BG and ENI eyeing for stake in ONGC’s KG – DWN - 98/2; Plans to spend around INR 36,000 crore (US$ 7,898 million) along with its partners on developing the block

In 2010, India’s state run Oil & Natural Gas Corporation (ONGC) has made significant finds in the Krishna Godavari (KG) basin, which is right next to the KG-D6 block of RIL in the K-G basin, off the east coast. ONGC is aiming to develop the KG basin assets through four different projects. The G-1 and GS-15 integrated development followed by the S-1 and Vasistha deep-water development, exploitation of discoveries in the KG-DWN-98/2 block and Project Manik, involving the oil finds.

The blocks are divided into two discovery areas - the Northern Discovery Area (NDA) consisting of the Padmawati, Kanakadurga, Annapurna, N-1, D/KT, U, A, W and E gas finds in water depths ranging from 594m to 1,283m and the Southern Discovery Area (SDA) consisting of the UD-1 discovery falls in ultra-deepwater with a depth of 2,841m.

KG-DWN-98/2, which has 10 gas discoveries, was awarded under the New Exploration Licensing Policy, which allows ONGC to farm out a participating interest to foreign firms. In 2010, ONGC had asked foreign firms to submit proposals to buy a stake in the block. Cairn India is already a 10 per cent partner in the block.

“Giving away more will result in losing control and, in turn, our decision-making ability. We want an international partner who can get us the technology for deep-sea exploration. Both BG and ENI have it. These players are experts in deep water and know exactly how to go about the routine of the block,” said, one of the board members, ONGC. He added the discoveries in KG-DWN-98/2 and three in adjacent blocks together hold 6.37 trillion cubic feet (tcf) of in-place reserves. RIL’s KG block holds in place reserves of 11.3 tcf.

In February 2011, BP agreed to buy a 30-percent stake in 23 oil and gas blocks owned by Reliance Industries for $7.2 billion, as part of a long-term deal that involves a total investment of $20 billion. Nearly four months after RIL signed a deal with BP for getting BP’s technology for deep-sea exploration.

To know more about Reliance-BP's $7.2 billion deal, CLICK HERE 

Block 1G was given to ONGC on nomination basis. It cannot sell stake to any firm and can at best involve a foreign firm as a service contractor. ONGC has partnership with BG India in three blocks in KG offshore, two operated by ONGC and one operated by BG. Petrobras and ENI have also partnership in one block each.

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ONGC has entered into a period of exploration for appraisal after completing the exploration MWP commitments in block KG-DWN-98/2. The company plans to start producing 25-30 mscmpd of gas from the block in 2016-17.

Source Documents:

ONGC to sell 30 percent stake in KG block

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Laredo Petroleum grabs Permian focused Broad Oak Energy for $1 billion

Laredo Petroleum LLC has agreed to acquire Broad Oak Energy Inc, whereby Broad Oak will become a wholly-owned subsidiary of Laredo in exchange for aggregate consideration of approximately $1 billion. This is the biggest deal in the Permian Basin so far in 2011. This merger will make the combined company a leading player in the Permian Wolfberry oil play alongside Laredo's well established presence in the liquids-rich Granite Wash play.
Is the combined company planning for an IPO?
Both Laredo and Broad Oak are privately held companies formed in partnership with their management teams by affiliates of Warburg Pincus LLC. Through this merger, is there an IPO coming up from Laredo's side??

Broad Oak Energy Inc is a privately held oil and gas exploration and production company with a particular focus on the Permian Basin of West Texas. Broad Oak has assembled approximately 65,000 acres in the Wolfberry play of the Midland Basin. Assets include both infill and extension drilling prospects targeting a 3000 ft. proven producing interval that comprise Upper and Lower Spraberry, Dean and Wolfcamp reservoirs. Broad Oak has drilled over 200 wells and plans to drill 120 wells during the second half of 2010. The following map shows the operated producing assets of Broad Oak and Laredo Petroleum.

The following is the gross production profile of  Broad Oak operated assets.

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Summary of Permian Basin deal activity in the last 5 years

Deals by key operators in the Permian Basin

Note: The graph is interactive

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Here are the significant Permian Basin deals of 2010 where the $/flowing barrel equivalent was around $100,000.

