The FINANCIAL — Statoil ASA (OSE: STL, NYSE: STO) is strengthening and diversifying its US onshore portfolio by entering the Eagle Ford shale area.
Through agreements with Enduring Resources, LLC and Talisman Energy Inc., Statoil will acquire 67,000 net acres in the Eagle Ford shale formation in Southwest Texas.
“The magnitude of the shale resources in North America and the significant role these resources are expected to play in the future energy mix make this an attractive opportunity,” says John Knight, senior vice president, business development and global unconventional gas.
“This Eagle Ford position complements Statoil’s existing US onshore portfolio, supplying a different range of hydrocarbons to different markets, and it also has a clear path towards operatorship. We now have a long term flexible portfolio with significant optionality and growth potential from the top shale plays,” Knight continues.
"Statoil and Talisman have formed a 50/50 joint venture for the purpose of developing assets in the Eagle Ford shale. As part of the joint venture, Statoil and Talisman have jointly acquired the Eagle Ford assets of Enduring, comprising 97,000 acres (48,500 net to Statoil), in a $1.325 billion transaction. The purchase price equates to about US$10,900 per acre," Statoil informed.
Furthermore, Statoil will acquire 50% of Talisman’s existing Eagle Ford acreage and production for $180 million (18,500 acres net to Statoil). As a result, Statoil and Talisman will together hold 134,000 net Eagle Ford acres and associated assets and production in the joint venture.
The two transactions amount to a total consideration for Statoil of $843 million and will deliver recoverable Statoil resources of approximately 550 million barrels of oil equivalent.
In addition, the companies have an option to jointly acquire up to 22,000 net acres.
Initially, Talisman will take the lead as operator for the total acreage with Statoil taking over the operatorship of 50% of the acreage within three years. Governance in the joint venture will be shared equally between the two partners from the start.
“We are pleased to enter into this joint venture with Talisman, an experienced operator in several North American shale plays. We look forward to working together with them in developing and producing these assets in a safe and efficient manner,” says John Knight.
Enduring operates 90% of its leases and this acreage is located in an attractive, liquids rich area of the Eagle Ford play. Statoil expects that a significant proportion of the revenue from Statoil’s Eagle Ford acreage will come from gas liquids and condensate which are competitively located to be sold into the petrochemical and refinery centres in Texas.
The effective date of the transaction is August 1, 2010. The transaction is expected to close by the end of this year.
Morgan Stanley acted as an advisor to Statoil on this transaction.
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