Deals of the Week: Apache and Crescent Point Energy Play it Safe with Bolt-On Acquisitions
This week’s upstream M&A was dominated by two large bolt-on acquisitions by Apache and Crescent Point Energy, within North America. Although the deals lacked the sensationalism that comes from a company making a bold move into a new area, they both involved oil weighted producing assets with additional upside in areas that the companies have vast experience in exploiting. The fallout on the market was subdued with neither company’s share price posting any dramatic movements despite the relatively large outlays.
The larger of the two deals came from Apache Corp, a company who formed a formidable reputation during their rise to prominence, as a company who could acquire mature assets and extract previously unforeseen value from them. Of late the company has expanded on their strategy to also include the acquisition of early stage shale resources. Their latest deal to acquire Cordillera Energy Partners III, LLC for $2.85 billion is a healthy blend of these two strategies. Cordillera owns 254,000 acres in the liquids fairway of the Anadarko basin, an area in which Apache has operated in for over 50 years. The Granite Wash amongst other plays being acquired has several different target zones at differing depths. The conventional zones have a long history of production, but other tight zones which although not technically shale resources, have been opened up by the advances made in horizontal drilling and fraccing technologies.
Crescent Point’s bolt on acquisition came via their C$611 million acquisition of Wild Stream Exploration Inc.. The motivation behind the deal is for Crescent Point to consolidate its position as the largest owner of land in the Lower Shaunavon play of Saskatchewan, a play which is estimated to hold over 4 billion boe of original oil in place, albeit with a current recovery rate of around 2%. As part of the deal Wild Stream Exploration will be spinning off their Dodsland area assets into a new junior public oil and gas company. Crescent point however will still be gaining 5,400 boe/d of production and 28.7 million boe of proved and probable reserves. After taking into account the undeveloped land value and the tax pools that Wild Stream currently owns, the normalized cost per 1P boe purchase price equates to C$26.64, which Crescent Point will expect to reduce if they are successful in increasing the recovery factor on the acquired assets.
In the North Sea, EnQuest Plc acquired an additional 25% interest and operatorship of the Kraken asset, an oil field that was discovered during 2011 with a flow rate of 4,500 b/d. The final consideration which will be in the form of a cost carry to Nautical will be dependent on the level of 2P reserves booked during the development stage. The consideration will range from a firm $150 million, to a possible $240 million if the field books over 166 million barrels of proved and probable reserves during the development stage. The deal by EnQuest will enable a faster rate of development of the field as the previous operator Nautical, already has a debt-to-equity level of 80% and no incoming revenue amidst a continually restrictive financings market.
Meanwhile AWE Limited has acquired two production sharing contracts in the shallow waters offshore Indonesia, from Malaysian investment company, Genting Berhad. The consideration for the currently undeveloped assets will be comprised of $39 million in cash and the assumption of $100 million of debt. The acquired assets are composed of the oil weighted North West Natuna PSC, containing the Ande Ande Lumut discovery and the gas weighted Anambas PSC. The Ande Ande Lumut unit alone is estimated to contain 76 million barrels of recoverable heavy oil and is forecasted to have an initial plateau production rate of 25,000 barrels per day in 2014.
Acquirer | Target Company | Target Business Segment | Brief Description | Total Acquisition Cost (000) |
Apache Corp. | Cordillera Energy Partners III LLC | E&P | Apache Corp acquires Cordillera Energy Partners III LLC for $2.85 Billion | 2,857,226 |
Crescent Point Energy Corp | Wild Stream Exploration Inc. | E&P | Crescent Point Energy Corp. will acquire all of the issued and outstanding common shares of Wild Stream in a transaction valued at approximately c$610.9 million | 612,125 |
EnQuest PLC | Nautical Petroleum | E&P | Nautical Petroleum agrees sale of 25% of Kraken asset to EnQuest for a cost carry of up to $240 million | 150,000 |
AWE Limited | Genting Berhad | E&P | AWE acquires assets offshore Indonesia with 100% interest and operatorship in two Production Sharing Contracts including undeveloped land containing 76 Million barrels of recoverable oil. | 139,000 |
Crescent Point Energy Corp | Unspecified | E&P | Crescent Point acquires more than 85 net sections of land in the Beaverhill Lake Light oil resource play in Alberta, the majority of which are undeveloped, for aggregate consideration of approximately C$38 million of cash | 37,267 |
Unspecified | Midway Energy Ltd | E&P | Midway disposes of a 50% working interest in its 23,000 net acres of land and its associated wells and production in the Swan Hills area in return for twenty million dollars in cash and a carried interest in the drilling of the first three wells on the lands | 35,306 |
Nighthawk Energy plc | Running Foxes Petroleum Inc | E&P | Nighthawk Energy completes the acquisition of a further 25 per cent stake in Jolly Ranch and becomes operator of the project | 12,792 |
Horizon Oil | Eaglewood Energy Inc | E&P | Horizon Oil has executed a farmin agreement with Eaglewood Energy Inc. to earn a 25% interest in PPL 259 in Western Province, Papua New Guinea. | 7,715 |
Mega Fortune International Limited | Eaglewood Energy Inc | E&P | Mega Fortune Internationl Limited has executed a farmin agreement with Eaglewood Energy Inc. to earn a 25% interest in PPL 259 in Western Province, Papua New Guinea. | 7,715 |
Evaluate Energy is a leading
data provider Oil & Gas professionals and the financial services
industry. The Oil Blog is written
by members of their team of professional analysts and provides comment
on market movement and industry trends within the oil industry.
2013-03-17 15:49:47
Source:
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).