Richard Zeits • 11 Comments
Richard Zeits • 27 Comments
Richard Zeits • 38 Comments
Mon, Jun. 20, 2:25 PM
- Marathon Oil (MRO +10.4%) powers higher after snapping up P-E-backed PayRock Energy for $888M, increasing its footprint in Oklahoma's prolific STACK oil play.
- MRO expects internal rates of return for the new addition of 60%-80% before taxes at a WTI price of $50/bbl.
- CEO Lee Tillman says MRO would ratchet up drilling activity if crude prices held above $50/bbl for a while, and that the Oklahoma oil region is profitable enough that it can compete for capital against the company’s other oil plays.
- SunTrust analysts consider ~60% of Payrock’s position to be in the core STACK, and estimates the core acreage value at ~$15K/acre, which appears in line with recent transactions.
- The firm also thinks MRO's move is good news for core STACK players Newfield Exploration (NFX +0.5%), Cimarex Energy (XEC +1.3%), Continental Resources (CLR +1.2%), Devon Energy (DVN +4.6%) and Chesapeake Energy (CHK +3.3%).
Dec. 7, 2015, 5:28 PM
- Devon Energy's (NYSE:DVN) deal to buy $1.9B worth of assets in the hot STACK shale play in Oklahoma may have the profit potential of the massive Bakken formation, but some analysts are questioning the high price.
- Continental Resources (NYSE:CLR) CEO Harold Hamm has sounded bullish on his own company's well in the STACK and believes it could be as profitable as the Bakken someday, but some analysts do not like the timing for the deal.
- S&P and Moody’s placed DVN debt under review for a downgrade; DVN will be increasing indebtedness to finance the deal at a time when it is already squeezed by low energy prices, S&P said, and Moody's said that "compared to the price of the acquisition, the acquired production and proved reserves is very small, and both properties are still in early development stages."
- "Levering up in this environment [is not] well-received," Wells Fargo's David Tameron says; DVN's purchases are a major cash commitment as the low price environment makes it harder for companies to raise capital, banks have grown warier about extending credit lines to the U.S. oil patch, and markets are more skeptical toward issuance of additional stocks and bonds.
Dec. 3, 2015, 7:51 AM
- Devon Energy (NYSE:DVN) is in talks to buy Felix Energy for ~$2B, including debt, Reuters reports.
- DVN owns oil acreage and an interest in oil and gas pipelines located close to Felix's assets in northern Oklahoma.
- A deal would represent a bet by DVN that crude oil prices will recover from their current $40/bbl lows to ~$65 sooner rather than later, according to the report.
- Besides DVN, other major players with investments in the are where Felix operates include Marathon Oil (NYSE:MRO), Newfield Exploration (NYSE:NFX), Continental Resources (NYSE:CLR) and Cimarex Energy (NYSE:XEC).
Jul. 16, 2015, 2:57 PM
- Global oil majors have $150B of firepower than can be used for M&A and have the ability to defer another $325B in capex on marginal projects; with so much cash available for potential deals and up to 15M bbl/day of production potentially available for purchase, Goldman Sachs analyst Ruth Brooker sees a pickup in M&A activity in the oil and gas space coming soon.
- The firm thinks shale production has the potential to double by 2025, and Brooker argues majors likely will take the current opportunity to increase their exposure to U.S. shale at historically low prices.
- Goldman sees seven companies as most likely to draw buyout attention from the majors: EOG, PXD, CLR, COG, NBL, APC, RRC.
Apr. 8, 2015, 7:30 PM
- Analysts say Shell's (RDS.A, RDS.B) move to buy BG Group is telling potential acquirers that one of the biggest players is now confident enough to make a big play, and that the worst may be over in the big slide in oil and gas prices.
- The deal also may be the starting gun for a wave of M&A activity that oil industry observers have been predicting since crude prices started to slump in June.
