E&P Notes (October 2019)
Authors: JPT staff _ 
Published: September 2019

E&P Notes

BP To Sell Alaska Business to Hilcorp

BP has agreed to sell its entire business in Alaska to Hilcorp Alaska, based in Anchorage. Under the terms of the agreement, Hilcorp will purchase all of BP’s interests in the state for a total consideration of $5.6 billion.

The sale will include BP’s entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., that owns all of BP’s upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.’s interest in the Trans Alaska Pipeline System (TAPS).

Bob Dudley, BP group chief executive, said in a press release, “Alaska has been instrumental in BP’s growth and success for well over half a century and our work there has helped shape the careers of many throughout the company. We are extraordinarily proud of the world-class business we have built, working along-side our partners and the state of Alaska, and the significant contributions it has made to Alaska’s economy and America’s energy security.

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BHP, Anadarko Among Leaders in Latest US Gulf Lease Sale

Australia’s BHP Billiton and the recently acquired Anadarko Petroleum submitted the largest dollar totals of high bids in US•Gulf of Mexico Lease Sale 253.

The year’s second US gulf auction received 165 bids on 151 blocks from 27•firms, with high bids totaling $159.4•million, the US Bureau of Ocean Energy Management (BOEM) announced in New Orleans on 21•August. Those totals were mostly down from the last two gulf lease sales: Lease Sale 252 in March and•Lease Sale 251 in August 2018.

“While we saw companies pick up acreage near remote areas, the infrastructure-rich Mississippi Canyon was the bid engine of the sale, capturing roughly 25% of total bids,” said Michael Murphy, research analyst at consultancy Wood Mackenzie, in comments following the auction. “Infrastructure-led exploration continues to be a theme” in US gulf lease sales, he noted.

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Eni Makes Big Gas, Condensate Discovery in Nigeria

Eni reported a large gas and condensate discovery in the deep sequences of the Obiafu-Obrikom fields on the OML61 block onshore the Niger Delta.

The Obiafu-41 Deep well reached a TD of 4374 m and encountered 130•m of high-quality hydrocarbon-bearing sands within the deltaic sequence of Oligocene age. The find amounts to 1 Tcf of gas and 60 million bbl of associated condensate in the deep drilled sequences. Eni said the discovery has further potential that will be assessed in the next appraisal campaign.

The well will immediately be brought on production and is expected to flow more than 100 MMscf/D of gas and 3,000 B/D of associated condensate, the•company said.

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The Shale Bankruptcies Continue

The US upstream space may be more than 3 years removed from the apparent bottom of a generational oil-price slump, but the number of shale operators filing for Chapter 11 bankruptcy protection continues to grow.

The latest two are Sanchez Energy and Halcón Resources, both based in Houston. For Halcón, it is the company’s second time in 3 years.•

Sanchez’s voluntary filing on 11 August “follows an extensive review of strategic alternatives to align its capital structure with the continued low-commodity-price environment,” the company said in a news release. The Eagle Ford Shale producer will continue to operate as usual with an additional $175 million in newly committed financing, of which $25 million will be used to repay borrowings and replace a letter of credit.

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Equinor, YPF To Explore Block Offshore Argentina

Equinor and Argentina’s state-owned YPF will team to explore the 15000-sq-km CAN 100 offshore block in the North Argentina Basin.

Under the agreement, YPF will transfer 50% of its interest in the block to Equinor, giving the companies an equal share. YPF acquired 100% of the block in May, at which point a 4-year exploratory period began.

Equinor and YPF are already partners on the CAN 102 and CAN 114 blocks, also in the North Argentina Basin, awarded in April as part of Argentina’s first open bid round for offshore acreage in more than 2 decades. Equinor gained seven blocks in the auction, including five as•operator.•

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PDC Energy and SRC Energy Merge in Latest Shale Deal

The latest move to consolidate the US shale sector came on 26 August as PDC Energy said it would acquire SRC Energy in an all-stock transaction valued at just over $1.7 billion in assets and assumed debt.

The cash value of the deal is about $971•million and indicates that the offer is pegged at a 3.9% discount on SRC’s last•closing share price.

The two Denver-based companies will form the second-largest oil and gas producer in Colorado’s DJ Basin and adds to PDC’s position in the Permian Basin. Land holdings in the DJ Basin will include about 182,000 “core” acres, with the newly acquired SRC share adding an estimated 10 years of inventory. PDC is taking on close to $685 million of SRC’s debt.