Nearly $1 Billion Worth of Bakken Shale Acreage For Sale in 2011

The Bakken shale is an oil rich shale, present mostly in the Williston Basin, and covers parts of North Dakota, South Dakota, Montana, Saskatchewan and Alberta. Production at the end of 2010 was estimated by Bentek Energy to be 458,000 BOE/d. Some operators (Eg., Continental Resources) estimate that output potential could be a huge 1.2 MMBOE/d by the end of 2016. Continental Resources also estimates that there is ~ 24 billion barrels of recoverable oil, which is a huge jump from USGS estimates of up to 4.38 billion barrels a couple of years ago, and a meagre 151 million barrels in 1995. Therefore, this shale is likely to be a major contributor to US oil production in the near future. The following table gives a list of the top 10 Bakken Shale acreage holders.

Opportunities in the Bakken Shale are presented in the following chart using data captured in the Derrick 'Deals in Play' Database.

Table 1: Bakken Play opportunites sorted by net undeveloped acres. Also shown is the deal value range as estimated by Derrick analysts. Hover over bars for additional information. Click on the bars to get details on individual deals. Source: Derrick ‘Deals in Play’ database.

The following table shows recent transactions involving the Bakken Shale for insight into its recent $/Acre.

Table 2: X axis shows Buyer-Seller. Y axis is deal value. $/acre is given above the bar's in the chart. Data is sorted by quarter. Only recent deals involving primarily acreage transactions are shown. Hover over bars for additional information. Click on the bars to get details on individual deals. *Multiple Sellers = Arkoma Bakken LLC; Long Properties Trust; Reynolds Drilling Co Inc. Source: Derrick Deals Database.  

   Analyst Comments
      a. Most of the opportunities involving the Bakken shale are in the US, with just 2 in Canada.
b. Mid and small cap, and private companies are looking to sell, possibly due to the higher prevailing oil prices at the moment.
c. The majors are holding on to their assets, possibly signaling that they believe they are high value and are worth keeping.
d.The oil rich Bakken Shale could present a low risk - high reward opportunity as oil prices are high.
e. With increasing technology, the potential to recover far more oil than was previously possible makes this acreage a potential gold mine; to acquire or hold onto.

For more presentations on "Bakken", use our oil and gas document library:

Powered by Derrick Petroleum Services

Shell divests 20% stake in BM-S-8 for $350 million. Looks to farm out or divest additional blocks in Brazil

Barra Energia agreed to acquire 10% stake in the largest block in pre-salt area, Block BMS-8, from Shell, which currently owns a 20% participation in the area. The chief executive of Barr Energia, Joao Carlos de Luca, said that the company acquired the stake for $175 million. The other 10% was acquired by Queiroz Galvao Exploration and Production, which paid the same amount for joining the consortium that operates the block.

The block is located offshore in the Santos Basin in water depth of approximately 2,100 m. Petrobras is the operator of the block with a 66% working interest while Galp holds a 14% working interest. BM-S-8 includes two discoveries Bem-te-vi and Abare W and four prospects. The expected gross capital expenditure in 2011 is US$250 million and in 2012 is US$200 million.

Trend of M&A activity in Brazil

South America is emerging as a growing player in the oil and gas industry. With discoveries of new reserves across the continent, Brazil, Venezuela, Colombia, Chile, Peru and Argentina all look set to prosper. South America accounted for 17% of the total deal value in 2010, whereas it was not exceeding 5% in the last four years. In terms of major discoveries, Brazil has become a leading country in world rankings with oil reserves estimated to be around 26.9 billion barrels. This figure includes the Brazilian pre-salt discoveries that are revolutionising the oil & gas market in South America currently, with a number of major offshore investments taking place.

The following graph shows the trend of M&A activity in Brazil since 2007.

Powered by Tableau

Shell- Looks to restructure non-core Brazilian assets

Shell in the past one year was acquiring new assets across United States, Australia, China, Africa and none in Brazil or South America. Also, according to Shell's June 2011 presentation, the company’s investment plan in Brazil is only towards BC-10 which includes five fields Ostra, Abalone, Argonauta B-West, Argonauta O-North and Nautilus. It is observed that Shell is looking to restructure the other Brazilian assets.

Earlier in August 2010, Shell initiated a process to sell its stake in four offshore oil blocks in Brazil as part of their portfolio review. The blocks put up for sale included: BS-4, BM-S-8, BM-S-45 and BM-ES-28. In addition to Shell, Chevron, Petrobras, Petrogal and Vale also own stakes in these blocks. The sale remains pending with the remaining three blocks.

