BUSINESS
Santos buys ConocoPhillips’ northern Australia business
In a $1.4-billion deal, Santos Ltd. has agreed to purchase ConocoPhillips’ northern Australia business. According to the company, the purchase will boost its position in Asia’s growing LNG market. The transaction reportedly will allow Santos to become the country’s largest independent energy producer and capitalize on a push by Asian consumers, including China, to move away from coal to cleaner-burning natural gas. It comes one year after Santos’ acquisition of Quadrant Energy, expanding its position in the Australian oil ad gas market further. “The acquisition of these assets fully aligns with Santos’ growth strategy to build on existing infrastructure positions, while advancing our aim to be a leading regional LNG supplier,” explained Santos CEO Kevin Gallagher. In addition, ConocoPhillips is selling its operating interests in the Darwin LNG processing plant (pictured) and the Bayu-Undan, Barossa and Poseidon gas fields. The company is not the first to announce plans to sell interests in Australia; ExxonMobil also recently announced plans to sell its Bass Strait assets, off Australia’s southeastern coast. Photo: ConocoPhillips Australia.
C&J Energy Services, Keane Group merge to form NexTier Oilfield Solutions
Two Houston-based firms, C&J Energy Services and Keane Group, have entered into an all-stock merger of equals. Upon closing of the merger, the companies will create a new leading well completion and production services company called NexTier Oilfield Solutions Inc. Currently, C&J is a provider of onshore well construction and intervention, well completion and well support. And Keane Group provides hydraulic fracturing, wireline, engineered solutions and cementing. The new company reportedly will offer integrated completion services.
Neptune Energy acquires North Sea assets from Energean
Neptune Energy and Energean Oil and Gas have entered into a conditional sale and purchase agreement involving the acquisition of Edison E&P’s UK and Norwegian producing development and exploration assets. The assets are being acquired for an initial cash consideration of $250 million. The acquired portfolio reportedly will provide Neptune with material growth in contingent resources, an estimated 30 MMboe of 2P reserves and near-term production in core areas of the North Sea. It includes the Glengorm gas condensate discovery; the Nova gas development project; the Dvalin gas development project; and Scott & Telford, Tors, Wenlock and Markham fields. In a release, Neptune CEO Jim House said, “The assets are an excellent fit with our North Sea portfolio. Nova and Dvalin are expected to add 12,000 boed to our production base over the next two years, and Glengorm adds significant potential for the longer term.”
Parsley Energy acquires Jagged Peak Energy in multi-billion-dollar deal
Parsley Energy will acquire Jagged Peak Energy in an all-stock transaction valued at approximately $2.27 billion, including Jagged Peak’s net debt of about $625 million. The transaction reportedly was unanimously approved by each company’s board of directors. In a release, Jagged Peak President and CEO Jim Kleckner said, “The combined assets of Jagged Peak and Parsley Energy are a great fit that create a stronger combined Permian company. The proforma company provides our shareholders with premier acreage in both the Midland and Delaware sub-basins, while providing additional scale, significant operational synergies, and free cash flow in this competitive environment.” The combination of the companies’ acreage reportedly will create an adjoining footprint in the Delaware basin, allowing for a heightened lease geometry with additional extended lateral wells.
PRODUCTION
U.S. Gulf of Mexico production to set records through 2020
According to the U.S. Energy Information Administration (EIA), U.S. crude oil production in the Gulf of Mexico set a new annual record in 2018 with an average 1.8 MMbpd. The agency said it expects production to continue climbing, setting new records in years to come. Despite the shut-ins related to Hurricane Barry this summer, production in the GOM is soaring and expected to reach an average 1.9 MMbpd in 2019 and 2.0 MMbpd in 2020. This level of growth is based on the EIA’s latest Short-Term Energy Outlook. Although it is a noteworthy production increase, the EIA expects the GOM to account for just 15% of total U.S. crude oil production in 2019–2020—compared to 23% of total U.S. production in 2011—as regional onshore production growth continues to outpace that of the offshore sector. Aiding in the projected growth are the eight new projects that producers anticipate will come online in 2019 and the four anticipated for 2020. According to EIA, these projects will contribute approximately 44,000 bopd in 2019 and about 190,000 bopd in 2020. Photo: Shell.
