Evaluate Energy’s Oil & Gas Deals of the Week – 28th April 2011

The largest deal of the week involved W&T Offshore shifting its focus away from the Gulf of Mexico to acquire assets onshore in the Permian basin for $366 million. Click here for Evaluate Energy’s full analysis of the deal (clients only). Despite the WTI crude benchmark posting over $100 for the trailing 2 month period, W&T were able to acquire the assets which were 91% weighted towards liquids for the relatively low price of $13.56 per barrel.

The need for W&T to diversify their asset base became evident following the BP deepwater horizon blowout, which led to a drilling moratorium in the Gulf of Mexico and increased scrutiny in operational practices. The market welcomed the move with the company’s share price rising by 16.6% on the day of the deal announcement.

Kohlberg Kravis Roberts entered its second Barnett Shale acquisition of the year with the $104 million acquisition of substantially all of Carrizo Oil’s “Tier 1” assets in the play. Using the KKR reported figure of 124bcfe of proved reserves acquired, the cost per boe equates to just $5.10 ($0.85 per mcfe).

In Poland Nexen became the latest North American company to enter the Polish shale sector with the acquisition of a 40% interest in 10 concessions owned by Marathon Oil for an undisclosed fee. The list of North American companies operating in Poland already included ExxonMobil, Chevron, Talisman and ConocoPhillips. The assets are all in the early stages of exploration and the country is still awaiting confirmation via a successful exploration drill that the vast shale potential resident in the country will prove to be commercial.

Meanwhile in Algeria, whilst deals in its neighbouring country of Libya have stalled due to the ongoing civil war, business has continued as normal. This week Enel Spa farmed into an 18.375% interest in a field known as the Isarene block, which will benefit the target company, PetroCeltic International Plc by potentially $80 million in cash and cost carry considerations combined. For a detailed analysis on the current status and future prospects of Algeria please see Evaluate Energy’s recent analysis:  Is Algeria Next?.

Top Deals of the Week

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.

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