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In the recently concluded deal by Occidental, their acreage in Bakken was sold for just $500 million against a prior expectation of $3 billion.

Sale of Bakken by Occidental


If I had eyeballed the attributable production correctly, the new buyer is buying at only $25,000 per flowing barrel, with the rest of the non productive acreage given away for free (assuming no debt changes hands). If a similar valuation matrix is applied to continental resources ("CLR") which had a 2Q produciton of 226mboed, CLR should only be valued at approx $5.7 billion without any debt (vs its current capitalisation of $13.44 billion with eye-watering debt levels). 

To put things in proper perspective, Occidental's acreage is far from desirable/optimal as compared to the key Bakken players.

(19-10-2015, 09:50 AM)HitandRun Wrote: [ -> ]In the recently concluded deal by Occidental, their acreage in Bakken was sold for just $500 million against a prior expectation of $3 billion.

Sale of Bakken by Occidental


If I had eyeballed the attributable production correctly, the new buyer is buying at only $25,000 per flowing barrel, with the rest of the non productive acreage given away for free (assuming no debt changes hands). If a similar valuation matrix is applied to continental resources ("CLR") which had a 2Q produciton of 226mboed, CLR should only be valued at approx $5.7 billion without any debt (vs its current capitalisation of $13.44 billion with eye-watering debt levels). 

To put things in proper perspective, Occidental's acreage is far from desirable/optimal as compared to the key Bakken players.

I will say, without any debt figure, the comparison, has very little meaning.

Anyway, a good try. 

• Oct 20 2015 at 8:54 AM 
  

Iran seeks $US70-$US80 range for oil

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NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/h/5/p/p/f/image.related.afrArticleLead.620x350.gkd5o2.png/1445291683779.jpg[/img]OPEC has exceeded its official production target for 16 consecutive months. MCT
Iran's oil minister sees no imminent change in OPEC's output strategy even as he urged fellow members of the group to cut their collective production to buoy crude to a range of $US70 to $US80 a barrel.
Iran is preparing to ramp up its own output once world powers remove sanctions on its economy, regardless of any decisions by the Organisation of Petroleum Exporting Countries, Oil Minister Bijan Namdar Zanganeh told reporters Monday at an industry conference in Tehran.
"No one is happy" with prices at current levels, he said. "OPEC should decide to manage the market by reducing the level of production," Zanganeh said. "It seems that the atmosphere is not well for making a change in the market."
OPEC has exceeded its official production target for 16 consecutive months as the group seeks to defend sales amid a global supply glut. Brent crude, a global benchmark, has slumped 43 per cent in the last 12 months and was at $US48.99 a barrel in London on Monday at 5.07pm local time. OPEC, supplier of about 40 per cent of the world's oil, plans to assess output when ministers from its 12 members meet on December 4 in Vienna.
[img=620x0]http://www.afr.com/content/dam/images/g/k/d/6/m/n/image.imgtype.afrArticleInline.620x0.png/1445291627043.jpg[/img]Brent crude has slumped 43 per cent in the last 12 months.
Iran is pushing to regain the global oil sales it lost after the US and other world powers imposed sanctions over its nuclear program. The country agreed in July to accept limits on its nuclear work in return for access to oil and financial markets.
The Islamic Republic is seeking $US100 billion in investment by March 2021 to increase output of oil and natural gas, Zanganeh said. The country hopes to stimulate interest by announcing a new contract for oil investors in November. Iran has the world's fourth-largest reserves of oil and second- largest deposits of gas, according to the US Energy Information Administration.
"We won't seek permission from anyone for our production," Zanganeh said. "We will bring our production back to the market, and the market will absorb it. All of those OPEC members whom I speak with welcome this."
The comparatively low cost of producing oil in Iran enhances its appeal, OMV chief executive officer Rainer Seele said at the conference. OMV is interested in developing two areas - the Mehr block and the Cheshmeh Khosh field - if investment contract terms are flexible, he said.


