This Could Be A Game Changer -- August 17, 2015

Note: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

Spectra looking to buy all of Williams. Reuters is reporting:

Tulsa, Oklahoma-based Williams decided to put itself on the auction block after it rejected an all-stock acquisition proposal from rival Energy Transfer Equity LP in June.

At the time the bid was worth $53.1 billion including the assumption of debt; it was contingent upon Williams' canceling its plans to acquire the portion of its pipeline subsidiary Williams Partners LP that it does not already own for $14 billion.

Houston-based Kinder Morgan Inc is also interested in Williams, but would face potential antitrust issues if it proceeded with a bid, the people added.

It may be cheaper to buy than to build, and it's a whole lot faster.

**********************

The Dead Cow Looks Like ... well ... a dead cow....

Platts provides an update. Note the price of horizontal wells in the Bakken / Eagle Ford.

Argentina has drawn wide interest for its vast shale oil and natural gas production potential, but when it comes to committing investment to extract the resources, the hesitation is just as significant.

The potential is huge. The US Energy Information Administration estimates that the biggest play, Vaca Muerta, holds 16.2 billion barrels of oil resources and 308 Tcf of gas resources. That’s enough for the country to emulate the US shale boom.

ExxonMobil, Shell, Total, Wintershall and others have taken stakes in Vaca Muerta, but only Chevron has advanced into production in a partnership with state-run YPF. They are producing about 43,000 b/d of oil equivalent, the first shale oil extracted outside North America.

The others are moving toward pilots, a slow progression that is a sign of how hard it is to do business in Argentina and achieve what is most important for developing the play: getting drilling and completion costs down to profitable levels.

YPF is making a go of it. With Chevron, it has drilled 360 oil wells in Vaca Muerta and brought down drilling costs to $7 million per well for verticals this year from $11 million in 2011.

But that’s still shy of the $4-5 million target, or the cost of horizontal wells in the prolific Bakken and Eagle Ford Shales.

Without reaching these levels, “the wells won’t be profitable,” said Alex Fleming, a senior manager in oil and gas at EY Advisory, a US-based business advisory.

It’s a sort of chicken and egg dilemma. Without profits, the estimated $20 billion a year needed to develop the play won’t come. And without this investment in drilling tens of thousands of wells, the economies of scale won’t be reached on the fields to cut costs.

A reason not to rush into production — only 400 wells have been drilled — is that wells must be tested for up to two years to gauge the potential of the shale rock before a company will commit billions of dollars. This is especially the case now that low global oil prices have slimmed investment budgets for frontier plays.

 Much more at the link.