Chesapeake Energy has made the largest deal thus far in the short life of the emerging Utica shale, in a $2.1 billion transaction with an undisclosed “international major energy company”. Chesapeake didn’t give much away on the identity of the joint venture partner other than it being "somebody big enough for this deal not to be material." Companies who may fit this billing include ExxonMobil who has already started amassing acreage in the Utica shale whilst choosing not to divulge exactly how much and at what price, and Reliance Industries, the Indian heavyweight who has made no secret of its desire to further its shale resources investment.
Despite the assets being virtually wholly undeveloped, the impressive drilling results released by Chesapeake in August 2011 were enough command a value of $15,000 per acre for the 25% interest in 570,000 acres. Chesapeake has been the front runner in the Utica play and it was its Q2 2011 release that sparked the industry’s imagination on how prosperous the play may eventually become. In a later report Chesapeake revealed that its 12 well drilling program resulted in liquids rich production, with one well alone registering an IP rate of 3,000 boe/d, bolstering the argument that its acreage in the play may be worth $20 billion.
The next largest deal of the week also came from a shale play within the US, but at a very different stage in its lifespan. EnCana is divesting its Barnett shale assets to a partnership of Enervest and EV Energy Partners for $975 million. EnCana bought its stake in the play as far back as 2004 and although being largely responsible for the success of the shale industry in the US, the Barnett shale has now been superseded by plays closer to the end market, like the Marcellus shale of Pennsylvania, and plays rich in more economically viable liquids, such as the Eagle Ford play in Texas. The fact that interest for shale resources has been diverted elsewhere has produced very competitive acquisition metrics, with EnCana’s reported 2.3TCF of potential resources from the assets equating to 42¢ per mcf.
The United States was the setting for 7 further upstream oil and gas deals, in a week which attracted a total deal value of $4.3 billion. Concho Resources acquired 114,000 net acres in the Delaware Basin for $330 million. North American Energy Resources acquired a…
