Rosneft has reached agreements to form separate JV alliances with three Global Competitor companies: ExxonMobil, ENI, and Statoil.

What Rosneft brings to these deals is simple, acreage. ExxonMobil gains access to large new wildcat exploration acreage in the Kara Sea and the Black Sea. ENI picks up interests in the Black Sea and the Barents Sea. Statoil enters blocks in the Russian sector of the Barents Sea, the Sea of Okhotsk, and will jointly study two onshore blocks involving an undeveloped West Siberian field and shale oil acreage.

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This entry was posted on May 14, 2012 at 8:38 AM and has received 70 views. Print this entry.

A US$2.5 billion joint venture alliance between Devon Energy and Sinopec has been announced. Sinopec will acquire a 33.33% interest in Devon's acreage across five new venture plays. The alliance includes an estimated 1.2 million acres in the Tuscaloosa Marine Shale, Niobrara, Oklahoma Mississippian play, Ohio Utica shale, and the Michigan Basin. The Niobrara, Mississippian and Utica shale acreage is liquids weighted. The Michigan and Tuscaloosa acreage includes both oil and gas. The distribution of total acreage contributed to the alliance by play is shown below.

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This entry was posted on January 5, 2012 at 11:43 AM and has received 306 views. Print this entry.

A joint venture between Chesapeake, EnerVest Ltd., and Total has been announced in the liquids-weighted Utica Shale play in Ohio. The joint venture combines 542,000 net acres contributed by Chesapeake with 77,000 net acres contributed by EnerVest Ltd.

Total will acquire a 25% interest in the combined JV acreage through a US$700 million upfront cash payment. Total has also agreed to carry 60% of future capital costs by Chesapeake and EnerVest over a period expected to last not more than 7 years. Reflecting aggressive drilling plans, Total announced that its share of net output will reach 100 Mb/d by 2020.

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This entry was posted on January 3, 2012 at 12:07 PM and has received 217 views. Print this entry.

Nexen Petroleum announced on 30 November 2011 that it has farmed out a 20% interest in three deepwater exploration prospects to CNOOC with possibly three others to follow with working interests ranging from 10% to 25%. Two of the prospects, Kakuna and Angel Fire, are located west and northwest of the Knotty Head discovery on Green Canyon Blocks 504 and 327, respectively. The third prospect is Cypress. Earlier this year Statoil farmed into a 27.5% interest in Kakuna.

The transaction reflects continuing pressures on independent producers to seek out partners in North America as well as a spreading NOC strategic effort to broaden their access to future growth asset opportunities.

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This entry was posted on December 1, 2011 at 9:11 AM and has received 167 views. Print this entry.

In a US$3.5 billion deal, Sinopec will acquire a 30% share in Galp Energia's Brazilian upstream assets. The transaction will give Sinopec a 3% working interest in the Lula (formerly Tupi) and Iara projects and the Iracema (Cernambi) discoveries in Brazil's pre-salt play. Sinopec will also acquire interests in three other Santos Basin deepwater blocks.

While the potential production from the assets is very large on a gross basis, the contribution to Sinopec's net boe output will be much more limited because of the small working interest the company acquires.

What is significant is that this transaction demonstrates (1) a continuing program within Sinopec of building its global new project asset base (the deal follows up on Sinopec's acquisition in late 2010 of a 40% share in Repsol's Brazilian assets) , (2) a focus on Brazil and deepwater as a future area of growth for the company, and (3) a signal that the Chinese NOCs will continue to move into direct competition with the GC and STIC peer groups for access to new growth assets outside China.

This entry was posted on November 11, 2011 at 12:18 PM and has received 124 views. Print this entry.

Land-rich independents continue to be squeezed between the drag of low gas prices on cash flows and high drilling requirements if they are to achieve production growth targets. The result is an ongoing, if sometimes costly, opportunity for international companies to buy into North American unconventional resource plays as a strategy to achieve future production growth.

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This entry was posted on October 24, 2011 at 11:14 AM and has received 211 views. Print this entry.

Marathon has again farmed down its interest in over 2 million acres across 10 blocks in the Polish shale gas play. Following Nexen's entry into the acreage for a 40% interest in April, Mitsui has now taken a 9% interest. With this latest transaction, Marathon remains the operator but its net acreage in the 10 blocks is now 51%.

A five year evaluation period is anticipated that will include both seismic and drilling. At the time of the Nexen deal it was announced that Marathon plans "one or two wells in the fourth quarter of 2011 and potentially drilling seven to eight wells in 2012."

Mitsui also holds 100,000 net acres in the Marcellus shale gas play in the United States through a JV alliance with Anadarko announced in February 2010.

This entry was posted on June 15, 2011 at 11:10 AM and has received 145 views. Print this entry.

After nearly a year since Chevron and Rosneft announced plans to jointly explore in the Russian sector of the Black Sea, it has been reported that Chevron will exit the venture. Under the original terms of the agreement Chevron would acquire a 33.3% interest in exchange for funding US$1 billion in spending during the exploratory phase and payment of a cash bonus to Rosneft in the event that reserves were discovered.

From the start the venture agreement was conditional on receiving "fiscal relief" from the Russian government. The desired relief was to be in addition to the already agreed exemption from the mineral extraction tax of the first 20 million tonnes of oil produced.

This entry was posted on June 15, 2011 at 11:09 AM and has received 114 views. Print this entry.

Deutsche Bank Securities recently announced the release of a research report on the Oil Majors. The essential conclusions of the report appear to be that the business model for the oil majors is wrong and inconsistent with the realization of full value.

We do not have access to a full copy of the report. However, it has been summarized in a number of places. Our comments will be confined to a consideration of the key points that have been highlighted in these summaries.

The study's key observation seems to be that the financial markets are discounting major oil companies' valuations relative to other sub-sectors in the global energy business such as oil service, independent producers, or refiners. The current differences in the market's relative valuations in the oil and gas industry are taken to imply that the strategic focus of the large international oil companies is therefore wrong.

While this is an important result, it is certainly not something new. Moreover, this is not always true. Relative valuations of major integrated oil companies, independent producers and service companies have always been cyclical -- shifting with the oil and gas price cycles. These relative valuations are not constant over the cycles.

The authors attribute the discounting of major oil company shares to several factors. In broad terms these factors seem to be usefully summarized as (1) market wants, (2) a failure of the "traditional business model of international oil companies", and (3) external forces. We believe that Deutsche Bank is wrong on multiple levels.

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This entry was posted on April 28, 2011 at 11:03 AM and has received 182 views. Print this entry.