E&P Notes (May 2018)
Authors: Parshall Joel , Zborowski Matt , Whitfield Stephen 
Published: May 2018

E&P Notes

‘Enormous’ Merge Play Resource Rivals Major World Gas Fields, Largest Discoveries

Joel Parshall, JPT Features Editor

Producers in the recently opened Merge play of Oklahoma’s Anadarko Basin are sitting atop a resource that rivals some of the world’s major gas fields and largest new discoveries, Geology CEO Greg Augsburger of Citizen Energy told the SPE Gulf Coast Section Business Development Group recently.

Merge lies between the prolific Sooner Trend, Anadarko, and Canadian and Kingfisher (counties) (STACK) and South Central Oklahoma Oil Province (SCOOP) plays, effectively tying them together.

Privately funded Citizen Energy, formed in 2012, drilled the Merge discovery well in September 2015 and 18 delineation wells before significant competitor interest emerged. The discovery, made by the Governor James B. Edwards well in the Sycamore formation, was Citizen’s first company well.

 

Concho Deal Creates Permian Basin Giant 

Matt Zborowski, Technology Writer

Concho Resources has agreed to acquire RSP Permian in an all-stock deal valued at $9.5 billion including $1.5 billion in RSP debt. The move is expected to make Concho the Permian Basin’s most-active driller and its largest oil and gas producer from unconventional shale, the opera-tors said in a joint release.

The combined company will hold some 640,000 net acres in the basin and operate a 27-rig program, with fourth-quarter 2017 production of 267,000 BOE/D. RSP is providing Concho some 92,000 net acres, split almost evenly between the Midland and Delaware Basins, along with seven active drilling rigs. Its fourth-quarter 2017 production was 56,000 BOE/D, of which 80% was oil and 20% was gas. Once the deal is complete, Concho will have 26,000 gross locations and net resources of 12.2 billion BOE.

 

Latest Gulf of Mexico Lease Sale Generates Moderate Bidding Interest

Stephen Whitfield, Senior Staff Writer

The largest lease sale in the history of the US Gulf of Mexico (GOM) drew a lukewarm response from industry bidders, as a small percentage of available blocks received winning bids well below past price averages.

Held in New Orleans on 21 March, Lease Sale 250 was the second offshore sale held under the National Outer Continental Shelf Oil and Gas Leasing Program (National OCS Program) for 2017–2022. Under this program, 10 regionwide lease sales are scheduled for the GOM, where oil and gas infrastructure is well established. Two lease sales will be held each year and include all available blocks in the combined Western, Central, and Eastern GOM planning areas.

The lease sale included 14,474 unleased blocks. Excluded from the sale were blocks subject to the US congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks that are adjacent or beyond the US Exclusive Economic Zone, in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundary of the Flower Garden Banks National Marine Sanctuary.

Eni Enters Abu Dhabi Amid Zohr Efforts Offshore Egypt

Matt Zborowski, Technology Writer

Eni has notched agreements with a pair of Abu Dhabi companies that will increase the Italian multinational firm’s presence in the Middle East and give it another partner—along with cash—in its producing Zohr gas field offshore Egypt.

Marking its entrance to Abu Dhabi, Eni has been awarded stakes in two off-shore fields for $875 million. It is receiving a 10% interest in the Umm Shaif and Nasr concession and a 5% interest in the Lower Zakum concession. The 40-year agreements are backdated to 9 March.

Eni is paying a $575-million participation fee for the Umm Shaif and Nasr concession 135 km off Abu Dhabi, where oil production is targeted to reach 460,000 B/D. The Lower Zakum concession, 65 km off Abu Dhabi, comes with a $300-million participation fee and a production target of 450,000 B/D of oil. Oil was discovered at Lower Zakum in 1963, and production there began in 1967.

 

Exploration Must Meet Tough Value Criteria

Joel Parshall, JPT Features Editor

Oil exploration has gone through a brutal period the last few years and remains commercially challenged, especially among companies that answer to a broad investor base. In a talk titled “The Exploration Conundrum,” before the Norwegian consulate general in Houston recently, Chief Upstream Strategist Bob Fryklund of IHS Markit said that pure exploration projects must meet tough value criteria to move ahead and companies must better communicate that value to the financial community.

Yet communicating it stands as a tall order in today’s environment. Fryklund compared the 2014–2017 stock performances of four oil companies:

An integrated supermajor

A publicly traded national oil company with major international operations

A United States onshore producer developing unconventional shale resources

A pure international exploration company