"You can find very low-cost fields here, and therefore I think it's very competitive production that's coming on stream here in Iran," Seele said.
OPEC members that boosted sales to Iran's customers after sanctions hobbled its exports must make room for the planned increase in Iranian supply, Amir Hossein Zamaninia, deputy minister for commerce and international affairs, said in an interview at the Tehran event. Saudi Arabia, "more than anybody else," should take the lead in trimming output, he said. "Hopefully something will be done and allow for Iranian extra supply."
Iran can boost oil exports by 500,000 barrels a day within a week after the removal of sanctions, Roknoddin Javadi, managing director of state-run National Iranian Oil Co, told reporters. The Persian Gulf nation can raise exports by 1 million barrels a day within six months once the curbs are lifted, he said.
It targets crude production of 4.7 million barrels a day by March 2021 and plans to produce 1 million barrels a day of crude condensates by the same date, Javadi said. The country pumped 2.8 million barrels a day of oil in September, according to data compiled by Bloomberg.

Iran also expects to complete its first terminal for exporting liquefied natural gas, known as LNG, within three years after sanctions are lifted, NIOC's Javadi said. Gas producers can supply LNG by ship to customers beyond the reach of pipelines.



Bloomberg

OPEC Brings Oil Price War Home in Pursuit of Asia's Cash
http://www.bloomberg.com/news/articles/2...sia-s-cash

(19-10-2015, 09:55 AM)CityFarmer Wrote: [ -> ]I will say, without any debt figure, the comparison, has very little meaning.

I beg to differ, because it shows that many of these companies are (1) struggling badly and (2) still overpriced.  But there's nothing to stop any buddy from offering his model.

Changing the subject, here's an interesting take on the mentality of these "swing producers": 

Drill or Die

• OPINION
   
  
  
•  Oct 22 2015 at 8:51 AM 
  

Janet Yellen and central bankers frustrated in bid to spur new growth

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NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/u/l/4/3/image.related.afrArticleLead.620x350.gkf9ll.png/1445465619943.jpg[/img]In the US, the recovery is feeble, while eurozone economic activity is sluggish and there are fears that Japan could be once again on the brink of recession. Jacquelyn Martin
[Image: 1435478719294.png]

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by Karen Maley
Even Janet Yellen, the phlegmatic boss of the US Federal Reserve, will have found it difficult to suppress a flicker of annoyance atthe latest slide in the oil price, after new figures showed a higher-than-expected rise in US stockpiles.
There's little doubt that the plunge in the oil price has frustrated the efforts of the world's major central banks. Faced with anaemic economic activity and desperately low levels of inflation, central banks in the US, Europe, Japan and the UK have been forced to deviate from traditional monetary policies, which rely on interest rate cuts to boost growth, and are relying instead on massive bond-buying programs to bolster growth.
Since 2007, the world's major central banks have injected huge amounts of money – it's now close to $US13 trillion ($18 trillion) – into the global economy, by buying bonds in an effort to push long-term interest rates lower.
At the same time, central bankers know that increasing the amount of their currency in circulation will push their exchange rates lower, which makes their country's exports more competitive in global market.

But central bankers have been deeply disappointed with the results that their efforts. In the US, the recovery is feeble, while eurozone economic activity is sluggish and there are fears that Japan could be once again on the brink of recession.
Earlier this month, the International Monetary Fund again cut its forecasts, and now expects that the global economy will expand 3.1 per cent this year, down from its previous estimate of 3.3 per cent.
Faced with faltering growth, the world's central banks are focusing more on their central policy objective: inflation. By reigniting inflationary pressures, central banks can help reduce the heavy debt burden that has been built up by governments, companies and households around the world.
Further, in a world where interest rates are now close to historic lows, pushing up the general price level is one way to further cut the real (or inflation-adjusted) cost of credit and to stimulate economic activity.


But inflation remains stubbornly low. US consumer prices fell 0.2 per cent in the year ended September 30 - the biggest drop in eight months - while eurozone consumer prices fell 0.1 per cent. As a result, the 2 per cent target of most central banks appears a distant dream.
There's little doubt that the steep slide in the oil price is largely to blame for this weakness in inflation. But it's not the only reason.
In Europe the savage austerity policies imposed on much of southern Europe have pushed salary levels down.
At the same time, the growing number of part-time jobs, the declining power of unions and the pressure on companies to cut costs in order to compete in the global markets has also put a squeeze on wages. So much so that in the US, salary levels are virtually stagnant, even though the country is close to full employment.

