http://www.gordonenergysolutions.com/On-Point/index.cfm Forward-looking, critical analysis of the upstream oil and gas industry. en-us Sun, 20 May 2012 07:30:43 -0500 Mon, 14 May 2012 08:38:59 -0500 BlogCFC http://blogs.law.harvard.edu/tech/rss sgordon@gordonenergysolutions.com sgordon@gordonenergysolutions.com sgordon@gordonenergysolutions.com no http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/5/14/Why-the-Rosneft-JV-Alliances-Matter Steve Gordon 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. ... Acquisitions & Divestitures Company Strategy Mon, 14 May 2012 08:38:59 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/5/14/Why-the-Rosneft-JV-Alliances-Matter http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/5/11/The-Cost-of-High-Oil-Prices--Argentina-Takes-Control-of-YPF Richard Gordon, Ph.D 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. ... Unconventional Gas Nationalization Argentina Fri, 11 May 2012 10:13:43 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/5/11/The-Cost-of-High-Oil-Prices--Argentina-Takes-Control-of-YPF http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/4/11/North-American-Arctic-Gas-Takes-a-Hit Steve Gordon In past issues of On Point we have warned that North American Arctic gas supply prospects were at risk due to the rise in unconventional gas production. It should come as no surprise, therefore, that the Mackenzie Gas project partners have announced that they are suspending the project. The decision was due to a continued decline in market conditions and unacceptable commercial terms. ConocoPhillips plans to take a US$525 million write down on an after tax basis. ... Arctic Wed, 11 Apr 2012 15:14:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/4/11/North-American-Arctic-Gas-Takes-a-Hit http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/2/13/The-Future-of-North-American-Natural-Gas-Prices Richard Gordon, Ph.D 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. ... Unconventional Gas Liquids-Weighted Shale Price Outlook Mon, 13 Feb 2012 10:21:39 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/2/13/The-Future-of-North-American-Natural-Gas-Prices http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/25/Cost-Watch-2011 Steve Gordon This issue of Cost Watch reflects current estimates of inflation pressures in the oil and gas industry through the end of 2011. Results from September through December 2011 are subject to revision but key conclusions are not likely to change. ... Cost Watch Wed, 25 Jan 2012 13:42:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/25/Cost-Watch-2011 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/6/Emerging-East-African-Gas-Discoveries-Up-for-Sale Richard Gordon, Ph.D 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. ... Acquisitions & Divestitures Fri, 06 Jan 2012 11:28:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/6/Emerging-East-African-Gas-Discoveries-Up-for-Sale http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/5/Sinopec-Joins-CNOOC-in-Major-North-American-Unconventional-Resource-Deal Steve Gordon 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. ... Unconventional Gas Acquisitions & Divestitures Company Strategy Liquids-Weighted Shale Land Programs Thu, 05 Jan 2012 11:43:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/5/Sinopec-Joins-CNOOC-in-Major-North-American-Unconventional-Resource-Deal http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/3/Total-SA-Enters-LiquidsWeighted-Utica-Shale-Play Richard Gordon, Ph.D 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. ... Acquisitions & Divestitures Company Strategy Liquids-Weighted Shale Tue, 03 Jan 2012 12:07:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2012/1/3/Total-SA-Enters-LiquidsWeighted-Utica-Shale-Play http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/12/19/338-Million-Committed-in-Gulf-of-Mexico-Sale-218 Richard Gordon, Ph.D 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. ... Lease Sale Gulf of Mexico Deepwater Mon, 19 Dec 2011 14:10:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/12/19/338-Million-Committed-in-Gulf-of-Mexico-Sale-218 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/12/1/CNOOC-Farms-Into-Nexen-Deepwater-Gulf-of-Mexico-Prospects Steve Gordon 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. ... Acquisitions & Divestitures Company Strategy Land Programs Thu, 01 Dec 2011 09:11:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/12/1/CNOOC-Farms-Into-Nexen-Deepwater-Gulf-of-Mexico-Prospects http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/11/14/Kodiak-Oil--Gas-Building-Scale-in-the-Bakken Steve Gordon In a US$590 million deal (including US$50 million in stock), Kodiak Oil & Gas has acquired an additional 50,000 net acres in the Bakken play. The company announced that, following this transaction, its Williston Basin land position will rise to 155,000 net acres. This is the fourth acquisition tracked by GES that Kodiak has made in the Williston since late 2010. A total of 103,000 estimated net acres were acquired in these four deals at a combined cost of US$1 billion or US$9,908 per net acre. The two most recent deals (both made this year) included significant existing production. ... Acquisitions & Divestitures Mon, 14 Nov 2011 11:12:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/11/14/Kodiak-Oil--Gas-Building-Scale-in-the-Bakken http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/11/11/Sinopec-Builds-on-its-Brazilian-Position Steve Gordon 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. Acquisitions & Divestitures Company Strategy Fri, 11 Nov 2011 12:18:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/11/11/Sinopec-Builds-on-its-Brazilian-Position http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/10/24/Statoil-Continues-Expansion-Program-in-North-American-Unconventional-Plays Richard Gordon, Ph.D 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. ... Acquisitions & Divestitures Company Strategy Mon, 24 Oct 2011 11:14:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/10/24/Statoil-Continues-Expansion-Program-in-North-American-Unconventional-Plays http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/10/9/GAIL-and-Sinopec-Deals-Mark-Continuing-Shift-in-NOC--EEC-Companies-Growth-Strategies Steve Gordon The GAIL JV alliance with Carrizo and the Sinopec acquisition of Daylight Energy are part of a continuing process described in our recent study, Emerging Challenges to the Global Competitor Peer Group. GAIL has paid US$63.7 million in up-front costs and committed to another US$31.4 million in carried costs to acquire 4,040 net acres in the Eagle Ford shale. While the GAIL deal is trivial in terms of the net acreage involved, the resulting per acre cost of US23,515 paid by GAIL places this deal is in the 95th percentile of a sample of 21 transactions in 2010 and 2011. In a move to expand the role of Canada in its future growth, Sinopec just announced a C$2.2 billion deal to acquire Daylight Energy, a Canadian resource play company with operations. Previously Sinopec acquired ConocoPhillips' interest in Syncrude. Acquisitions & Divestitures Sun, 09 Oct 2011 15:15:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/10/9/GAIL-and-Sinopec-Deals-Mark-Continuing-Shift-in-NOC--EEC-Companies-Growth-Strategies http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/7/15/BHP-Billiton-Acquires-Petrohawk-Energy Steve Gordon In a US$15.1 billion deal, BHP Billiton will acquire Petrohawk Energy shares for US$12.1 billion and assume $3 billion in Petrohawk debt. This deal follows BHP's prior acquisition of Chesapeake's Fayetteville shale operations at a cost of US$4.75 billion. The combined effect of these two transactions is to establish North American unconventional gas as a key driver of future BHP Billiton growth. With operations concentrated in the much coveted Eagle Ford and Haynesville plays, estimated net production of 950 Mmcfe/d, and proved reserves of 3.4 Tcfe, the transaction has been made at a per acre cost of US$15,100. This places the deal in the 80th percentile of a sample of 21 Eagle Ford deals made in 2010 and 2011 and roughly comparable to prior transaction values in the Haynesville. Unconventional Gas Acquisitions & Divestitures Fri, 15 Jul 2011 15:13:00 -0500 http://www.gordonenergysolutions.com/On-Point/index.cfm/2011/7/15/BHP-Billiton-Acquires-Petrohawk-Energy