In a week that saw oil prices crash from recent highs on the back of a flurry of poor economic data across the globe, the E&P sector remained bullish. Two potential billion dollar deals were announced, according to our analysis of this week’s deals.
One deal that was definitely in excess of a billion dollars was the further divestment of a 10% stake in YPF Sociedad Annima (NYSE:YPF) by Repsol (OTCQX:REPYF)-YPF to the Petersen Group for $1.3 billion.
Repsol has been steadily decreasing its interest in its South American-focused subsidiary following increased government intervention and taxes, especially within Argentina and Bolivia. The value of YPF has remained flat in the previous four years and is currently 38% lower than its peak in 2005. Repsol will be hoping that the money raised on the sale will see a better return from its intended target in the deepwater resources of Brazil. Following this deal, Repsol’s stake in YPF- which once stood at 98%- will decrease to 58%. That's just 7% shy of its target final interest in YPF of 51%.
The other potential billion dollar deal came from Chevron’s (NYSE:CVX) acquisition of 228,000 acres in the Marcellus shale play from Chief Oil & Gas. The terms of the transaction were undisclosed but as the cost per acre in the Marcellus shale play can range from $4,000 per acre for an undeveloped asset to over $10,000 per acre for a partially developed property, the estimated price could be between $1-$2 billion. Judging by Chevron’s disclosure that the acquisition is likely to add 5 trillion cubic feet of gas reserves, it’s likely that the consideration will lie in the middle to high portion of this estimate.
In Canada, Crew Energy (OTCPK:CWEGF) sealed a transformational deal, which will almost double the company’s production whilst increasing the liquids weighting of the company’s portfolio of assets. Crew is acquiring Caltex Energy Inc, a company with liquids-rich gas assets in the Peace River area and heavy oil operations in the Lloydminster area of Saskatchewan for C$623 million. The normalised cost per proved boe equates to C$19.65, which looks to be at a slight premium to an assumed fair price of C$17 based on the resource type and stage of development.
The Gulf of Mexico-focused, Dynamic Offshore Resources completed its eighth transaction since its inception in 2008 with the $42.5 million acquisition of Gulf of Mexico shelf assets. The price looks attractive at just $5.85 per proved & probable boe. Even factoring in the $16 million of increased asset retirement obligations that the properties will add, the normalised cost per proved and probable boe still equates to barely over $8.
Top Deals of the Week
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Target Business Segment
Total Acquisition Cost (000)
YPF Sociedad Anonima
Grupo Petersen exercises its option to acquire a further 10% of YPF from Repsol-YPF
Kinder Morgan Energy Partners, L.P.
Petrohawk Energy (NYSE:HK)
Kinder Morgan Energy Partners acquires a 50% interest in KinderHawk Field Services (the natural gas gathering and treating services provider in the Haynesville Shale) and a 25 percent interest in Petrohawk's natural gas gathering and treating business in the Eagle Ford Shale
Crew Energy Ltd
Caltex Energy Inc.
Crew Energy acquires Caltex Energy Inc., a private Canadian based E&P company
Dynamic Offshore Resources, LLC
Dynamic Offshore Resources acquires Gulf of Mexico properties via two transactions
Japan Australia LNG (MIMI) Pty. Ltd
Tap Oil Limited (OTCPK:TAPOF)
Japan Australia LNG, a 50:50 joint venture between Mitsubishi and Mitsui acquires a 25% interest in WA-351-P in the Carnarvon Basin in Australia from Tap Oil
Paxton Energy Inc
Virgin Oil Company, Inc.
Paxton Energy, Inc. acquires Virgin Oil Company, Inc.
Torque Energy Inc. (OTC:TQEEF)
Eurogas Corp acquires Torque Energy Inc.
Twin City Technical, LLC; Irish Oil and Gas, Inc.
Ante5, Inc acquires 8,000 acres in the Bakken shale play from Twin City Technical, LLC, a North Dakota limited liability company, and Irish Oil and Gas, Inc.
Pluspetrol Angola Corporation acquires ROC Oil's remaining 10% interest in the Cabinda Onshore South Block, Angola
Chief Oil & Gas LLC
Chevron acquires 228,000 acres of Marcellus shale acreage from Chief Oil & Gas LLC for an undisclosed price
EvaluateEnergy tracks every global upstream deal on a daily basis, estimating normalised deal value, in-depth financial and operating detail behind each deal and an explanation and opinion on deal rationale . Normalised deal value reveals underlying reserve values.