The spending slowdown by international companies including BHP Billiton Ltd. (BHP) and Royal Dutch Shell Plc (RDSA) comes amid a series of write-downs of oil and gas shale assets, caused by plunging prices and disappointing wells. The companies are turning instead to developing current projects, unable to justify buying more property while fields bought during the 2009-2012 flurry remain below their purchase price, according to analysts.
The deal-making slump, which may last for years, threatens to slow oil and gas production growth as companies that built up debt during the rush for shale acreage can’t depend on asset sales to fund drilling programs. The decline has pushed acquisitions of North American energy assets in the first-half of the year to the lowest since 2004.
As overseas buyers moved in, booming production soon led to oversupplies, and gas prices plunged to a 10-year low in 2012, forcing companies to write-down the value of some of their assets. Companies were also hurt when some fields thought to be rich in oil proved to contain less than anticipated.
Firms depending on asset sales to help finance drilling may not have enough money to pay for higher oil and gas production, said Eric Nuttall, who oversees C$70 million ($68 million) at Sprott Asset Management LP in Toronto. That could slow output growth, especially as companies try to avoid taking on more debt.
International buyers that branched into North America in recent years don’t need to buy anything else -- for now, said Toshi Yoshida, a partner with law firm Mayer Brown LLP, which advises on cross-border oil and gas deals. A lot of them achieved their primary goals of obtaining a supply of long-term, dollar-denominated commodities and the technology needed to turn shale into energy, Yoshida said.
"Wildcatter bets on Ohio"--former CHK chief lines up $1.2 billion for Utica Shale deals--Headlines from WSJ article today. yup the "buyers sure are scarce for shale deals" first Pemex announces that want into U.S. shale and now Aubrey. Could Aubrey buy more from Enervest/EVEP? Well Walker and Aubrey know each other well so stay tuned.
"Mexico Oil Giant Seeks U.S. Shale"--Headline on WSJ article yesterday
"Pemex will be starting a new company that will be working on the shale-gas and shale -oil fields in the U.S."--quote from the Chief Executive of Pemex contained in the article.
apparently Pemex missed the article on the IV board.