This sale represents an exciting opportunity to the interested companies to enter Brazil’s offshore oil frontier, where no new exploration and production concessions have been put up for bid by the government since the presalt oil discoveries were made in 2007.


The following map shows the acquisitions made by Shell in the past one year

Powered by Tableau

Note: The data used for obtaining the above graph and the map is sourced from Derrick Petroleum Database.

Source Documents:

Bm s-8 overview

View more presentations from derrick_anitha

List of E&P Companies for Sale/ Looking at Strategic Alternatives in 2011

“Strategic alternatives may include, but are not limited to, a sale of the corporation, a merger or other business combination, a farmin or farmout, an acquisition or disposition of assets, among other alternatives"

In 2011, 26 companies were looking for strategic alternatives and so far only 4 of these deals have been completed! From the Derrick ‘Deals in Play’ database, 21 companies are looking to sell or are considering strategic alternatives. Opportunities involving Canadian companies represent ~ $1 billion with more than 33 MMBOE of proved reserves and ~ 17 MBOE/d of production

The tables below show these companies along with their reserves and production profiles. Subscribers to Derrick’s database can get detailed information on each deal by clicking the bars (login required).

Chart 1: Canadian companies that are up for sale or considering strategic alternatives. Companies have been sorted by deal value. Hover over colored squares for more information. Subscribers can click on the squares for a detailed deal breakdown (login required). Source, Derrick E&P Transactions Database.

Chart 2: Global companies that are up for sale or considering strategic alternatives. companies have been sorted by deal value. Hover over colored squares for more information. Subscribers can click on the squares for a detailed deal breakdown (login required). * Maurel&Prom's principal assets are in Gabon. However they also have assets in other countries. But for this discussion Gabon is given as principal country. Source, Derrick E&P Transactions Database.

Analyst comments:
1. Most of these companies are private.
2. By far, the biggest deal here is Exco Resources which is looking at strategic alternatives, not excluding the possibility of putting up the company for sale. Derrick's analysts place the deal value in the range of $1 - $10 billion.
3. Most companies that have been put up for sale and/ or considering strategic alternatives  so far are Canadian (62%). Every other country is only represented once (either for sale or considering other strategic alternatives). 
4. In 1H 2010, 18 companies were put up for sale and most them have been sold. In the corresponding time in 2011 (1H 2011), 26 companies have been put up for sale. This is an increase in corporate sales by 44%. Apart from other factors, this also likely reflects higher oil prices. 

DNO adds RAK’s MENA assets to its portfolio. Looks to expand in Norway and Tunisia

DNO International ASA and UAE-based RAK Petroleum Public Company Limited have agreed to merge RAK Petroleum’s Middle East and North Africa operating subsidiaries into a subsidiary of DNO in exchange for DNO shares to be issued to RAK Petroleum. The consideration shares will be issued at a minimum share price of NOK 8.25 per share and a maximum share price of NOK 10.00 against a value of the RAK Petroleum MENA assets between US$250 and 300 million.

DNO- Going in for additional listing

DNO’s board of directors has confirmed the intention to list the enlarged company on the London Stock Exchange in addition to the Oslo listing. A listing in London is expected to contribute to extended coverage of the company’s shares, attract interest from a broader range of MENA focused investors and provide a solid platform for follow on merger and acquisition activity. It is expected that, on transaction closing, RAK Petroleum will hold a total ownership interest in DNO of approximately 40%. RAK Petroleum currently holds a 30% share in DNO.

Overview of RAK Petroleum 

RAK Petroleum is the operator of seven blocks in the Sultanate of Oman (Blocks 8, 30, 31, 47) and the United Arab Emirates (RAK B, RAK Saleh and RAK onshore) and also owns a non-operating 30% interest in the Hammamet offshore license in the Republic of Tunisia. The reserves and production of RAK's MENA assets, as of Q1-2011were:
-- WI Reserves: 33.5 MMBOE (40-45% oil and liquids)
-- WI production: 7,510 BOE/d (60-65% oil and liquids)
-- Contingent Resources: 32 MMBOE (40% oil and liquids).

The combined entity will have a combined production of 47,455 BOE/d and reserves of about 326.5 MMBOE.

DNO looking for new options

This acquisition is in line with DNO's 2011 strategy of acquiring assets in MENA area and form atleast one new core area of operations.

The Chairman of DNO, Mr Mossavar-Rahmani, said “DNO plans to refocus itself as a Middle East exploration and production company, shutting down its business in Mozambique and unloading assets in Equatorial Guinea”. It is now evaluating expansions into its home base of Norway, and in Tunisia, where RAK Petroleum holds a 30% interest in an offshore licence.