-- Apache acquires BP assets in Permian Basin for $3.1B

-- Concho Resources and Apache acquire assets of Marbob Energy for $1.65B

-- SandRidge Energy acquires Arena Resources for $1.3B

-- Oxy acquires Yates Drilling Co for $1.1B


Comparison of the deal activity by US sub-regions 
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The Permian Basin received the highest production multiples, $80,000-$110,000 per flowing barrel equivalent. The metrics reflect the premium buyers are willing to pay for oil reserves; future drilling opportunities, behind pipe potential and reserve quality.

The first 5-month results of 2011 show the total value of Permian Basin deals to be $2.3 billion with an average production metrics of ~90,000/daily BOE. There are a few Permian Basin packages put up for sale by Element Petroleum (brokered by BMO Capital), Piedra Resources (brokered by RBC Capital) and Parallel Petroleum (brokered by Scotia Waterous). These packages, being mandated by major advisors, are to make huge money to the Permian Basin for this year.

Source Documents

Permian basin overview

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USGS Assessment on Permian Basin Reservess

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Broad oak & laredo offset leases

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Apache announces 5 new discoveries in Egypt Concessions! Multi Play potential opens up!

Apache today announced five new discoveries in its Faghur Basin play in the far southwest of Egypt's Western Desert Oil and Gas province (See Map).

The Faghur discoveries include West Kalabsha-I-4, which logged 79 feet of net pay and test flowed 7150 bpd of oil and 11.4 MMcfd of gas; Faghur North-1X which logged 25 feet of net pay and test flowed 1444 bpd of oil and 3.9 MMcfd gas; Faghur South-1X which logged 38 feet of net pay and tested 2768 bpd of oil and 4 MMcfd of gas; Huni-1X which logged 27 feet of net pay and tested 970 bpd of oil and the Neith North-1X which logged 77 feet of net pay.

"The Faghur Basin continues to be a successful focus area for Apache, with AEB, Safa, and now Paleozoic reservoirs that have proven to be prolific oil and gas producers. These recent discoveries support the multi-pay potential of this oil-prone area of the Western Desert," said Tom Voytovich, vice president of Apache's Egypt Region.

Apache also said that the AG-96 development well in the Abu Gharadig Concession acquired from BP in late 2010 tested 3,347 barrels of oil and 1 million cubic feet (MMcf) of natural gas per day from the Lower Bahariya formation.

Apache paid $650 million to BP in Nov 2010 to acquire four development leases and one exploration concession across 394,300 acres. The assets have estimated proved reserves of 20 million barrels of oil equivalent (59 percent liquids), and first-half 2010 net production of 6,016 barrels of oil and 11 million cubic feet of natural gas per day.  The BP assets also included strategically positioned infrastructure- a natural gas processing plant, a liquefied petroleum gas plant and oil and gas export lines – that will enable Apache to increase production from its existing fields in the Western Desert.

Thus far in 2011, Apache has drilled eight new discoveries in 10 attempts in the Faghur Basin, and drilling is under way on three additional wells —Mandulis-1X, Neilos-1X and Faghur North-2X. Eight additional exploration wells are planned for the area this year. Apache had earlier stated in its 2010 annual report that it plans to drill 65 exploration wells in Egypt in 2011, 50% more than in 2010 (See Table 1 for Apache's exploration wells in 2011). 

Exploratory wells being drilled by Apache as operator globally in 2011. Source: Derrick Petroleum Planned Wells Exploration Database. The table does not include exploration wells where Apache is partner but non-operator. 

Apache had earlier in 2011 redeployed all non-essential expatriate personnel and all expatriate dependents from Egypt. However, key expatriate personnel remained in-country to work alongside Egyptian national personnel to manage ongoing production operations. Apache's production, located in remote locations in the Western Desert continued uninterrupted. 

Earlier in 2011, the Siwa-D-1X well drilled in the Siwa Concession pushed Jurassic and Cretaceous plays farther south and westward and will lead to follow-up exploration prospects. Apache expects to commence production from the well upon approval of a development plan later in 2011.

