Deals of the Week: Asian Asset Grab Intensified in North America
Government backed Asian companies made further moves for global oil and gas resources this week, with the target areas ranging from Canada and the United States to Australia. The largest deal came from INPEX Corp, who signed a $700 million transaction with Nexen to farm-in to a portfolio of assets primarily focused on the Horn River play of British Columbia in Canada. The Canadian shale gas sector has seen a flurry of deals lately from Asia, which is being driven by the low current gas reserve prices in North America and the development of LNG export terminals on the west coast of the country, ideal for serving the Asian markets. The deal will involve INPEX paying half of the consideration up front and half in the form of a cost carry to receive a 40% share of 300,000 acres of land in the Horn River, Cordova and Liard plays.
Nexen’s assets in the Horn River play have already been proven commercially productive and are currently producing 50,000 mcf/d. Upon full scale development, this is forecasted to increase to 1,200,000 mcf/d and has resulted in a cost per undeveloped acre of land of just over $5,000. On a contingent reserve basis, INPEX will be acquiring the gas resources for $0.22 per mcf with the potential to be lowered should the 13 TCF of prospective gas in the Liard basin prove to be successful. Following this deal, Nexen signed an agreement with CNOOC, another Asian NOC; CNOOC has farmed into six deepwater blocks in the Gulf of Mexico. Financial terms were not revealed.
Korean companies Samsung C&T and KNOC also invested heavily in North America this week with the joint acquisition (KNOC 90%, Samsung 10%) of Parallel Petroleum Corp from Apollo Global Management. Although the financial terms of the deal were not disclosed by either party, it has been reported by the press that the value may be as much as $780 million. It is not the first time the companies have collaborated in a deal; in 2009 KNOC and Samsung jointly acquired Taylor Energy, a company with a portfolio of assets also in the Gulf of Mexico for $800 million. Completing this week’s Asian asset grab, Mitsubishi Corp acquired a 50% interest in unconventional resource rights in the Canning basin of Australia from Buru Energy.
Nigeria approved two major deals this week, namely Neconde Energy’s acquisition of a 45% interest in OML 42 and First Hydrocarbon Nigeria Ltd’s acquisition of a 45% interest in OML 26 both from a consortium made up of Royal Dutch Shell, ENI and Total. The Neconde’s acquisition was only announced in May 2011, but First Hydrocarbons’ acquisition of OML 26 had been waiting for over a year for final approval from the government, which in that time has seen new president, Goodluck Jonathan, take office.
In the refining sector, CHS Inc. acquired an additional 25.6% interest in NCRA, owners of the McPherson refinery in Kansas for $255 million. Scaling up the acquisition cost would give a valuation of just under $1 billion for the 80,000 b/d refinery which although initially looks high, can be explained by the very high Nelson Complexity rating of 14.5. The complexity is also due to improve further still with the construction of a planned $555 million Coker unit, due to complete in 2015.
| Acquirer | Target Company | Target Business Segment | Brief Description | Total Acquisition Cost (000) |
| Plains All American Pipeline | BP | Midstream | Plains All American Pipeline acquires BP’s Canadian NGL and LPG business | 1,670,000 |
| Inpex Corporation | Nexen | E&P | Inpex Corporation farms into a 40% interest in Nexen’s northeast British Columbia assets encompassing the Horn River, Cordova and Liard basins | 703,993 |
| CHS Inc. | National Cooperative Refinery Association | R&M | CHS Inc acquires an additional 25.571% interest in the National Cooperative Refinery Association, owners of the McPherson refinery in Kansas | 255,506 |
| Stealth Ventures | Unspecified | E&P | Stealth Ventures acquiers an undisclosed company with oil and gas properties in India | 45,000 |
| Storm Resources Ltd. | Unspecified | E&P | Storm Resources Ltd acquires a producing property in the Mica area of north eastern British Columbia | 16,081 |
| Mitsubishi Corporation | Buru Energy Limited | E&P | Mitsubishi Corp acquires a 50% interest in the rights to all unconventional resources in the Kimberley region of Western Australia from Buru Energy Limited | 15,599 |
| Parex Resources, Inc. | Touchstone Exploration Inc. | E&P | Parex Resources acquires a 33.8% interest in the “Moruga Licence” onshore Trinidad and Tobago | 10,000 |
| Unspecified | Connacher Oil & Gas Limited | E&P | Connacher Oil and Gas divests its Latornell properties in the Alberta Deep basin for an unspecified consideration | - |
| Royal Dutch Shell | ENI | E&P | Royal Dutch Shell acquires an additional 7.5% interest in the Evans Shoal permit, offshore Australia as part of ENI’s deal original acquisition of a 40% interest from Santos | - |
| African Petroleum Corporation | Government body | E&P | African Petroleum Corporation are awarded two offshore exploration permits covering two blocks: Rufisque Offshore Profond and Senegal Offshore Sud Profond | - |
| Samsung Corporation | Parallel Petroleum Corp | E&P | Samsung C&T acquires a 90% interst in Parallel Petroleum LLC | - |
| Korea National Oil Corporation | Parallel Petroleum Corp | E&P | Korea National Oil Corp acquires a 10% interst in Parallel Petroleum LLC | - |
| CNOOC Ltd | Nexen | E&P | CNOOC Ltd acuires a range of interests in six deepwater exploration wells in the Gulf of Mexico from Nexen | - |
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