World of oil and gas

BUSINESS/M&A

 Concho Resources’ acquisition forms Permian’s largest unconventional shale producer

Concho Resources has acquired RSP Permian, Inc., in an all-stock transaction valued at approximately $9.5 billion. The acquisition, which includes RSP’s net debt, adds about 92,000 net acres to the company’s position in the Permian basin. Additionally, the transaction adds about 2.2 Bboe of resource potential. With a Permian portfolio that now consists of approximately 640,000 net acres and 27 rigs, Concho manages the largest drilling program in the Permian basin. Analysts are reportedly touting the transaction as a potential catalyst for future consolidation of E&P companies operating in North America. As oil prices rise, the deal “has the potential to spark an arms race in the region,” Senior Analyst, Wood Mackenzie, Roy Martin told Bloomberg. Photo: RSP Permian, Inc.

Total buys into oil fields offshore Abu Dhabi for $1.45 billion

Total has agreed to two new 40-year concession agreements with the Supreme Petroleum Council of the Emirate of Abu Dhabi (UAE) and the Abu Dhabi National Oil Company (ADNOC). Under terms of the agreement, Total was granted a 20% participating interest in the new Umm Shaif and Nasr concession, as well as a 5% interest in the Lower Zakum concession. Umm Shaif and Lower Zakum—situated about 83 mi and 40 mi, respectively, off the coast of Abu Dhabi—are two key fields that account for approximately 20% of the emirate’s production. The additional interest reportedly supplies Total with about 80,000 bopd in 2018. ADNOC Offshore will retain 100% ownership, and will serve as operator of the concessions.

GOVERNMENTAL/REGULATORY

GOM lease sale generates more than $124 million in high bids

As part of President Trump’s America-first offshore energy strategy, the region-wide Gulf of Mexico (GOM) Lease Sale 250 was held on March 21 and generated $124,763,581 in high bids for 148 tracts, spanning 815,403 acres, in federal waters of the GOM. According to the U.S. Interior Department, 33 companies participated in the lease sale and submitted $139,122,383 in bids. The sale is the second of 10 region-wide lease sales to be held as part of the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022. It includes 14,474 unleased blocks in the Gulf’s western, central and eastern planning areas. “NOIA is encouraged by the results of [the] Gulf of Mexico Lease Sale, which show a promising trajectory towards the future. While the bidding activity reflects improving, yet still lower-than-desired commodity prices, both the number of bids submitted and the total amount of high bids received are up compared to the August 2017 sale figures,” NOIA President Randall Luthi said in a statement.

Devon Energy divests Barnett shale assets

Devon Energy Corp. is selling the southern portion of its Barnett shale position for $553 million. According to the company, net production from the divested assets average approximately 680 MMcfed. Field-level cash flow for the assets, which are situated primarily in Texas’ Johnson County, is expected to be about $100 million this year. “Combined with other recent asset sales, divestiture proceeds associated with our 2020 Vision have now reached $1 billion,” said Devon President and CEO Dave Hager in a release. “We are very confident about Devon’s future and, as market conditions permit, we will continue to pursue opportunities to further increase cash returns to our shareholders.”

 Sarcos aligns with industry innovators to form technical advisory group

Sarcos Robotics has formed an industry-focused Exoskeleton Technical Advisory Group (XTAG), which is made up of executives from leading companies that specialize in industrial manufacturing, automotive, aviation and aerospace, construction, utilities, and oil and gas. Participating companies include Bechtel, BMW, Caterpillar, Delta Airlines, GE, Schlumberger and Würth Industrie Service GmbH & Co. Sarcos’ Guardian exoskeletons are said to offer the strength and precision of machines, with human-like intelligence and reflexes. They reportedly allow robots to perform complex tasks, and are capable of extended work sessions in a variety of environments. “GE is investing in emerging technologies, such as exoskeletons and human-assisted wearables to prevent injuries and unplanned downtime,” said Sam Murley, GE EHS digital acceleration leader, in a news release. “We look forward to the outcomes of the XTAG and the use of the Guardian XO to increase safety and simplify environment, health and safety programs across the company.” Photo: Sarcos.