Apache also said that the the Tayim West-1X discovery in the West Kalabsha Concession represented the first Paleozoic success found in a reservoir separate from the younger proven Jurassic and Cretaceous sands and opens up the area to further deep tests in upcoming wells. The discovery is currently on production.

Apache's current gross operated production in Egypt totals approx. 215,000 barrels of oil and 900 MMcf of gas per day, including 40,000 barrels of oil per day from the Faghur Basin.

Click here for Apache's press release on the 5 discoveries.

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Vero Energy reported Operational Update for First quarter 2011; Increased oil production by 120% to 1,051 bpd over the same quarter last year; Disclosed 2011 average production guidance of 10,000 – 10,500 boepd (27-28% liquids)

Vero Energy Inc. (Vero) is a Canadian energy company involved in the exploration, development and production of oil, natural gas and liquids in Alberta.  In third quarter 2010, the company has entered into farm-in agreements to earn up to 19 sections of land in Edson core, Alberta. Vero Energy increased the liquids proportion of total production to 25% in the first quarter of 2011 from 20% in the first quarter of 2010. The company also increased oil production by 120% to 1,051 bpd.

Operational Highlights:

During the quarter, Vero participated in the drilling of 11 (9.2 net) horizontal wells and one vertical deep basin gas well. Horizontal drilling activities achieved success on 10 of 11 wells resulting in five Cardium oil wells, four Notikewin wells, and one Viking well. The drilling program enabled the Company to add significant production since Q4 2010, adding approximately 2,700 boepd and yielding current production field estimates of approximately 11,000 boepd (27-28% liquids). 

"In a challenging operating environment, our team has efficiently and effectively executed an active program that added a significant amount of production in a short period of time on our asset base. Many of the production additions have come from exploratory wells and step out locations.  The results have exceeded our expectations and will be followed up throughout the year and into the future“, said Doug Bartole, President and CEO, Vero Energy.

Plans for the Rest of the Year:

For the remainder of the year Vero plans to drill approximately 25-28 gross (17-19 net) horizontal wells with a focus on Cardium light oil which will comprise approximately 20-23 gross (13-15 net) of the horizontal wells. Gas drilling will continue to be high-graded to target high impact, liquids rich wells that have strong economics.  The Company's gas production is liquids rich and averages ~30 bbls/mmcf.

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Vero reiterates its previously released 2011 average production guidance of between 10,000 - 10,500 boed (27-28% liquids). Upon successful implementation of the Company's 2011 program, the production mix is expected to have changed from approximately 22% oil and liquids in 2010 to an estimated 31 - 35% by year end 2011.


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EUROPE O&G Major's Presentations - 2011

Statoil:
Morgan Stanley Gas Conference 2011

Field development on the Norwegian continental shelf
Market Outlook for Natural Gas

ExxonMobil:
Business Model & Fundamental Strategies 2011
Goldman Sachs Global Energy Conference 2011

Shell:

CREDIT SUISSE EUROPEAN OIL & GAS CONFERENCE
CreditSuisse Brazil Oil Trip 2011

ENI:
2011-2014 Strategy

ConocoPhillips:
Investor Update June 2011
UBS Energy Conference May 2011

2011 Annual Meeting of Stockholders
Investor Update May 2011

BP:
China's Energy Future
BP Energy Outlook 2030

Liberia on course to prove oil riches in 2011. Companies that stand to gain..

Liberia  is a country on the west coast of Africa, bordered by Sierra Leone on the West,Guinea on the north, Côte d'Ivoire on the east, and the Atlantic Ocean on the south. The potential for significant oil and gas discoveries in Liberia is huge, given some recent exploratory success in the region, especially Anadarko’s Mercury and Venus discoveries in neighbouring Sierra Leone’s waters. No commercial deposits have so far been found in Liberia and therefore there is no production or field development. However, this might soon change, as companies are looking to drill different plays than the old conventional structural traps. Here are the companies active in Liberia and looking to drill in 2011 and 2012. 


Material has been sourced from Derrick Petroleum's exhaustive data on exploration and deals. The Derrick Petroleum Planned Exploration Wells Database is an extremely useful research tool to keep track of exploratory drilling of companies by region, year, etc. It will also be useful to E&P companies for identifying farm-in opportunities and to oil field services companies for identifying sales opportunities.

