources, for $104 million. The properties that Carrizo are selling are largely in Parker County and represent only a small fraction of the company's Barnett Shale production, which equals about 100 million cubic feet of natural gas per day, said Richard Hunter, Carrizo's director of investor relations. The properties do not include Carrizo's highly productive, 22-well padsite at the University of Texas at Arlington, Hunter said.
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Carrizo President and CEO S. P. "Chip" Johnson, IV commented on the sale, "Our plan to focus our Barnett Shale development drilling on our Core properties in Tarrant County and our success in the initial development of our liquids-rich Eagle Ford Shale and Niobrara resource plays made our Tier 1 Barnett property a candidate for divestiture.

"With their significant proved developed producing reserve component in a reservoir we know well through our current operations in the region, the assets are a great fit for our KKR Natural Resources platform. We are pleased to add these assets to our oil and gas portfolio and remain excited about the opportunity to grow the KNR platform through the acquisition of additional oil and gas properties in North America," said Jonathan Smidt, a Member at KKR and a senior member of KKR's Energy and Infrastructure business.

KKR has been active acquiring conventional and unconventional assets in 2010. The following snapshot shows the deals that KKR clinched in 2010.

Source: Derrick Petroleum E&P Transactions Database

Acquisition metrics including probable reserves

The approximately 13,000 acres being sold include 75 gross (58.5 net) wells currently producing at an approximate gross rate of 15.7 MMcfe per day (8.3 MMcfed net). Estimated proved reserves associated with the divested properties amount to 122.4 Bcfe, 55% of which are proved undeveloped, as determined by Carrizo's third party engineers at year-end 2010.

Source: Carrizo - April IPAA 2011 OGIS Presentation

The probable reserves associated with this acquisition are approximately 100 Bcfe. The resource potential for the acquisition based on 58.5 net locations and 1.8 Bcf/well is estimated to be approximately $105 Bcf.

The probable reserves can be valued at $17 million based on $1/boe. The rest of the deal value could be assigned for proved reserves which gives the production metrics to be ~$62,000/flowing barrel (~$10,000/flowing mcfe) whereas peers value the reserves or production at $75,000/flowing barrel (~$12,500/flowing mcfe).