- For starters, BG's U.S. shale assets likely will become candidates for divestiture after the Shell deal closes; in buying BG, Shell has made the choice to double-down on global liquefied natural gas and de-emphasize U.S. shale.
- Among the biggest players, Exxon (NYSE:XOM) and BP could contemplate deals - perhaps even with each other, as has been speculated, since BP ranks among the cheapest major producers relative to estimated profit.
- BG itself could whet the appetite of XOM's Rex Tillerson, who recently said there was "no limitation" to what he might buy - but he will be especially selective after getting burned by 2010's XTO purchase.
- Companies with prime acreage in oil-rich shale fields in Texas, North Dakota and Colorado have become a lot cheaper in recent months; Anadarko (NYSE:APC), Cabot Oil & Gas (NYSE:COG), Pioneer Natural Resources (NYSE:PXD), Occidental (NYSE:OXY), Continental Resources (NYSE:CLR), Concho Resources (NYSE:CXO) and Tullow Oil (OTCPK:TUWLF) are among those at topping analysts’ lists.
- Galp Energia (OTC:GLPEF) may draw interest from buyers because, like BG, it offers access to oil assets in Brazil.
Apr. 8, 2015, 7:59 AM
- Analysts at Jefferies now expect Royal Dutch Shell (RDS.A, RDS.B) to surpass Exxon Mobil (NYSE:XOM) as the world's largest publicly traded oil and gas producer by 2018, with output of 4.2M boe/day, following Shell's $69.6B deal to buy BG Group.
- But XOM has long been rumored as a potential bidder for BG, and Financial Times points out that it now has both the motive and the opportunity, raising the possibility that it could try to outbid Shell for BG.
- Like Shell, XOM is struggling to grow and will find it easier to raise production by dealmaking than by drilling; XOM’s output was ~4.3M boe/day in 2001 and 4M last year.
- With its greater size, low debt and AAA credit rating, XOM could muster a larger cash component in any offer than Shell’s 28% of its total offer of ₤13.50/share; however, hostile deals are very rare in the oil and gas industry.
- Whether or not BG is the perfect fit for XOM, Paul Sankey of Wolfe Research has suggested other midsized E&P specialists could prove tempting, including Hess (NYSE:HES), Continental Resources (NYSE:CLR), Devon Energy (NYSE:DVN), Apache (NYSE:APA) and Anadarko Petroleum (NYSE:APC).
Mar. 13, 2015, 3:58 PM
- Whiting Petroleum (WLL +3.1%) spikes on a Bloomberg report suggesting Exxon Mobil (XOM -0.2%) could be interested in the company; trading is now halted for volatility.
- Continental Resources (CLR -4.8%), Hess (HES +0.4%) and Statoil (STO +1.4%) also are reportedly looking at WLL, according to the report, and WLL has set up a data room for potential buyers to evaluate the company’s financial information and asked them to submit bids next week.
- WLL is the largest producer in North Dakota’s Bakken Shale, and the four rumored suitors already are among the 10 largest holders of acreage in the play.
- WLL had been down all day on an earlier report that it was considering selling off pieces rather than the whole company.
Nov. 8, 2012, 8:28 AM
Continental Resources (CLR) announces agreements to purchase Bakken producing and undeveloped assets for $650M and to sell its producing crude oil and natural gas properties and supporting assets in its East Region for $125M. The Bakken property includes leasehold of ~12K net acres and production of ~6,500 boe/day.| Nov. 8, 2012, 8:28 AM
Aug. 10, 2012, 4:48 PM
Continental Resources (CLR) shareholders ratify the purchase of Wheatland Oil assets. The purchase covers all leases and wells in a defined portion of the Bakken play pursuant to a participation agreement effective January 1, 2002. The transaction is expected to be completed on August 13 by the transfer of approximately 3.9M shares of Continental Resources common stock to the owners of Wheatland Oil.| Aug. 10, 2012, 4:48 PM
Mar. 28, 2012, 7:43 AM