Giant Johan Sverdrup field goes onstream in the North Sea
In early October, Equinor—alongside partners Lundin Norway, Petoro, Aker BP and Total—reported that its giant Johan Sverdrup project had gone onstream in the North Sea, more than two months ahead of schedule and about NOK 40 billion below the original estimates outlined in the plan for development and operation. With recoverable reserves of approximately 2.7 Bboe, the field is anticipated to produce up to 660,000 bopd at peak. Additionally, because the field is powered with electricity from shore, it has record-low CO2 emissions of less than 1 kg/bbl, according to Equinor. “Johan Sverdrup coming onstream is a momentous occasion for Equinor, our partners and suppliers. At peak, this field will account for around one third of all oil production in Norway and deliver very valuable barrels with record-low emissions. [It] is expected to generate income from production of more than NOK 1,400 billion, of which more than NOK 900 billion [goes] to the Norwegian state and society,” Eldar Sætre, President and CEO of Equinor, said in a release. By the end of the month, the field’s first cargo—containing 1 MMbbl of crude with a market value of approximately $60 million—was reportedly set to be delivered to customers in Asia. Photo: Equinor.
GOVERNMENT/REGULATORY
Trump names energy secretary to replace Perry
U.S. President Donald Trump said that he will nominate Dan Brouillette to be his next energy secretary, replacing Rick Perry, who is leaving that post later this year. Brouillette, who has been Perry’s second-in-command, served previously at the Energy Department under former President George W. Bush as an assistant secretary for congressional and intergovernmental affairs. He also worked previously as staff director for the House Energy and Commerce Committee, where he helped to establish new energy legislation. Based on his background, Brouillette is unlikely to stray from the policies supported by Perry, who has been a forthright advocate of the nation’s oil and gas industry. Photo: Department of Energy.
Trump highlights importance of shale to U.S. economy, environment
At the 9th Annual Shale Insight Conference in Pittsburgh, President Donald Trump highlighted the overwhelming benefits of the United States’ domestic shale industry, describing “an economic boom of truly historic proportions,” which brings “prosperity back to cities and towns all across America.” Congruently, the Council of Economic Advisors (CEA) issued a report, titled “The Value of U.S. Energy Innovation and Policies Supporting the Shale Revolution,” outlining the rise in American oil and gas production and its affirmative effect on cost and price; consumer savings driven by energy price declines made by shale exploration; and both total and shale-related changes in U.S. emissions. The report disclosed a significant increase in extraction productivity for oil and gas since 2007, allowing the U.S. to become the world’s largest producer. The report also revealed that U.S. shale reduces energy-related greenhouse gas and particulate emissions through changes in the composition of electricity generation sources. Additionally, it saves U.S. consumers approximately $203 billion annually, according to the report.
Exxon, Chevron contest potential fracing ban
While Elizabeth Warren and Bernie Sanders, two leading candidates for the Democratic presidential nomination, are working to put a stop to America’s reliance on fossil fuels, they also want to end what they call, “Washington’s subservience to corporate interests.” “On my first day as president, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands. And I will ban fracing everywhere,” Warren said in September. Exxon Mobil and Chevron, however, are pushing back. The companies, which are two of the largest producers in the Permian, spoke out publicly against the fracing ban proposals. According to Bloomberg, the companies said that they would shift profits from crude production in the U.S. to other countries. They also said they may increase prices for consumers while doing nothing to reduce oil demand or greenhouse-gas emissions. “Any efforts to ban fracing or restrict supply will not remove demand for the resource,” Neil Hansen, Exxon V.P. of investor relations, reportedly said.
“If anything, it will shift the economic benefit away from the U.S. to another country, and potentially impact the price of that commodity here and globally.”
UK effectively bans fracing
New wells using hydraulic fracturing technology have been effectively banned in the UK, where companies, including Caudrilla Resources Ltd. and Ineos Group Ltd., have been working to exploit reserves in the country’s deep shale formations. The ban on new permits follows new evidence from the Oil & Gas Authority, suggesting that it’s not possible to accurately predict the probability and magnitude of earthquakes caused by fracing. Bloomberg reported that, as recently as August, the government had been showing support for fracing, saying that it saw shale gas as a crucial domestic energy source that can cut imports and help transition away from coal. “Whilst acknowledging the huge potential of UK shale gas to provide a bridge to a zero-carbon future, I’ve also always been clear that shale gas exploration in the UK must be carried out safely,” said UK Energy Secretary Andrea Leadsom. Cuadrilla and Ineos reportedly have also been encouraging the government to decrease regulations, so they can start producing gas domestically.
