Total (TOT -0.7%) agrees to acquire most of Tullow Oil's (OTCPK:TUWLF, OTCPK:TUWOY) stake in Uganda's Lake Albert oil project for $900M, ending Tullow's role as an operator in the country and giving TOT access to valuable fresh oil reserves.
The deal includes $200M in cash and $700M to be used for future development costs of the Ugandan fields and pipelines.
Tullow says the development phase of the Lake Albertproject, which is expected to ultimately produce ~230K bbl/day of oil and begin producing by the end of 2020, would cost $5.2B, including $3B required to reach first oil production.
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 BPcould 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.
Europe largely missed out on last year's $383B in oil and gas sector M&A activity, but Europe likely will get a bigger piece of the action in 2015 if current oil prices persist, according to Reuters' Fiona Maharg-Bravo.
BG Group (OTCPK:BRGXF, OTCQX:BRGYY) has long been a target, and the new CEO starts in March; BP faces big liabilities in the Gulf of Mexico and volatility in Russia, it’s not clear if Shell (RDS.A, RDS.B) will make a move, while Exxon (NYSE:XOM) and other U.S. majors could be tempted.
Tullow offers “a significant operating position that would not look out of place in the portfolio of a larger company,” says Societe Generale's David Mirzai, adding that the drop in oil prices “would certainly make it a lot easier to win the investor base around than in previous years.”
Total (NYSE:TOT), Cnooc (NYSE:CEO) and Exxon (NYSE:XOM) would be among logical bidders since they’ve expressed interest in African assets before, BMO says, adding that a buyer would not need to contend with obstacles such as a poison pill or dual-class stock structure.
Dec. 3, 2014, 7:58 AM
Feb. 17, 2012, 10:05 AM
U.K. oil exploration firm BowLeven (BWLVF.PK +72%) flies after Dubai-based Dragon Oil says its mulling a bid for the company. Shares had already been up 20% on speculation Tullow Oil (TUWOY.PK) was an interested buyer. The bulk of BowLeven's assets are in Cameroon. Feb. 17, 2012, 10:05 AM