Mr Mossavar also said, “A number of oil companies had called him "to consider combining" as political turmoil sweeps the Middle East and pushes down share prices. There may be an opportunity for a company like DNO in its enlarged form to take the lead in aggregating other MENA focused companies whose share prices have been hit by the perception of increased risk”.

Source Documents:

DNO-RAK Petroleum merger ppt

View more documents from derrick_anitha

DNO March 2011 investor ppt

View more documents from derrick_anitha

$2 - $3 Billion Worth of Eagle Ford Shale Assets Up For Sale as of July 2011

Derrick Petroleum's "Deals in Play' database has recorded $2 - $3 billion worth of Eagle Ford Shale assets for sale as on July 2011. The Eagle Ford Shale is becoming prized property for oil and gas companies in 2011. The shale play area starts at the Texas-Mexico border in Webb and Maverick counties and extends 400 miles toward East Texas. The play is 50 miles wide, an average of 250 feet thick at a depth between 4000 and 12,000 feet, and has high carbonate content making it easier to fracture than other shales. In addition, it is also more liquid rich than other shales. The $/acre of the shale has been increasing rapidly over the last few years due to increasing successes of companies exploring this play. The high present $/acre relative to previous years is also bringing capital to firms who want to sell non-core Eagle Ford assets to focus on their core assets.

The following table from Derrick Petroleum’s ‘Deals in Play’ database shows opportunities available with respect to Eagle Ford assets as on 4 July 2011.

Powered by Tableau

Table 1: Is an interactive chart/ table showing data recorded from Derrick Petroleum's 'Deals in Play' database. Only deals above $10 million are shown. Net undeveloped acres have been sorted from highest (up) to lowest (down). Subscribers can click on the relevant bar to view detailed information from the database. 

The following table shows recent transactions involving the Eagle Ford Shale for insight into its recent $/Acre.

Powered by Tableau

Table 2: X axis shows Buyer-Seller. Y axis is deal value. $/acre is given above the bar's in the chart. Data is sorted by month and quarter. Only deals above $100 million in Q1 and Q2 2011 have been shown. Click on the bars for more detail on individual deals.

Analyst Comments
1. Total deal value involving Eagle Ford shales has been among the highest relative to the other US shales.
2. Number of deals involving Eagle Ford shale have been the highest so far in 2011 as compared to other shales (~25 deals), as recorded in Derrick's Deals database.
3. Eagle Ford shale looks set to dominate the deals market for unconventionals in 2011. 

Mitsui and SM Energy form Eagle Ford JV. Adjusted $/acre settles at ~11,000/acre

SM Energy Co (SME) entered into an agreement with Mitsui concerning a 12.5% working interest in its non-operated Eagle Ford shale position. The company will be carried on 90% of its drilling and completion costs (excluding costs associated with construction of mid-stream gathering assets) in this acreage until $680 million has been expended for the benefit of SM Energy.

Asset highlights:

• The project comprises 310,000 gross acres in which Anadarko holds 73% operated WI (~225,000 net acres) and 27% WI is held by SME (~85,000 net acres). Post transaction, SME will have 14.5% WI (~46,000 net acres) in the non-operated portion of its Eagle Ford shale position
• The acquired acreage includes Eagle Ford (~39,000 acres) and Pearshall acreage (~8,000 acres) and spans across Dimmit, Maverick and Webb counties;
• Reported average daily production from SME's total non-operated Eagle Ford shale position at the end of the first quarter was 43.5 MMcfe/d / 23.36 MMcfe/d for Mitsui's 12.5% interest (42% oil, 36% natural gas, and 22% NGLs)
• Proved reserves associated with SME’s total non-operated Eagle Ford shale position as of December 31, 2010 were 52 Bcfe (27.93 Bcfe for Mitsui's 12.5% interest). 48% of these reserves are proved developed.

$/Acre- Valuation Analysis

The value of the reserves is estimated to be $233 million (at $60,000/Daily BOE). In addition, the value of Pearsall acreage is estimated at $16 million (at $2,000/Acre). The remaining deal value of $430 million is ascribed to Eagle Ford acreage ($11,036/Acre). The metrics are calculated without discounting the future carry costs.

To see what other operators are reporting on "Eagle Ford", use our oil and gas document library:

Powered by Derrick Petroleum Oil & Gas Search Tool

Vigorous growth in Eagle Ford transaction activity:

Activity in the Eagle Ford play has been high in the recent months. In 2010 in the Eagle Ford, 1,018 drilling permits were issued through November, up from 94 the year before, and output of crude oil, condensate and other liquids nearly quadrupled to 3.9 million barrels, according to Texas Railroad Commission data.

