Independents Get Oilier, Majors Get Gassier in U.S. Transaction Market

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Aug 16, 2011, 11:34 ET

HOUSTON, Aug. 16, 2011 /PRNewswire/ -- Announced U.S. oil and gas transaction volume topped $24.4 billion for the first six months of 2011 versus $37 billion during the first half 2010, according to Hart Energy's A-DCenter.com.

"Two themes characterize the 2011 market," said Richard Mason, chief technical director, upstream, for Hart Energy. "One is a larger number of smaller transactions in the Bakken Shale and Permian Basin, as operators add bolt-on acreage or improve liquids-rich positions in bite-sized increments. The other is a rising tide of investment by major oil companies in U.S. onshore assets."

According to Mason, the majors appear focused on the Marcellus Shale where Shell, Chevron, and ExxonMobil invested $12 billion+ in the last 18 months. ExxonMobil's $1.69 billion purchase of TWP Inc. and Phillips Resources Inc. in early June brought 317,000 net acres, 50 million cubic feet/day of gas equivalent in production, and 228 billion cubic feet in proved reserves.

The A-DCenter.com database shows ExxonMobil, Chevron, and Marathon Oil Corp. represented 51% of dollar transaction volume during the quarter. This includes the three largest U.S. onshore deals, notably Marathon's $3.5 billion purchase of Hilcorp Energy's 141,000 acres in the gas/condensate window of the Eagle Ford.

The second quarter U.S. deal market saw distinct preference for oil-related transactions. The Bakken Shale led other regions, accounting for 13 of 85 deals recorded in Hart Energy's A&D Transaction Database, followed by the Permian Basin, which accounted for 10 of 85 deals (including the $1 billion merger between Laredo Petroleum LLC and Broad Oak Energy Inc.). The Eagle Ford shale also accounted for 10 of 85 deals during the quarter.

"The industry is expecting domestic transactions to heat up during the second half of the year as independents get oilier and several joint ventures come to market in Oklahoma's Mississippi Lime, the Utica Shale, and the Niobrara Shale," noted Mason. "That said, unexpected commodity price volatility could dampen transaction volumes."

Hart Energy is the leader in covering news and technology for investors and petroleum executives via subscriber-only online information services, magazines, newsletters and high-level conferences, notably DUG™ (Developing Unconventional Gas) and DUO™ conferences. Its research arm published the first Global Shale Gas Study in 2011; its Global Shale Oil Study will be published this fall.