In a subdued week for E&P deals, Linn Energy were the main protagonist for the second week in a row with the largest, albeit at $175 million, a small fraction of the $1.2 billion it had to pay to BP last week to take a position in the Hugoton Basin. In this week’s deal, Linn Energy is acquiring mature producing assets in East Texas from an unspecified seller. The assets are 100% developed with a remaining reserve life of 15 years and are being acquired for $7.70 per boe. This would make for a compelling metric if the assets were not composed 97% of gas at a time when the Henry Hub price has dropped to just $2.24 per mcf.

There were few other significant new E&P deals, but there was still some activity in the market with pre-existing agreements and joint ventures. El Paso held its vote for the protracted takeover by Kinder Morgan, which received a 95% vote in favour. Meanwhile KKR and Chesapeake teamed up to form a new joint venture targeting investment in US oil and gas assets. The partnership will tap into Chesapeake’s experience of frontier US plays, which has seen them build up large portfolios of land in emerging plays such as the Utica and Marcellus before the land prices became restrictive. The initial capital of the partnership will consist of $250 million, with 90% of the contribution coming from KKR.

In Iraq, Statoil gained approval from Iraq’s Oil Ministry to divest an 18.75% stake in the West Qurna-2 field to Lukoil for undisclosed terms. Due to the fiscal terms of the production contract, which gave the lion’s share of revenues to the state, the sale will have little impact on the financial statements of Statoil, but will help to free up capital to put into higher return projects. Statoil took a stake in the field in 2009, as part of Iraq’s reconstruction, and accepted the low returns the field would bring due to the supposed importance of gaining a foothold in a region that looked to be opening up to western companies.

Since this time, Statoil has failed to make further inroads into the country, whilst its peers have snapped up assets in the autonomous Kurdistan region of the country, which offers better financial terms and is a less hostile region compared to the rest of Iraq. To do business in Kurdistan, however, means to be excluded from operating in Iraq as Hess Corp found out last year, but companies with only a marginal exposure are already finding that the risk of upsetting the Oil Ministry in Iraq is far outweighed by the benefits that can be gained from working with the Kurdistan Regional Government instead. Statoil have never indicated that they wish to enter the region, but rumours have followed the company around ever since it tried to open an office in Kurdistan, before political pressure from Baghdad made them backtrack.