Argentina has passed legislation expropriating a 51% share in YPF from Repsol and declaring the oil and gas industry to be of "national public interest". The terms of compensation for Repsol's shares remain undetermined.
This latest move highlights the impact high oil prices have in terms of limiting access by international oil companies to oil and gas resources.
Under the combined impact of unusually warm weather and ballooning supply, natural gas prices have taken a beating this winter in North America. Recent announcements by Chesapeake Energy and ConocoPhillips that they will cut gas drilling operations is an important first step towards shoring up the beleaguered price of natural gas. We even saw a short term bump in price immediately following.
But will this be enough to ease the pain? Our research suggests not.
After opening a data room with the intent to sell its 8.5% working interest in the Offshore Area 1 (Rovuma Block) in Mozambique, the Board of Directors has decided to offer the entire company.
The license in Mozambique is the site of multiple gas discoveries including Windjammer, Ironclad, Barquentine, Lagosta, Tubarao, and Camarão. Estimated recoverable gas reserves for the block range from 15 to 30 Tcf.
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.
On 14 December 2011 twenty companies bid for new Western Gulf of Mexico acreage in Sale 218. Winning bids on 191 blocks totaled US$337.7 million. The results of the sale were noteworthy in a number of respects.
Only a handful of companies drove the sale results. ConocoPhillips' high bids represented 46.7% of the total. Other drivers of the competition were ExxonMobil, Maersk, BP and Anadarko.
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.
In a surprising move EnCana and PetroChina have agreed to end negotiations to create a joint venture alliance on EnCana's Cutbank Ridge unconventional gas acreage in Canada. The companies stated that this decision was taken because "... the parties were unable to achieve substantial alignment with respect to key elements of the proposed transaction, including the joint operating agreement."
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.
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.
In a US$1.1 billion deal, Petronas has entered a JV alliance with Progress Energy Resources in the Montney shale gas play in British Columbia. Petronas will pay US$275 million up front and carry 75% of Progress' share of capital costs over the next five years up to a maximum of another US$827.3 million. Petronas will acquire a 50% working interest in 149,910 acres implying a per acre cost to Petronas of US$14,717. Progress will retain its interest in its remaining 750,000 net acres in British Columbia and Alberta.
