• 4 mintues Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Forecasts for oil stocks.
  • 9 minutes Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 13 minutes European gas market to 2040 according to Platts Analitics
  • 11 mins Simple question: What is the expected impact in electricity Demand when EV deployment exceeds 10%
  • 2 hours America's pandemic dead deserve accountability after Birx disclosure
  • 4 hours Putin blocks Ukraine access to Black Sea after Joe blinks
  • 31 mins Today Biden calls for Summit with Putin. Will Joe apologize to Putin for calling him a "Killer" ?
  • 4 hours U.S. Presidential Elections Status - Electoral Votes
  • 22 hours Fukushima
  • 1 day CO2 Mitigation on Earth and Magnesium Civilization on Mars – Just Add Water
  • 22 hours Biden about to face first real test. Russia building up military on Ukraine border.
  • 4 days New Chinese Coal Plants Equal All those in U.S.A
  • 5 days Joe Biden's Presidency
Why Nikola Was Never Actually A Tesla Challenger

Why Nikola Was Never Actually A Tesla Challenger

Nikola took the markets by…

The Worst Oil Trades Ever Made

The Worst Oil Trades Ever Made

Wall Street is full of…

What The Market Is Overlooking In The Occidental Deal

What The Market Is Overlooking In The Occidental Deal

Occidental Petroleum has caught a…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Does This $1.5 Billion Shale Purchase Signal A Change?

The shine has come off the North American natural gas export story lately.

A year ago, most observers in this market were buzzing about the possibilities for sending cheap natgas abroad, in the form of liquefied natural gas (LNG). With projections running high about the amount of gas that could be sold from places like the U.S. Gulf Coast and the west coast of Canada.

But LNG prices in key consuming nations like Japan and Korea have since fallen back to their lowest since the Fukushima incident. And LNG developers in Canada particularly have said they are starting to get cold feet over high tax rates for projects here.

Amid such an environment however, we got a very interesting M&A deal in the Canadian natural gas space this week. Showing that interest continues to run high here--with or without hopes of big LNG developments.

Related: Petronas Threatens To Scrap Canadian LNG Terminal Over Tax Rates

The purchase came from Kuwait Petroleum Corp (KUFPEC). Who agreed to buy a 30% interest in an emerging Canadian shale gas play for a hefty price tag of $1.5 billion.

The acreage in question is located within the Duvernay play of western Alberta. With the interest being sold to KUFPEC by current holder Chevron--a major that has recently been selling off projects globally in an effort to raise cash.

One of the interesting things about the deal is the fact that the Duvernay is a liquids-rich gas play. Showing that North American gas still has an appeal for big producers, even at current prices below $4 per mcf.

The liquids of course help production economics. With recent wells in the Duvernay testing hundreds or even thousands of barrels per day, alongside straight-up gas output.

Related: U.S. And Australia Chasing Qatar for LNG Supremacy

But even prices for natural gas liquids have been in decline in North America the past 18 months. Showing that, ultimately, big players around the world just want to get into the phenomenal growth story of shale here--high commodity prices or not.

Canada is likely the best place for incoming producers to get exposure to the space today. With prices for projects in popular U.S. plays like the Marcellus, Eagle Ford and Permian running high (in Q3 alone, Permian Basin M&A totalled $11.2 billion--accounting for one-third of the total dollar value of global oil and gas deals for the period).

Look for increased drilling in plays like the Duvernay to benefit the Canadian services sector, and support good valuations for lands here. We'll see if more M&A emerges in this space.

Here's to getting in where you can,

Dave Forest

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News