BUSINESS, MERGERS AND ACQUISITIONS

Sanchez Energy divests non-core Marquis asset in the Eagle Ford

Sanchez Energy Corp. sold its non-core Marquis asset to Lonestar Resources for approximately $50 million. In addition, the company received Lonestar preferred stock, structured to convert into 1.5 million shares of common stock.The asset, which is situated in the eastern part of the Eagle Ford shale play, consists of about 21,000 net acres in Texas’ southwest Fayette and northeast Lavaca Counties. According to Sanchez, the Marquis asset contains net proved reserves of 2.7 MMboe, as well as net production of approximately 1,750 boed (74% oil) from 104 gross (65 net) wells. Sanchez says that the divestiture reflects the company’s strategy of increasing its liquidity and financial flexibility, in order to focus on the growth and development of its Comanche, Catarina and Maverick assets. These assets are primarily in the western part of the Eagle Ford, where Sanchez has more than 340,000 net acres.

Encana sells Piceance assets in Colorado for $735 million

Encana Oil & Gas, Inc., a wholly-owned subsidiary of Encana Corp., has agreed to sell its Piceance natural gas assets in northwestern Colorado. Denver-based Caerus Oil and Gas reportedly will purchase the assets for a total cash consideration  of $735 million. The assets include approximately 550,000 net acres of leasehold and approximately 3,100 operated wells, which produced an average 240 MMcfgd and 2,178 bpd of liquids during first-quarter 2017. Encana reported that the assets’ estimated year-end 2016 proved reserves stood at 814 Bcfge. Following the transaction, Caerus says it will operate over 4,000 producing wells and over 7,000 future drilling locations. Subject to closing conditions and regulatory approvals, the transaction is expected to be complete during the third quarter. Photo: Caerus Oil and Gas.

EQT Corp. acquires Rice Energy, forming largest U.S. gas producer

EQT Corp. has acquired Rice Energy for a total consideration of about $6.7 billion. The transaction brings together two top Marcellus and Utica producers, forming the largest natural gas driller in the U.S. Under terms of the agreement, EQT also will assume or refinance approximately $1.5 billion of net debt and preferred equity. According to EQT, the transaction will close during fourth-quarter 2017. Because much of the acquired acreage is adjacent to EQT’s existing position, the company reported that it anticipates a 50% increase in average lateral lengths of future wells in Pennsylvania’s Greene and Washington Counties. The company’s president and CEO Steve Schlotterbeck said, “Since the beginning of 2016, we have added more than 485,000 acres to our development portfolio and have achieved significant scale in the core of the Marcellus. We will now shift our focus from acquisitions to integration, as we work to drive higher capital efficiency.”

DISCOVERIES/DEVELOPMENTS

Exxon Mobil to proceed with first phase of Liza development, offshore Guyana

The final investment decision has been made for the first phase of Exxon Mobil’s Liza development, offshore Guyana. Liza field, one of the largest oil discoveries of the decade, is part of the 6.6-million-acre Stabroek Block. It is situated approximately 118 mi offshore, in water depths of 1,500 to 1,900 m. Four drill centers are reportedly projected, with a total of 17 wells—eight production, six injection and three gas injection. Phase 1, which is expected to cost more than $4.4 billion, includes a subsea production system and an FPSO vessel, designed to produce up to 120,000 bopd. According to Exxon Mobil, first oil is expected to be achieved by 2020. In addition to the company’s announcement regarding its final investment decision, Exxon Mobil reported positive results from the Liza-4 well. The well reportedly encountered more than 197 ft of high-quality, oil-bearing sandstone reservoirs, reinforcing a potential Liza Phase 2 development. Liam Mallon, president of Exxon Mobil Development Co., said, “We will work closely with the government, our co-venturers and the Guyanese people in developing this world-class resource that will have long-term and meaningful benefits for the country and its citizens.”

Statoil, Faroe Petroleum announce PDO approval for Njord and Bauge fields

Faroe Petroleum and Statoil have released details regarding plans for development and operations (PDO) for Njord and Bauge fields, in the Norwegian Sea. Authorities approved the PDO in late June. According to Statoil, the Njord A platform and Njord Bravo FSO will be upgraded to recover the remaining resources from Njord and Hyme fields, which amount to about 175 MMboe. Bauge is a new field development that will be tied in to the Njord A platform. The development concept for Bauge field reportedly includes one subsea template, two oil producers and one water injector. Siri Espedal Kindem, senior V.P. of Operations North, Development and Production Norway, said, “Njord remaining onstream until 2040 is important for our specialist communities in Kristiansund and Stjørdal, as well as the mid-Norway supply industry. An upgraded field center and new infrastructure at Njord also allows for the development of other fields in the area.” First oil is anticipated at the end of 2020.

