In what was the biggest E&P deal of the week, fellow Canadian intermediate producers Pengrowth Energy and NAL Energy, combined to form a company which will reportedly be worth $6.6 billion. The deal will see Pengrowth acquire NAL in an all-stock deal, that values NAL at an enterprise level of $1.9 billion including approximately $600 worth of debt. The transaction will be effected by NAL shareholders receiving 0.86 shares of Pengrowth for each share of NAL that they hold. Based on the market prices one day prior to the deal announcement, this represents a low premium of just 9.7%, implying a friendly takeover between the two former Canadian royalty trust companies.
Pengrowth will receive a highly developed Canadian asset base, weighted evenly between gas and liquids at a cost per proven boe of $29. The high valuation can be explained through the additional upside of NAL’s portfolio which includes over half a million acres of undeveloped land, $1.4 billion of accrued tax pools and 38 million boe of probable reserves.
US based Master Limited Company, QR Energy, acquired mature assets in the mid-continent for $230 million. The assets hold 13 million boe of proven reserves which are 93% liquids and 98% developed but only have moderate production rates due to their level of maturity. This has led to a competitive cost per boe of proven reserve of $17.70 but a high cost per producing boe of $195,000, compared to the typical cost in the US of around $60,000.
Parallel Energy Trust acquired the remaining 41% interest in the liquids rich West Panhandle Field from Bravo Natural Gas LLC for $189 million. The cost per proven boe of reserves equated to just $10 as although the reserves are only 5% gas, the liquids are composed purely of less valuable condensates as opposed to oil.
Falkland Oil & Gas secured their long awaited deal for a rig this week as part of a farm-out agreement with an unspecified company. The deal will see Falkland Oil and Gas relinquish a 25% interest in its license area in return for the partner contributing 25% of both past and future costs, with the latter comprising of a two well exploration programme during 2012. Falkland Oil and Gas’ acreage is located in the South Basin which unlike the North Basin and its 1 billion boe of oil in place Sea Lion discovery, has yet to be drilled.
Shell and CNPC concluded a landmark deal in China that will see Shell take up a production sharing contract in 3,500 square kilometers in the Sichuan Basin. The deal marks the first ever PSC in the expanding shale gas industry in China, which the Government hopes will put a partial end to the country’s dependence on foreign resources. It has been estimated by the EIA that China may hold over 1,000 TCF of gas in its shale deposits although it has to be proven whether the resources can be extracted with the same ease as in the US plays.
In the midstream sector Williams Partners struck a $2.5 billion deal for private company Caiman Eastern Midstream LLC, a company specializing in the transportation and processing of gas from the Marcellus shale play. As part of the deal Williams Partners and Caiman Energy, will also partake in a joint venture to develop infrastructure in the Utica play. The Utica shale play is in its infancy but may be the next US shale play to take off if Chesapeake’s positive operating results so far, extends across the entire formation.
|Acquirer||Target Company||Target Business Segment||Brief Description||Total Acquisition Cost (000)|
|Williams Partners||Caiman Eastern Midstream LLC||Midstream||Williams Partners L.P. a 72% owned subsidiary of Williams acquires Caiman Eastern Midstream LLC, a company engaged in gathering and procession business located in the northern West Virginia, southwestern Pennsylvania and eastern Ohio||2,500,000|
|Pengrowth Energy Corporation||NAL Energy Corporation||E&P||Pengrowth Energy Corp acquires NAL Energy Corp||1,905,392|
|QR Energy, LP||Unspecified||E&P||QR Energy signs a definitive agreement to acquire predominately oil properties located in the Ark-La-Tex area and Michigan||230,000|
|Parallel Energy Trust||Bravo Natural Gas, LLC||E&P||Parallel Energy acquires the remaining 41% of the jointly owned West Panhandle Field from Bravo Natural Gas LLC||189,400|
|Unspecified||Falkland Oil and Gas||E&P||Falkland Oil and Gas executes enters an option agreement for the farm out of a 25% interest in the FOGL License area and an associated joint operating agreement with an unspecified acquirer||40,000|
|Valiant Petroleum plc||Rocksource ASA||E&P||Valiant Petroleum Plc enters into an asset purchase agreement to acquire a substantial interest in all of Rocksource ASA’s licences in the Norwegian Continental shelf||18,578|
|Petro Viking Energy Inc||Grisham Assets Corp.||E&P||Petro Viking Energy Inc enters into a LOI with Grisham Asset Corp. to acquire a 100% issued and outstanding shares of Grisham Assets Corp., Grisham hold an agreement to acquire an 80% interest in blocks 1810, 1710 and 2913B located offshore the coast of Namibia.||7,685|
|Unspecified||Montana Exploration Corp.||E&P||Montana Exploration Corp farms out a 50% participation interest in 110,000 net acres of land located in Montana to a Denver based private company||5,114|
|Korea National Oil Corporation||Roxi Petroleum plc||E&P||Bakmura LLP, a subsidiary of the Korea National Oil Corporation enters into a farm in agreement with Roxi Petroleum Plc to acquire a 35% interest in the BNG Contract Area in Western Kazakhstan||5,000|
|Royal Dutch Shell||CNPC||E&P||Royal Dutch Shell and China National Petroleum Corporation (CNPC), signs a production sharing contract for shale gas exploration, development and production in the Fushun-Yongchuan block in the Sichuan Basin, China||-|