The largest deal of the week involved W&T Offshore (WTI) shifting its focus away from the Gulf of Mexico to acquire assets onshore in the Permian basin for $366 million.
Despite the West Texas Intermediate crude benchmark posting over $100 for the trailing 2 month period, W&T was able to acquire the assets from a private seller, which were 91% weighted toward liquids for the relatively low price of $13.56 per barrel. The need for W&T to diversify its asset base became evident following the BP deepwater horizon blowout, which led to a drilling moratorium in the Gulf of Mexico and increased scrutiny in operational practices. The market welcomed the move with the company’s share price rising by 16.6% on the day of the deal announcement.
Kohlberg Kravis Roberts (KKR) entered its second Barnett Shale acquisition of the year with the $104 million acquisition of substantially all of Carrizo Oil’s (CRZO) “Tier 1” assets in the play. Using the KKR reported figure of 124bcfe of proved reserves acquired, the cost per boe equates to just $5.10 ($0.85 per mcfe).
In Poland, Nexen (NXY) became the latest North American company to enter the Polish shale sector with the acquisition of a 40% interest in 10 concessions owned by Marathon Oil (MRO) for an undisclosed fee. The list of North American companies operating in Poland already included ExxonMobil (XOM), Chevron (CVX), Talisman (TLM) and ConocoPhillips (COP). The assets are all in the early stages of exploration and the country is still awaiting confirmation via a successful exploration drill that the vast shale potential resident in the country will prove to be commercial.
Meanwhile in Algeria, whilst deals in its neighboring country of Libya have stalled due to the ongoing civil war, business has continued as normal. This week Enel Spa farmed into an 18.375% interest in a field known as the Isarene block, which will benefit the target company, PetroCeltic International Plc (GM:PTIFF) by potentially $80 million in cash and cost carry considerations combined. For a detailed analysis on the current status and future prospects of Algeria please see Evaluate Energy’s recent analysis: Is Algeria Next?.
Top Deals of the Week Wild Stream Exploration Kohlberg Kravis Roberts & Co. (KKR) Equal Energy Ltd (EQU) Petroflow Energy Ltd Petroceltic International (GM:PTIFF) ExxonMobil (XOM) Edison S.p.A
Acquirer Target Company Target Business Segment Brief Description Total Acquisition Cost ($000) W & T Offshore (WTI) Unspecified E&P W&T Offshore Inc acquires assets in the Permian basin of Texas from private sellers 366,000 Williams Partners (WPZ) Williams Companies Midstream Williams Partners L.P. acquires an additional 24.5% interest in the Gulfstream interstate gas pipeline system from Williams 330,000 Unspecified E&P Wild Stream Exploration acquires producing oil and gas assets in southwest Saskatchewan 179,923 Secure Energy Services Marquis Alliance Energy Group Inc. Oil Services Secure Energy Services acquires Marquis Alliance Energy Group Inc., a company specializing in drilling fluids and drilling fluid systems 134,364 Carrizo Oil & Gas E&P KKR Natural Resources acquires substantially all of Carrizo Oil's "Tier 1" Barnett shale properties 104,000 E&P Equal Energy acquires Petroflow’s interests in the Oklahoma Hunton play via bankruptcy proceedings 87,700 Enel SpA E&P Enel SpA farms into a 18.375% interest in the Isarene Block in Algeria from PetroCeltic International Plc 80,612 Midstream ExxonMobil acquires a 1.3515% stake in Terminale GNL Adriatico Srl from Edison Spa 54,723 Qatar Petroleum Edison S.p.A Midstream Qatar Petroleum acquires a 1.3515% stake in Terminale GNL Adriatico Srl from Edison Spa 54,723
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Wild Stream Exploration
Kohlberg Kravis Roberts & Co.
Equal Energy Ltd
Petroflow Energy Ltd