Positive well test results reported from Muruk exploration well in Papua New Guinea

Exxon Mobil (42.5%), Oil Search (operator, 37.5%) and Santos (20%) have announced positive well test results from the Muruk 1ST3 exploration well in the Papua New Guinea (PNG) highlands. The production test was carried out to calculate reservoir productivity and recover hydrocarbon samples over the gas-saturated Toro Sandstone interval, between about 13,018 ft and 13,336 ft. The report follows Exxon Mobil’s announcement in May that the Muruk-1 sidetrack well also yielded positive results. Santos reported that the Muruk drilling program has confirmed the discovery of a potentially sizeable new gas field, approximately 13 mi northwest of the Hides production facilities. The companies reported that the Muruk 1ST3 well flowed gas and condensate at a rate of 16 MMscfd, on a 32/64-in. choke. Numerous hydrocarbon samples were collected for further analysis. The data collected from the Muruk drilling program reportedly will be assessed to help define forward appraisal options.

PRODUCTION

EnQuest delivers first oil at Kraken field,in the UK North Sea

EnQuest has announced first oil from Kraken oil field, in the East Shetland basin of the UK North Sea. First oil reportedly was achieved on schedule and considerably under budget. To maximize long-term productivity, the company says that the development’s 13 wells—which include seven producers and six injectors—will be brought online in phases, as the company works to move “from a period of heavy capital investment, to a focus on cash generation and deleveraging the balance sheet,” said CEO Amjad Bseisu. Following the company’s announcement, EnQuest reportedly rose as much as 11%, which is the most it had climbed in London trading in three months. “As one of the most significant oilfield projects on the UK Continental Shelf, successful production from Kraken is positive news for the whole basin. It has the potential to open up additional heavy oil opportunities in the northern North Sea, with other developments in the pipeline,” said Dr. Andy Samuel, UK Oil & Gas authority chief executive. According to Wood Mackenzie, Kraken is the only heavy oil project anticipated to come online this year in the greater North Sea. Enquest owns 70.5% of the Kraken development, while Cairn Energy owns the rest of the field. Photo: EnQuest. 

Repsol Sinopec delivers first gas from Cayley field as part of Montrose Area redevelopment

Repsol Sinopec Resources UK delivered first gas from Cayley field, which is the third and final discovery to be brought onstream during the major redevelopment of the Montrose Area, in the central North Sea. The redevelopment is expected to extend the life of the Montrose facilities, which were originally installed in 1976, beyond 2030. According to Repsol Sinopec, gross incremental production from Cayley, Godwin and Shaw is expected to peak at approximately 40,000 boed. Shaw field achieved first oil in early May. Cayley and Shaw fields have been developed as subsea tie-backs to a new bridge-linked production platform (BLP), while Godwin field has been developed via an extended-reach well from the Arbroath platform. The company says that it anticipates that the project will yield up to 100 MMboe of additional production, overall. “With the support of our shareholders and our partner Marubeni, we have overcome significant technical and legacy challenges to safely maximize economic recovery from these historic fields and facilities. We can now look forward to hub production from Montrose for another 15 years,” said Brian Winton, general manager, Montrose and Arbroath. As operator, Repsol Sinopec holds a 58.97% working interest in the redevelopment project. Marubeni Oil & Gas UK is the company’s sole partner.

GOVERNMENTAL/REGULATORY

Diplomatic, commercial isolation disrupts Qatari LNG shipments

Saudi Arabia—along with Bahrain, Egypt and the UAE—severed political and economic ties with Qatar, citing support for regional rival Iran, as well as for Islamic extremists. As a leading LNG producer with the world’s third-largest gas deposits, Qatar employs Saudi Arabian land crossings to satisfy UAE gas demand. The region’s largest ports, including Saudi Aramco’s Ras Tanura, shunned all vessels traveling to or from the Persian Gulf state. The region’s dispute also threatened to worsen instability in Libya, where efforts to restore output and exports are still underway following a 2011 rebellion. Demands from the Saudi-led alliance reportedly include a complete overhaul of Qatari foreign policy. While Qatar reportedly is interested in negotiating a fair solution, it also called the demands baseless and too strict. If demands are not met, however, the countries threatened to further sanctions against Qatar.

U.S. President Trump “unleashes” new energy policy focused on exports

U.S. President Donald Trump launched what he referred to as a “golden era” of energy policy in late June. Trump said he plans to achieve global “energy dominance” through increased natural gas, coal and petroleum exports. “We are here today to unleash a new American energy policy,” Trump said at a Department of Energy event. “We will export American energy all around the world.” Following the American shale boom, the U.S. now aims to become a net exporter of gas by the end of year, after decades of subsisting as a major natural gas importer. James Jones, a former NATO Supreme Allied Commander, said, “I think the United States can show itself as a benevolent country by exporting energy and by helping countries that don’t have adequate supplies by becoming more self-sufficient and less dependent and less threatened.” In addition, Trump promised to lift further Obama-era restrictions and opened a public comment period for the Interior Department, as it develops a new national offshore leasing program.