The problem for central bankers is that while inflationary pressures remain weak, they'll continue to feel the pressure to continue, or even to ramp up, their monetary stimulus.
This means that Yellen's plans for finally raising US interest rates from near zero – the level they have been stuck at since late 2008 – seem to have been put on hold. At the same time, European Central Bank president Mario Draghi and Bank of Japan governor Haruhiko Kuroda are being pushed to boost the size of their bond-buying programs even more, even though the results to date have been disappointing.
The problem is that Yellen and other top central bankers know all too well that they're getting very close to the limits of monetary policy.
Increasingly, they look to governments to take more responsibility for boosting longer-term growth by investing in major infrastructure projects and by tackling tough strategic reforms.

But until politicians start to see the problem of weak growth as – at least partly - their responsibility, central banks will find themselves increasingly frustrated in their efforts to revive economic activity.

Oil Glut Appears To Be Getting Worse, Not Better
http://finance.yahoo.com/news/oil-glut-a...02012.html

Smart $ on the prowl... 
This is the 2nd M&A overtures on ASX. The first is Woodside for Oil Search a low ball discipline one. Santos is deemed high leverage and has been bogged down... interesting to note that M&A deals are starting ie Predators are comfortable cutting deals at current oil price levels...

Scepter approach reveals Santos’ true value

• BUSINESS SPECTATOR
  
• OCTOBER 22, 2015 1:45PM
  

Stephen Bartholomeusz
[Image: stephen_bartholomeusz.png]
Business Spectator Columnist
Melbourne



[b]When the Santos board decided two months ago to ditch their chief executive and conduct a strategic review in which no options would be excluded, they would have been aware that there was potential that the announcement would attract predators. And it has.[/b]
Santos (STO) said today that it had received an “indicative, highly-conditional and non-binding” proposal from an investment bank and private equity fund manager backed by super-wealthy Asian and Middle Eastern families and sovereign wealth funds, including members of the ruling families in Brunei and Dubai.
The approach from Scepter Partners, a firm led by former members of Blackstone’s Asian team, was at $6.88 a share and values Santos at just over $7 billion.
Given that it was trading just above that level — without a takeover premium — as recently as August and the analyst consensus is that it has a net asset value above $9 a share, it isn’t surprising that the Santos board dismissed the approach, labelling it “opportunistic in nature” and saying that it didn’t reflect the fair value of the group’s underlying assets.
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• MORESantos pursued by former boss
  

