Shale plays are reshaping the nation’s gas supply, and their influence is extending to all aspects of the industry. The transaction market has also been profoundly influenced by the shale plays, said Ward Polzin, managing director, Tudor, Pickering, Holt & Co., at DUG 2010.
In 2007, shale deals began to impact the market, and by 2009 shale deals accounted for more volume than non-shale deals. “We now have a shale market that is equal to or greater than the rest of the market,” Polzin said.
Today, 55% to 60% of the deal volumes have a shale orientation, and half the number of deals done are shale. The discrepancy between volume and numbers comes because shale deals are generally larger, he noted. Furthermore, the new tranche of shale deals are coming from every shale basin. “There’s not one shale dominating the volume: there’s a buyer in every one of those positions.”
The rise of the shale joint venture is another notable development. Some $15 billion worth of shale joint ventures have been consummated during the past few years, and this trend is increasing. “We are seeing two to three significant-sized JVs being announced every quarter,” said Polzin. The JVs fit well in today’s market: buyers like the repeatability and scale of the shale JVs, and sellers like the ability JVs give to hold on to large land positions and accelerate value.
Even in a tough environment, the shale plays stand out. Private equity, foreign buyers and public companies are all quite active in shales—today, shales are the place to be.
-Peggy Williams, Senior Exploration Editor, Oil and Gas Investor
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