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make, notable advances and unit costs have fallen in spite of increasingly complex and specialised well design. Parker goes on to highlight the impact of this
structural change: “In a wider upstream oil and gas sector characterised by dwindling opportunities and increasing risks, the emergence of such an attractive resource – competitive with other global opportunities by every measure – has been a game changer.”
Attractions of shale gas So has the flurry of activity peaked yet? Parker doesn’t think so: “Te ingredients required for continued high levels of M&A activity in US shale gas remain in place. Te drivers that make shale gas so attractive – world scale resource, robust economics, access opportunities and limited above- ground risk – are as strong as ever.” Proving this point, Statoil has strengthened and
diversified its US onshore portfolio by entering into agreements with Enduring Resources and Talisman Energy to acquire 67 000 acres in the Eagle Ford shale formation in Southwest Texas. “Te magnitude of the shale resources in North America and the significant role these resources are expected to play in the future energy mix make this an attractive opportunity,” says John Knight, senior vice president, business development and global unconventional gas. “Tis Eagle Ford position complements Statoil’s existing US onshore portfolio, supplying a different range of hydrocarbons to different markets, and it also has a clear path towards operatorship. We now have a long-term flexible portfolio with significant optionality and growth potential from the top shale plays,” he added.
Statoil and Talisman have formed a 50/50 joint
venture for the purpose of developing assets in the Eagle Ford shale. As part of the joint venture, Statoil and Talisman have jointly acquired the Eagle Ford assets of Enduring, comprising 97 000 acres (48 500 net to Statoil), in a US$1.325b (€1b) transaction. Furthermore, Statoil will acquire 50 per cent
of Talisman’s existing Eagle Ford acreage and production for US$180 million (€137m) (18 500 acres net to Statoil). As a result, Statoil and Talisman will together hold 134 000 net Eagle Ford acres and associated assets and production in the joint venture.
Te two transactions amount to a total consideration for Statoil of US$843m (€640m) and will deliver recoverable Statoil resources of approximately 550 million barrels of oil equivalent (Fig. 1). In addition, the companies have an option to jointly acquire up to 22 000 net acres. Initially, Talisman will take the lead as operator for the total acreage with Statoil taking over the operatorship of 50 per cent of the acreage within three years. Governance in the joint venture will be shared equally between the two partners from the start.
Joint venture “We are pleased to enter into this joint venture with Talisman, an experienced operator in several North American shale plays. We look forward to working together with them in developing and producing these assets in a safe and efficient manner,” says John Knight. Enduring operates 90 per cent of its leases and
this acreage is located in an attractive, liquids-rich area of the Eagle Ford play. Statoil expects that a
The magnitude of US shale H
ow will the US shale gas market develop now? According to Luke
Parker, manager of independent energy research firm Wood Mackenzie’s M&A research service: “Tere’s scope for intra-play and sector wide consolidation, facilitated by mounting pressures on existing players to evaluate and restructure their portfolios as priorities evolve. Key among the various pressures that will influence the market, at least in the near-term, is the continued disconnect between oil and gas prices and a depressed Henry Hub futures market.”
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Terefore Wood Mackenzie suggests that gas weighted independents with a weak balance sheet and/or hedging position are beginning to look increasingly vulnerable to larger players. In fact, the company’s latest report (above) suggests that shale gas offers a good fit for the large caps and majors, playing to their technical capability, financial strength and long-term view, all of which are pre-requisites for those looking to build a material position. Hence this peer group will continue to dominate
the large scale deal activity. Robert Clarke, unconventional gas
research manager for Wood Mackenzie adds, “Te magnitude of the US Shale gas resource is extraordinary. We estimate the total resource potential of the 22 shale plays we currently analyse is approximately 650 trillion cubic feet of gas equivalent (tcfe): equivalent to a resource life of 32 years based on total US gas production in 2009. Shale gas production is set to increase from 17 per cent in 2010 to 35 per cent in 2020 of total US gas supply. ●
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