Oil industry sees Trump’s steel tariffs as cause for concern After President Trump imposed a 25% levy on foreign steel and 10% duties on imported aluminum, many expressed concern regarding the effects these actions could have on a still-recovering industry. “Steel is important in every part of the oil and gas industry, from drilling, production, processing, storage and transportation utilizing pipelines,” Nick Schultz, V.P. of pipeline regulation and general counsel for CAPP, told Bloomberg in an email. “If Canada is not exempt, these proposed tariffs on steel imports will add a significant burden to the industry on both sides of the border, and there could be unintended consequences if there are retaliatory measures taken.” Since then, however, Trump has granted exemptions for Canada and Mexico. He also has granted temporary exemptions for the EU, Argentina, Australia, Brazil and South Korea. The Texas Alliance of Energy Producers said that it is monitoring the status of the tariffs, as well as NAFTA trade negotiations. The Alliance contacted the President directly, requesting “further consideration of steel tariffs.”

DISCOVERIES/DEVELOPMENTS

Apache reports significant oil discovery in the North Sea

 Apache Corp. reported a significant discovery at its Garten prospect in the North Sea’s UK sector. The discovery well—situated in Block 9/18a Area-W, approximately 3.7 mi south of the Beryl Alpha platform (pictured)—encountered more than 700 ft of net oil pay and stacked, high-quality Jurassic-aged sandstone reservoirs. According to the company, recoverable resources could exceed 10 MMbbl of light oil. This estimate reportedly is in line with pre-drill estimates. “The Garten discovery marks our fourth commercial discovery in the Beryl area in the past three years, spanning several play types, ranging from the Tertiary to the Triassic. Apache’s strategy to focus on exploration near operated facilities is set to deliver significant production without the long cycle time of large-scale projects,” John J. Christmann, president and CEO at Apache, said in a release. The well reportedly will be suspended as a future producer and tied back to the Beryl Alpha platform. The Beryl field, and associated infrastructure, is situated approximately 208 mi northeast of Aberdeen, Scotland. The company says it is now working to obtain regulatory approvals from the Oil and Gas Authority for the Garten discovery, which is expected in first-quarter 2019. Dr. Andy Samuel, chief executive at the Oil and Gas Authority, said, “Garten marks the 2,500th offshore exploration well on the UK Continental Shelf and is an excellent start for exploration drilling in 2018.” Photo: Apache Corp.  

 Lundin Norway completes Luno II appraisal well, increases resource estimate 

Lundin Norway AS (operator, 50%) says it has successfully completed appraisal well 16/4-11 in PL359, in the Norwegian North Sea.  The appraisal well—which is situated on the Utsira High, nearly 4 mi south of the original Luno II discovery well—encountered a gross oil column of 72 ft in Triassic sandstone, with very good reservoir quality. According to the company, the well’s main objective was to prove additional resources in the Luno II discovery, in order to move forward to development, and the results were significantly better than expected. Following extensive data acquisition and fluid sampling, Lundin increased the gross resource estimate of the Luno II discovery, from 30 MMboe to 80 MMboe to between 40 MMboe and 100 MMboe. The company says it subsequently expects to submit a PDO by the end of the year. The field’s plan for development includes a subsea tie-back to the nearby Edvard Grieg platform, approximately 112 mi west of Stavanger. From there, oil will be transported to the Sture terminal, in Øygarden, via the Grane pipeline. Following completion, the semisubmersible drilling rig COSL Innovator (pictured) will drill appraisal well 16/1-28S on the adjacent Rolvsnes discovery, in PL338C. This also is a potential tie-back development to Edvard Grieg. Success at Rolvsnes reportedly will further de-risk the area’s prospectivity which, Lundin says, could hold as much as 200 MMbbl of resources. Lundin’s partners include Lime Petroleum (30%) and OMV (20%). Photo: COSL.