Monday, October 17, 2016

SM Energy To Sell Some Bakken Assets To Oasis; Newfield To Sell Bakken Assets; Oasis To Offer Up To 46 Million New Shares -- October 17, 2016

Note: I do much of this in haste. I often misread things. I often make factual and typographical errors. The blog is for my personal interest in the Bakken to help me better understand the Bakken, the oil and gas industry, in the context of global events and Washington politics. I share it because readers often provide links I would otherwise miss. Do not make any financial, investment, travel, relationship, or job decisions based on what you read here. If this is important to you, go to the source.

Updates

October 20, 2016: random notes regarding the SM Energy deal to buy additional acres in the Permian; and to finance that deal by selling some Bakken assets to Oasis. 

October 20, 2016: Mike Filloon has a Bakken update on RSP Permian's Silver Hill acquisition in the Delaware Basin of the Permian.

October 20, 2016: Rigzone/Bloomberg -- more on SM Energy's plans in the Permian -- a must read. 

October 19, 2016: Oil & Gas Journal on this deal:
  • Oasis: acquires 55,000 net acres; 226 gross operated locations; from SM Energy; $785 million
  • acquisition: 50 million boe of proved reserves; 63% of which is consider proved developed producing and 77% of which is oil; will produce 12,400 boe/d 4Q16
  • Oasis: 3Q16 production averaged 48,509 boe/d; 81% oil
  • Oasis: increased its full-year standalone company guidance to 50,000 boe/d
  • Oasis: current well costs: now down to $5.2 million on 4-million-lb-slickwater completions
  • Oasis' natural gas processing plant in Wild basin now online; operating as planned; will allow October, 2016, production to average over 50,000 boe/d
$785 million / 55,000 acres = $14,000/acre

Original Post
Huge "thank you" to a reader for spotting this. I would have missed it. From a press release:
  • SM Energy will sell its Williston Basin assets located outside of Divide County for $785 milllion
  • Oasis is the buyer of the SM Energy assets; again, this is their assets "outside of Divide County"
Also in the press release:
  • SM Energy to acquire 37,500 net acres in West Texas; SM will have 82,450 acres in Midland Basin
  • $1.1 billion cash plus 13.4 million shares of SM common stock to be issued to the seller
  • seller: QStar LLC, a portfolio of EnCap Investments L.P. 
SM Energy shares: $40/share = $500,000
$1.6 billion / 37,500 acres = $40,000/acre

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Newfield will sell North Dakota Bakken assets to finance STACK play in Oklahoma. Link here.
Newfield paid $470 million this year to expand its drilling rights in the central Oklahoma shale fields, part of a flood of investment into one of the few U.S. regions where drilling is still profitable at current prices. 
It’s a matter of "when, not if" Newfield sells its drilling rights in the Williston shale basin, [CEO Lee] Boothby said. Newfield currently holds rights on 85,000 acres in the Williston. No specific deal is on the table right now, he said.
Back of the envelope: 85,000 x $5,000 = $425 million.

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LNG Unable To Compete With Coal in Asia

Despite an over 90 percent coal price rally to almost $100 a tonne, and even with relatively low LNG prices of $6.50 per million British thermal units (mmBtu) , versus $20 per mmBtu in 2014, gas still can not compete with coal in Asia.
For LNG to be competitive, coal needs to trend toward $110 a tonne in Asia.  

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Active rigs:


10/18/201610/18/201510/18/201410/18/201310/18/2012
Active Rigs3267190184186

RBN Energy: understanding rate regulation for a new crude oil pipeline.  A continuing series.

Oasis to offer 46 million shares of common stock. Link here

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KK Rider Story, Todd Snider

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The Market

Open: up about 75 points. Goldman Sachs quarterly earnings surged 47%; easily beat expectations. Shares up 2% in early trading. As reported yesterday, Netflix shares have surged; up almost 20% in trading today on reports of huge global subscriber increase; Netflix is set to become #2 in dollars spent for "own" content. Only ESPN will spend more. If I recall, around $6 billion to be spent by Netflix, and about $7 billion by ESPN for "own" content programming. Of course, Oasis was expected to drop with today's news and shares are down almost 4% to under $11. XLNX is moving in the right direction now after a few down days. US Silica holdings, I would assume, is trending up again; let's see: yep, up about 1%. RSP Permian showing a bit of profit taking, down about 1.3%.

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