El Paso's Eagle Ford Assets on the Market

El Paso Corporation and Kinder Morgan announced a $38 billion transaction where the later will acquire all of El Paso's assets. The deal will create a pipeline and midstream company that is the 4th largest energy company in North America (Enterprise Value of >$90 Billion). El Paso had plans to spin off its exploration and production business at the end of the year, but those plans are delayed until Kinder Morgan has full control of the assets. The company still plans to divest the E&P assets, but is more likely to sell individual assets instead of spinning off a new entity. That means there are Eagle Ford wells and acreage on the market.

An international company like BHP or the Eagle Ford partnership between Talisman and Statoil are the most logical bidders. The proximity fits and both entities have the cash.

El Paso's Eagle Ford assets are located in La Salle County, TX where both Petrohawk (now BHP) and Talisman-Statoil operate. The El Paso assets would compliment other transactions by the same companies:

It's not Eagle Ford related, but Statoil announced the acquisition of Bakken focused Brigham Exploration on October 17, 2011. By becoming an onshore operator, I suspect the company's appetite for acreage will grow.

None of the three companies companies have been shy about acquiring U.S. shale assets. The El Paso acreage falls right in the middle of the Talisman-Statoil partnership and just west of BHP's Hawkville asset. It's a logical fit, but you never now how a company's appetite changes from day to day. With all of the bullish sentiment around the Eagle Ford, I doubt it will take long for someone to swoop in on this deal.

“On the PE side, the odds are that these assets would be sold separately,” said Adam Connors, a director in corporate finance group of boutique investment bank C.K. Cooper & Co. “There could also be another E&P company buying whole thing, but in terms of the odds of a PE firm picking up all of it and operating it effectively – they’re slim.”

The assets include El Paso’s “active drilling program” in the Eagle Ford Shale in South Texas, an emerging Wolfcamp position, as well as portions of its Gulf of Mexico and South Texas assets. It also includes Haynesville, Wilcox – a conventional gas play – and Altamont, up in the Rockies. Additional operations are in offshore Brazil and Egypt’s Western Desert.

Read more at wsj.com


Statoil - Talisman JV buys Enduring Resources Eagle Ford Acreage

Statoil agrees to 50/50 joint venture with Talisman Energy and moves to buy 97,000 acres from Enduring Resource's for $1.325 billion (>$13,600 per acre).  Statoil is expanding its US onshore operations outside of the Marcellus Shale and gaining exposure in the coveted Eagle Ford Shale.  Statoil is also paying Talisman $180 million (~10,000 per acre) for a 50% interest in 37,000 acres currently held by Talisman. Talisman's existing acreage was acquired through the acquisition of Common Resources' acreage in early 2010 for $359 million (~$10,000 per acre). The partnership now holds 134,000 acres in the Eagle Ford Shale. The partnership's Eagle Ford Shale acreage now spreads across DeWitt County, Karnes County, LaSalle County, Live Oak County, and McMullen County.

"Norwegian oil firm Statoil is expanding further its shale gas operations in the United States, saying on Sunday it has created a joint venture with Canada's Talisman to acquire acreage on the Eagle Ford prospect in Texas for $1.325 billion.""In 2008 Statoil acquired a 32.5 percent stake in the Marcellus Shale project from Chesapeake., a holding covering 1.8 million acres in the Appalachian region of North-East America."

"Statoil said mastering shale gas technology, such as horizontal drilling or hydro-fracking, is key to the growth of international oil companies in general and Statoil in particular."

Read the article at reuters.com