RYSTAD ENERGY PRODUCT HIGHLIGHTS Rystad Energy now offers a wide product range of North American shale products (NASAnalysis) as an advancement and extension to the previous North American Shale Quarterly report published until 2012.
NASReport: Up-to-date play coverage incorporating prospectivity maps, company-specific data, acreage and reserves, production forecasts of plays up to 2025 as well as well data analysis and economics of plays.
NASCube: Database that provides US and Canada shale gas and tight oil plays data for more than 200 companies and 30 plays. Data derives from Rystad Energy’s global and complete upstream database UCube, in addition to well data.
NASMaps: Geological, company acreage and well location maps. Maps are available as pdf-layers and GIS files with embedded information for import to GIS software.
NASWellData: Listing of official well data for key plays in addition to estimates for average well curves for selected acreages, NOW AVAILABLE in CUBE BROWSER.
RYSTAD ENERGY INDUSTRY HIGHLIGHTS As of December 2014, there are 18 proposed LNG projects in NA, 15 located in the US with a combined capacity of 17.55 bcf/d and 3 in Canada with a capacity of 4.74 bcf/d. As of December 2014, the combined capacity of all potential Canadian LNG sites reached ~28 bcf/d. Rystad Energy does not believe that all of the potential LNG export projects will come online in the mid- to long term. This is based on the forecasted gas export potential in CA of ~11 bcf/d in 2025. The gas export potential takes into account the gas production forecast at the forward prices with a shale gas upside in the high price scenario (6 $/kcf), less the domestic demand for gas. [Source: FERC, NASReport]
In the November 2014 auction of crown mineral rights of British Columbia, the sales amounted to $206.6 million. Two parcels located 200 km northwest of Grande Prairie accounted for $190.5 million, which made them the two most expensive property transactions in Canada during 2014. Until the first drilling licenses are issued on these lands, the owner of these newly acquired lands will remain unknown. [Source: Government of British Columbia]
On December 12, 2014, Petronas announced that it will delay plans regarding the FID on the proposed $31.5 billion Pacific NorthWest export LNG Project until the associated costs are reduced. Rystad Energy estimates that Petronas’ drilling activity will decrease by at least 30% in 2015 compared to the current year. [Source: NASCube]
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2014 has been a turbulent year for commodity prices. In June 2014 oil prices began their steep decline as a result of oversupply (Figure 1). Brent oil price is 50 $/bbl (as of January 12, 2015), the lowest price since April 2009. On November 27, 2014 OPEC announced the decision not to cut the supply of crude, which is expected to cause the global market to face a continuous oversupply in 2015, with sustained low oil prices. This may result in companies divesting parts of their portfolios. Let’s take a look back at the M&A activity in Canada during 2014.
The upstream deal value in Canada from January 1, 2014 until November 30, 2014 has surpassed $25 billion. February was the month with the largest transactions, when the M&A activities totaled over $6 billion as depicted in Figure 2. Encana was the most active company in Canada in terms of divestures during 2014. In June it sold Bighorn assets to Jupiter Resources for $1.8 billion, followed by the divesture of PrairieSky Royalty for $2.3 billion in September. The company has followed its strategy to divest non-core, gassy assets and invest in liquid-rich assets during 2014. On June 20, 2014, Encana completed an acquisition of Eagle Ford acreage from Freeport-McMoRan for $3.1 billion. In addition, on November 13, 2014, the company finalized the $7.1 billion acquisition of Athlon Energy yielding Encana extensive acreage in Permian Midland Basin.
Some of the largest divestures in Canada ($1 billion and above) include: the February divesture of Canadian properties by Devon for $2.8 billion, Petronas’ sale of WI in its Montney assets to Sinopec, Indian Oil, and China Huadian for $2.25 billion, and Chevrons’ JV agreement with KUFPEC to jointly develop the Duvernay acreage for $1.5 billion, which was announced in October 2014.
On the other side of the deal table, the company that made the largest investments in Canadian upstream assets in 2014 was Canadian Natural Resources. The company acquired assets from Devon in the February transaction for $2.8 billion; followed by a $374 million acquisition of assets from Apache in March 2014.
Looking at the nature of the transactions in Figure 3 we can observe that about 58% of all deals were conventional. From resource plays, the three largest in terms of M&A activities were in Montney, Cardium and Duvernay. In 2014, only ~$1.5 billion worth of deals were within the oil sands, representing nearly 6% of the total deals.
The acquisition with the highest NPV/acre was the Chevron/ KUFPEC deal to jointly develop the Duvernay acreage. KUFPEC paid ~15,100 $/acre, which is the highest value per acre ever paid in Duvernay Shale. During 2014, the largest Montney acquisition in terms of NPV/acre was the Sinopec, Indian Oil, China Huadian Corp. transaction in February. The companies acquired the acreage from Petronas for ~7,500 $/acre.
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy advisory and research products for E&P and oil service companies, investors and governments. We are headquartered in Oslo, Norway, with additional research teams in India. Further presence has been established in the UK (London), USA (New York & Houston), Russia (Moscow), for Africa as well as South East Asia.