Table showing companies looking to drill in Liberia. Source: Derrick Petroleum Planned Exploration Wells Database.

Anadarko operates blocks LB 15, LB 16 and 17 which cover an area of 3400, 3225, and 3150 sq km respectively. In 2008, Anadarko acquired a 4700-sq kms of 3D-seismic survey on these blocks. The 3D was used to develop deepwater Cretaceous fan prospects. A key target called Montserrado (Cobalt) in Block 15 is planned to be drilled in H2 2011. The prospective resources for the Cobalt prospect is estimated to be about 1.2 bbls. Anadarko holds 57.5% interest along with Tullow Oil (25%) and Repsol YPF (17.5%)

Map showing location of Liberian Blocks along with their operators. Source: Modified from Simba Energy.

Simba Energy has a 100% interest in the onshore NR-001 licence which covers an area of 1,366 square kilometers within the Roberts and Bassa Basins of south coastal Liberia. An Application to convert its current Hydrocarbon Reconnaissance Licence NR-001 into a Production Sharing Agreement (PSA) has been submitted to the Liberian government. The company carried out an oil seep survey on its property in 2010 using a team of 25 geology students. Reportedly, oil seeps were found on all their traverses. Evaluation of the oil associated with the seeps indicates it is economically desirable ‘mature oil.’

Chevron operates blocks LB-11, LB-12 & LB-14 which together cover an area of ~9,600 sq km. Two wells are scheduled to be drilled on these blocks in 2011 and 1 in 2012. Cheveron has a 70% interest in the blocks while Oranto Petroleum has 30%.

African Petroleum Corporation Ltd (APCL) has a 100% interest in 2 blocks: LB-8 and LB-9. The company has completed the acquisition and interpretation of about 5,100 sq km of 3D seismic over these blocks. About 40 leads and prospects have been identified s in the Upper Cretaceous section, some of which have been said to be similar Anadarko’s recent discoveries at Mercury and Venus, immediately to the north west. The Company has contracted the ultra deepwater semisubmersible, Maersk Deliverer to drill two exploration wells over the blocks with the first well in June 2011 as part of a two-well programme. 

In all 5 wells are scheduled to be drilled in 2011. The potential is enormous!

For more information of discoveries and exploration plans for the following West African countries, click on the following links. Cote D’ivoire; Ghana discoveries; Ghana Exploration in 2011, Exploration in Mauritania, Benin & Togo; Angola; Sierra Leone; Sengal; List of West African discoveries in 2010 – 2011.

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1H-2011 review of global oil and gas transactions.

How is the deal activity coming up in 2011? Let's take a look based on one category- Conventional vs Unconventional.

The deal activity for the first five months of 2011 was busy with 633 deals captured. In total, there were 202 deals reported with deal value greater than $10 million. The analysis is based on these 202 deals that hit the total deal value at $65.3 billion. The share of unconventionals in total deal value is almost same as 2010 which reduced to 31% from 49% in 2009. 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%).

Source: Derrick Petroleum 2010 M&A Review Report

Taking North America as the special case, the split of conventional and unconventional deals is 35% and 65%, respectively, against the 2010 split of 46% and 54%. The activity in North American unconventional sector for the five months was robust with many Asian investors including KNOC, CNOOC and Marubeni, venturing into the shales. It is anticipated that this increasing interest will strengthen the transaction activity levels for the rest of 2011. 
Among all the shales, Eagle Ford shale was highly noted for its metrics skyrocketing to a new level. KNOC-Andarko JV had left the mterics at ~$14,000/acre and the recent Marathon's $3.5 billion acquisition at ~$21,000/acre. The metrics quoted are different from the reported industry metrics of $19,000/acre and $25,000/acre. Click the deals to know how.

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Unconventional interest outside North America

Apart from North American shales, the oil and gas players’ have started venturing into other regions as well. Notably, European countries like Poland and Bulgaria have induced certain majors like Total, Chevron, Mitsui and Nexen to explore their shale reservoirs. Take a look at the snapshot of the following European shale deals in 2011.

The number of columns of the reported deals are limited to fit in this table. To view the complete analysis on these deals click the table.

Here are the few blockbusters of 2011. Start interacting.

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