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With Scepter managing more than $US14bn of discretionary funds, and its core backers — there are something like nine ruling families, awash with petrodollars and vast oil industry experience that between them have a combined net worth of more than $US100bn, Scepter says — the potential for Scepter to return with a more threatening offer is obvious.
The impact on the Santos share price of the disclosure of the approach was instant and substantial, with the price leaping almost $1 and adding more than $1bn to Santos’ market capitalisation. At around the $6.40 a share level, however, it is below the $6.88 a share foreshadowed by Scepter.
Santos is acutely vulnerable because of the impact of the coincidence of the plunge in oil prices over the past year, from above $US100 a barrel to less than $US50 a barrel, with the pre-start-up phase of the $US18.5bn Santos-led GLNG project in Queensland. The project, which has stretched Santos’ balance sheet, finally shipped its first cargo last week but probably won’t been fully operational until 2016-17.
It was the leverage in its balance sheet and the collapse in the oil price that decimated its share price ($12.80 a year ago), undermined its well-respected chief executive (David Knox) and led to the strategic review led by Santos chairman, Peter Coates.
That “all-options-open”’ review was expected to result in the sale of assets, perhaps even a prized 13.5 per cent stake in the PNG LNG project that would almost single-handedly deal with the leverage issue. Santos itself, however, was well aware that the decision to remove Knox and announce the review could put the entire company into play.
Whether it can retain its independence or not probably depends on its shareholders’ time horizons and their expectations of future oil prices. The leverage Santos has to oil prices has been laid bare by the plunge in prices but it would be equally leveraged to any recovery.
While there has been a lot of criticism levelled at Santos and Origin Energy (which has a similar Queensland LNG project), particularly at their risk management and scenario planning, given that they have, self-evidently, been taken by surprise by the severity and duration of the plunge in prices, it is worth noting that the architects of the turmoil in the market also misjudged the impact of their strategy.
The Saudi-led OPEC slashed the price by maintaining, indeed increasing, output in an attempt to drive out US shale oil production that represented a rapidly-growing threat to OPEC’s influence over the market.
While effective in driving the price down to the point where there has been a dramatic reduction in US onshore drilling activity, US production has held up as a result of dramatic productivity gains and a concentration by the producers on the most productive fields. It is only very recently that there have been signs that US volumes might have peaked and could decline.
The Saudis appear to have misjudged the resilience of US shale oil and have had to begin liquidating their vast offshore investment reserves to fund their budget deficits — they are reported to have withdrawn more than $US70bn of their investments this year.
It has also become apparent that any material pick-up in the price will bring dormant US production back into play, implying that OPEC won’t be able to allow prices to return to their pre-crash levels if it wants to retain its influence.
Against that, the savagery of the price fall has resulted in hundreds of billions of planned investment in new oil exploration and production being abandoned, which will inevitably have an impact on the price in future.
Given that the market share war appears to be belatedly achieving its original objective of halting the growth in the US onshore oil sector, and that it has put a big dent in the pipeline of future supply, it would appear reasonable to assume that the price is at its nadir, or at least close to it.
That would in turn suggest that the outlook for Santos over the next couple of years is a lot more positive than the past year has been, particularly once the GLNG project’s two trains are fully operational and it is garnering more than $1bn a year of cash flow from its stake.
The Scepter backers have deep, generational knowledge of the oil market and OPEC’s workings, as well as, in practical terms, limitless firepower to throw at Santos.
They can take a medium- to long-term view of the oil price outlook and their move on Santos suggests they see far more upside than the local market has been pricing into its share price, although its price decline may have been exaggerated by the attempt by some in the market to pressure the board into an equity raising at the distressed price level. In effect, the Scepter approach is a vote of confidence in Santos’ prospects.
The Santos board is well placed to rebuff anything short of an offer that reflects their view of fair value for the company, given that its strategic review has tested the market value of almost every significant asset Santos owns. It would have a very clear ‘sum of the parts’ figure in mind, as well as an understanding of the group’s sensitivity to any firming of the oil price.
Extracting full and fair value if Scepter returns, however, wouldn’t be an easy exercise given what’s happened in the oil market over the past year and the degree to which it has rattled the markets for the two Queensland LNG-exposed stocks.
The board would need to convince shareholders to see the past year as a likely aberration and to look two or three years out to the point where GLNG is more mature. Perversely, the approach from Scepter and the credibility of its sponsors might force the market to reappraise its previously pessimistic assessment.

3rd deal in the E&P space and its likely to be a friendly one given they share the common holder in 7 Group Holdings helmed by Kerry Stokes... Pure share swap though and the enlarged entity will survive the current long dark tunnel of low commodity prices in my opinion...
More importantly, it is significant that E&P corporate big wigs are more comfortable that a "floor" may be within sights to go ahead with mega deals to further cut costs in order to survive
 
Beach, Drillsearch set to merge


Reporter
Oil and gas producers Beach Energy and Drillsearch have struck a merger deal which would see the creation of a $1.17 billion listed company.
Beach and Drillsearch said today they had entered into a binding deal that would see Beach takeover all Drillsearch shares that it does not already own at 83c per share.
The deal represents a 27 per cent premium to Drillsearch’s last share price close and values the company at $384 million.
Beach currently holds a 4.6 per cent stake in Drillsearch. If the deal goes ahead, Drillsearch shareholders will own around one-third of the combined company.
Drillsearch shareholders will receive 1.25 Beach shares for each Drillsearch security they hold.
The companies said the merger will give the duo “enhanced scale” with a combined fiscal 2015 production of 12.1 million barrels of oil equivalent, plus an expanded portfolio of oil, gas and infrastructure assets.
“The boards of both Drillsearch and Beach believe this is a logical combination of two complementary, overlapping businesses, with the opportunity to generate significant value for shareholders of both companies,” the firms said in a joint release today.
The deal is subject to the approval of Drillsearch shareholders, at a meeting expected to occur in late January, as well as court approval and other conditions.

