Ever-increasing demand for oil, along with shrinking numbers of assets for sale in Canadian public auctions, is continuing to heat competition for assets. Producers are paying more than C$70,000 per flowing barrel of oil equivalent (BOE) for properties, according to Calgary-based investment-banking firm Sayers Energy Advisors. "The small amount of publicly announced assets for sale currently on the market, or announced to be on the market in the short term, indicates that buyers will need to be aggressive in order to secure production through acquisitions via the public auction process," says Brent Heinz, vice president with the firm. "Currently only approximately 40,000 BOE of production is publicly available for sale via property and corporate sales." Less daily production has been for sale midyear for the past two years, with 65,000 BOE for sale by the end of June 2005, a shortage compared with the end of June 2004 when there was some 200,000 barrels for sale. Energy trusts previously had an advantage over traditional E&P companies due to their lower cost of capital and strong support in the public market, he says, but the E&Ps have been highly aggressive in the last year, increasing competitiveness through public sales. "This is in part due to many of the junior E&Ps currently trading at similar values in terms of production ($/BOE/d) to the trusts." Two years ago, trusts were paying approximately C$43,000 per producing barrel, while traditional E&P companies paid 80% as much. The trusts paid more than C$50,000 per flowing BOE in 2005; the traditional producers, 88% as much. They each now pay more than C$70,000 per daily BOE. Preemptive bids are becoming commonplace. "In fact, the buyer may be inclined to pay a premium in the hopes of avoiding putting the company in play or providing the seller the incentive to go ahead with a public marketing of the properties."
Recommended Reading
Texas Earthquake Could Further Restrict Oil Companies' Saltwater Disposal Options
2024-04-12 - The quake was the largest yet in the Stanton Seismic Response Area in the Permian Basin, where regulators were already monitoring seismic activity linked to disposal of saltwater, a natural byproduct of oil and gas production.
Iraq to Seek Bids for Oil, Gas Contracts April 27
2024-04-18 - Iraq will auction 30 new oil and gas projects in two licensing rounds distributed across the country.
Ohio Utica’s Ascent Resources Credit Rep Rises on Production, Cash Flow
2024-04-23 - Ascent Resources received a positive outlook from Fitch Ratings as the company has grown into Ohio’s No. 1 gas and No. 2 Utica oil producer, according to state data.
Utica Oil: Encino Energy’s Liquids Wells Top the Charts in Ohio
2024-06-11 - Encino Energy’s first-quarter wells took the top five spots in Ohio as the company’s liquids output accounted for more than half of the state’s 7.23 MMbbl first-quarter total.
Oceaneering Secures Contract with Petrobras for Offshore Brazil
2024-06-10 - Oceaneering International Inc. will supply steel tube and thermoplastic electro-hydraulic umbilicals and associated subsea distribution hardware to projects offshore Brazil.