How BHP/Petrohawk is — and isn’t — a good deal
Posted on July 15, 2011 at 11:08 am by Tom Fowler in E&P, Economics, M&A, Natural Gas, North America
fuelfix.com
From the article:"...But could the deal continue to add to the frothiness of shale deals?
Marathon Oil’s $3.5 billion deal to buy 141,000 acres in the Eagle Ford shale in June was seen by some as a high-water mark, with the company paying about $21,000 per acre. On that basis, how does the BHP/Petrohawk deal compare?
While price per acre isn’t necessarily the best metric to use since the deal also includes a lot of producing wells and midstream infrastructure, notes Andrew Coleman of Raymond James, the average price is about $15,000 per acre for BHP/Petrohawk.
That would roughly be on par with the Anadarko Petroleum/KNOC deal in the Eagleford earlier this year, which was about $17,000 per acre.
But when you look at the per-acre cost in the different shales, the comparisons are a mixed bag, according to the analysis from Citigroup Global Markets analyst Robert Morris and his crew.
For undrilled Haynesville acreage, Citigroup estimates the cost to BHP was about $5,000 per acre. “… which matches what BHP paid for Chesapeake’s Fayetteville stake earlier this year.”
For Petrohawk’s Permian basin acreage the price is about $6,200 per acres, “ … which appears quite aggressive given that HK’s average cost basis is $1.4k/acre.”
And for the Eagle Ford acreage the price was about $22,000 per acre, “… which is arguably the high-end of any public transaction to date.”
A downside for deep pockets picking such potentially prolific assets? They plan to actually drill them, which could continue to put a damper on natural gas prices, notes Citigroup.
Will this deal spark more acquisitions or consolidation among U.S. E&P companies? Maybe.
TPH says it’s favorite takeout candidates include Brigham Exploration, Oasis Petroleum, Cabot Oil & Gas, Carrizo Oil & Gas, Range Resources, Southwestern Energy, and Ultra Petroleum.
Coleman over at Raymond James says he also likes SM-Energy, Forest Oil, Swift Energy, and Goodrich Petroleum.
Who’s unlikely to be part of takeover/merger? TPH says Chesapeake Energy and EOG have the right assets to attract a bidder but they “may be too large.”...".
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In the end, any take out of a potential E&P Company must not be too large, needs to have proven producing assets w/ plenty of acreage for future development and most importantly is willing to be acquired.
EKS |
