The efficiencies and scale from the merger help make those
goals far more achievable. Some shareholders were already calling for consolidation, including recommendations from a hedge
fund for EQT to merge with one of its competitors. With the
recent exception of EQT, the idea has yet to take hold in the
shale patch. The Marcellus is still largely fragmented with operations by Antero, Range, and Cabot, among others. Public
Permian drillers potentially have even more to gain from consolidation. According to data published by Bloomberg, the top
10 most active operators in the Delaware and Midland basins
run only 53% and 55% of rigs, respectively. This fragmentation
helps drive the Permian’s current fierce competition for acreage
and escalating competition for services.
Quality gas assets outside of the major shale plays are also
finding buyers, with Encana striking a deal to sell its Piceance
Basin assets in Colorado to Caerus Oil & Gas for $735 million.
The assets have long-life, stable production of 250 MMcfe/d and
YE16 proved reserves of 814 Bcfe. Caerus, which is backed by
Oaktree Capital and Anschutz Investment Co., joins fellow pri-
vate companies Hilcorp (San Juan Basin) and Jonah Energy
(Green River Basin) as a buyer of Rocky Mountain gas fields. In
contrast with hot shale plays, these assets are generally ac-
quired for the value of production with upside from optimizing
fields and potential increases in prices down the road.
On the midstream side, buyers are still highly focused on the
hottest (or they hope soon to be hottest) upstream areas. In-
creasing volumes in the Delaware Basin make it about as safe a
bet as energy markets provide, and a number of buyers are look-
ing to capitalize on future demand there. Howard Energy Part-
ners is one example, inking a JV with WPX Energy that will see
a consortium of capital providers invest $432 million in cash
and carry to build out midstream infrastructure. Taking a slight-
ly riskier approach (with the potential to be an early mover),
midstream companies are also increasing bets on the Powder
River Basin. After falling sharply during the downturn, upstream
activity has been picking up there again with some operators
reporting extremely impressive wells.
In the oilfield services sector, companies are also looking at
consolidation to help drive future profitability. Offshore driller
Ensco is acquiring Atwood Oceanics for $1.7 billion and adding
nine existing offshore drilling units plus two ultra-deepwater
drill ships under construction to its fleet.
SELECT INTERNATIONAL UPSTREAM TRANSACTIONS
16-Jun- 17 KazMunaiGas MOL Hungarian Oil & Gas Undisclosed Asia: Kazakhstan Acreage Oil + Gas
14-Jun- 17 Undisclosed Bellatrix Exploration $26 Canada: AB Conv. Property Gas
9-Jun- 17 MIE; Can-China; Mercuria Centrica $537 Canada: Multi Conv. Property Gas
7-Jun- 17 Total Providence Resources; Sosina $27 Ireland Acreage Oil + Gas
1-Jun- 17 Cardinal Energy Apache $244 Canada: Multi Conv. Property Oil
25-May- 17 Undisclosed Trilogy Energy $45 Canada: AB Duvernay Property Oil + Gas
24-May- 17 INEOS Dong Energy $1,050 Norway: North Sea Property Gas
24-May- 17 International Petroleum Statoil $81 Europe: France Property Oil
Total $2,010
SELECT GLOBAL OILFIELD SERVICE TRANSACTIONS
13-Jun- 17 Kirby Corp. Stewart & Stevenson $710 US: Texas Corporate Diversified Services
12-Jun- 17 Weir Oil & Gas Akastor $114 Singapore Corporate Trees, valves, actuators
30-May- 17 Ensco Atwood Oceanics $1,726 Global Corporate Offshore Drilling Units
22-May- 17 Helmerich & Payne Motive Drilling $75 US: Texas Corporate Direction Drilling Guidence
18-May- 17 Keane Group RockPile Energy Services $285 US: Colorado Corporate Completion & Workover
Total $2,910
