Link here. See comments below regarding who/what TRZ is. It should be the third comment down. [Following original post, more information came out; click here; at this site, scroll down to Hawkeye Spud.]
This is a Reuters story.
Subhead: "Follows $445 million acquisition in July same region; comes only a week after Williams Cos' $925 million deal there"
This, to me, is just another example of the "big boys" starting to get really interested in the Bakken, and more importantly for those bullish on oil, that they are feeling comfortable about where the price of oil is headed.
I started talking about this about two months ago that I expected to start seeing more mergers, acquisitions, acreage deals; very, very interesting to see it happening so soon.
The Hess deal:
- Increasing "its already large bet on the oil-rich Bakken shale formation"
- A $1.05 billion deal
- Acquires 167,000 net acres from TRZ Energy LLC
- The newly acquired acreage is near its existing acreage
- New acquisition has current net production of 4,400 bbls/day
- $1,005 million / 167,000 acres = $6,000 / acre
Hess' financials according to Yahoo!Financial:
- Market cap: $23 billion
- P/E: 9.4
- Total cash: $2.35 billion
- Total debt: $5.58 billion
- Operating cash flow: $4.32 billion (trailing twelve months)
The $6,000 / acre (Hess/TRZ) is less than the $8,000 to $10,000 / acre paid by WMB and ERF in recent deals.
Reuters again stated: among the oil shales [around the world], "the Bakken has the highest crude oil content..."
Note: in the article, it was noted that "Marathon's chief executive said this month his company would focus more on Oklahoma's Woodford shale next year because it represented better value than the Bakken."
Bruce do you know who TRZ is? The only company that makes sense to me is Tracker. I would expect their net production to be more than that by now.
ReplyDeleteI thought Tracker, also. But I don't know.
ReplyDeleteIf it has anything to do with Tracker (and I doubt it, although that was my first guess), the production by Tracker and the production by TRZ would still be kept separate. The production attributed to TRZ is only that attributed to TRZ, not to some other umbrella corporation like Tracker, if that makes sense.
Someone once told me that "LLC" companies are often subsidiaries of other companies or backed by much bigger companies, and if the LLC fails, it simply goes away; if it succeeds beyond one's wildest dreams, it is absorbed by the backers or the large corporation backing it.
But I'm as curious as you are who TRZ might be; I surfed the net looking for more info and found none.
Yes, it's Tracker. Tracker's leasehold in the area is in the company of TRZ Energy LLC.
ReplyDeleteThank you. That was my first guess, but then I talked myself out of it. Smile. I thought any Bakken company would hate to sell its holdings.
ReplyDeleteBut ...
In the past two months I have been talking about the increasing cost of doing business in the Bakken, in terms of contracting fracking crews, getting oil into pipelines, and that the larger companies had the inside track, making it difficult for smaller players. Thus, I argued that we would be seeing acreage changing hands, acquisitions, mergers, etc. And I guess this was one example, but I completely talked myself out of it, that it was tracker. Thank you for helping out.
I assume that a) Tracker needs cash to develop its remaining acreage; and/or b) it was simply too good a deal to pass up. Maybe a bit of both.
Could it be that Tracker was a umbrella of Hess (cash sale)? Alot of acerage in Dunn around the MRO fields.Could they be thinking that big? Very agressive right now with no gulf drilling it could be replacement production and capital expenditures from there.
ReplyDeleteI don't know, but you are on the same page as I am with regard to what's going on in the Bakken.
ReplyDeleteWhen you see Hess buying this much; ERF recently buying; Williams Cos (WMB) buying for the first time; and then combine that with what is going on in the Gulf; and then combine that with fierce competition in the Bakken, and you get the feeling that there could really be a shakeout in the Bakken over the next two years. By shakeout, I mean scramble to consolidate, acquire more acreage, etc., resulting in significantly fewer companies operating -- the big ones get bigger; the strong survive, weaker ones go by the wayside.
I always look forward to a new day in the Bakken. Can't wait for the markets to open to see what deals are being made and where oil is headed.
Don't be surprised about MRO selling out their position to the boys in Green as well!
ReplyDeleteIf it happens, I will give you the credit! Thank you for commenting.
ReplyDeleteI do believe we are going to see some big deals in the Bakken in 2011 - 2012, similar to Hess/TRZ; XOM/XTO; Hess/AEZ; WMB/unknown; ERF/unknown; Oasis/Fidelity.
Again, thank you.
ERF purchase was from SimRay...
ReplyDeleteERF acreage was purchase from Simray...
ReplyDeleteThank you very much. Very interesting bit of information. I had not seen much activity with regard to Simray in quite some time.
ReplyDeleteSpeaking of not much activity: just after I post a long rambling note on Zavanna and not much action, Zavanna has two new permits per today's Daily Activity Report. Like I said earlier: I love the Bakken; each new day surprises me.