OPEC close to crushing US oil boom
DateOctober 22, 2015

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Grant Smith


After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in US crude output.
The nation's production is almost back down to the level pumped in November 2014, when the Organisation of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the US wilts, demand for OPEC's crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates.
While cratering prices and historic cutbacks in drilling have taken their toll on the US, OPEC members have also paid a heavy price. A year of plunging government revenues, growing budget deficits and slumping currencies has left several members grappling with severe economic problems. The fact that the US oil boom kept going for about six months after the group's November decision also means OPEC has so far succeeded only in bringing the market back to where it started.
"It's taken a hell of a long time and it will continue to take a long time -- US oil production has been more resilient than people thought," said Mike Wittner, head of oil markets research at Societe Generale in London. "The bottom line is the re-balancing has begun."
OPEC abandoned its traditional role of paring production to prevent oversupply last November as a tide of new oil from the US eroded its share of world markets. The group chose instead to keep pumping, allowing the subsequent price slump to squeeze competitors with higher costs. The group didn't discuss capping output when its representatives met in Vienna Wednesday with non-member countries including Russia.
The plan appears to be working. Oil remains 34 per cent lower than when OPEC revealed its strategy on November 27, trading for $US47.63 a barrel in London on Wednesday. US crude production has retreated about 500,000 barrels a day from the three-decade peak reached in June to 9.1 million a day in the week to October 9, according to data from the Energy Information Administration.
The losses will accelerate next year with a drop of 390,000 barrels a day in annual average production to 8.86 million barrels a day, according to the EIA. OPEC's fortunes will improve as the US declines, with the IEA predicting demand for the group's crude climbing to 31.1 million barrels a day next year from 29.3 million in 2014.
"Their strategy is still working for them," said Miswin Mahesh, an analyst at Barclays Plc in London. "It means pain now, but in the medium-to-long term they will reap the fruits of a more balanced market, moderated shale supplies, growing demand for oil and ultimately a higher price."
The pain has been considerable. The average price of a selection of OPEC's crudes has been about 46 per cent lower this year than in 2014, equivalent to a loss of export earnings of roughly $US370 billion.
Saudi Arabia, the main architect of OPEC's new strategy, will have a budget deficit of 20 per cent of gross domestic product this year, the International Monetary Fund estimates. While the kingdom has been able to tap foreign currency reserves and curb spending to cope with the slump, financial assets may run out within five years if the government maintains current policies and prices stay low, the IMF said Wednesday.
Less wealthy OPEC members have even fewer options. The threat of political unrest is mounting in the "Fragile Five" of Algeria, Iraq, Libya, Nigeria and Venezuela, according to RBC Capital Markets LLC.
Venezuela, whose currency has lost 87 per cent of its value on the black market in the past year, is urging fellow OPEC members to reverse course and curb production to support prices. Technical talks on Wednesday between officials from OPEC and non-members ended without any discussion of output caps or restoring a target price, Russian Energy Ministry official Ilya Galkin said. Speaking before the forum, Venezuelan President Nicolas Maduro had pledged the country would present evidence on the need to revive prices to $US88 a barrel.
Iran agrees that OPEC ought to reduce output to engineer a price recovery to $US70, but it's doubtful the group will enact any measures to do this, the nation's Oil Minister Bijan Namdar Zanganeh said October 19. The Persian Gulf nation is planning to boost its own output by 1 million barrels a day next year if international sanctions are lifted.
Faltering US supplies show the Saudi-led strategy is paying off, said Societe Generale's Wittner. "If there are folks in the oil market who expect this is going to end with a new game plan, they're going to be very disappointed," he said.