In 2010, Eagle Ford Play had generated close to $2.9 billion in revenue and provided nearly $47.6 million in local government revenue. Over the next 10 years, it is expected that more than 5,000 new wells will be drilled and generate more than $21.5 billion in total annual economic output.

Some of the world's biggest oil companies - including Shell, BP, Statoil, Marathon, KNOC and CNOOC - have recently entered the Eagle Ford and taken the acreage metrics to a new bench mark level. Four years back, the acreage cost in the Eagle Ford play was $100-$200/acre which in 2010 was reaching an average price of $10,000/acre. The recent deals by Marathon and KNOC have moved it to another higher level of $20,000-$25,000/acre. The following interactive graph shows the Eagle Ford deals done by these majors.

Powered by Tableau

A good progress in pipeline infrastructure in Eagle Ford play
The Eagle Ford has its high content of valuable crude and natural gas liquids. But along with the optimism, some operators worry that growth could be held back by equipment constraints and a potential lag in building new pipelines, processing plants and other infrastructure. Though the pipeline infrastructure in Texas is very mature, especially for oil and natural gas, the system needs significant investments to process natural gas liquids.

In 2010, investments in midstream development in the Eagle Ford play accounted for an estimated $404.3 million. With more than 130 miles of new pipeline activity, including the continued development of the Chisholm, Dilley, Dos Hermanas, Leona, and Fox Creek pipelines, all indications are that over the next three to five years midstream activities will continue to play a significant role in the development and economic prosperity of the region. The following table shows the midstream deals regarding Eagle Ford play.

Source: Derrick Petroleum Midstream Database

Source Documents:

SM Energy Eagleford Overview

View more presentations from derrick_anitha

Anadarko operated eagle ford wells info

View more presentations from derrick_anitha

Chevron plans on investing $26 billion in 2011, with 87 percent of that amount expected to fund upstream activities

Chevron Corp, the second-largest U.S. oil company plans to take a measured approach to shale gas development despite a flurry of deals in the past year and the industry's huge ambitions for the emerging resource.

View Chevron’s major projects startups:

"You're not going to see Chevron -- I can't speak for others -- just shift the whole business into shale, and let other things go," Bobby Ryan, Chevron's vice president for global exploration, said at the Reuters Global Energy and Climate Summit in Houston on Wednesday. Ryan reiterated that Chevron's focus areas remained the Gulf of Mexico, West Africa and Western Australia, which were all part of a "balanced portfolio" approach to exploration.

Like Exxon and others, Chevron is exploring shale acreage in Eastern Europe, and will drill its first well in Poland this year. In the U.S. Gulf, Chevron recently got clearance for a few wells already under development, and its program includes 10 development and exploration plans and 15 drilling permit applications in various stages of approval or preparation.

For more presentations on "Chevron", use our oil and gas document library:

Powered by Derrick Petroleum Services

Chevron is set to drill 16 development wells and two exploratory wells at Jalalabad, Moulvibazar and Bibiyana gas fields in Bangladesh for the next one year. According to Petrobangla, Chevron submitted a US$ 350 million capital budget to carry out the plan. "To conduct the drilling operations we need one year as we have to construct concrete drilling pit, mobilize drilling rig and associated equipment, management and treatment of waste and decommissioning of rig and materials", Chevron official said.

Chevron has added 14 million acres to its portfolio, including the acquisition of Atlas Energy in the northeast United States, and deepwater opportunities in Liberia and China. Chevron’s queue of major capital projects, including Gorgon and Wheatstone in Australia. Over the next three years, 25 projects with a Chevron share of more than $250 million each are scheduled to start production, nine of which have a net Chevron share that exceeds $1 billion. Chevron has four major capital projects planned to start up in 2011.

Additionally, over the next three years, the company expects to make final investment decisions on 13 more projects, each with a Chevron share in excess of $1 billion. Construction on the Gorgon project is nearly 25 percent complete, with startup expected in 2014, and Chevron remains on schedule to reach a final investment decision this year on the Wheatstone project, with startup planned for 2016.

Chevron CEO, John Watson told, “Disruption fears are pushing up oil prices and chevron has $26 billion in capital expenditures slated for this year. When it comes to acquisition, it's all about the right opportunity. We are spending almost 90% of our capital dollars on the upstring, exploring and producing oil and gas, where we'll emphasize our growth and we have growth to add over the next five to seven years.”

Check this Video - Chevron CEO John Watson discusses 2011 Capital Expenditure Plan with CNBC: