Why ConocoPhillips is selling off property in the world’s hottest essential oil play and buying Canadian propane gas assets

Why ConocoPhillips is selling off property in the world’s hottest essential oil play and buying Canadian propane gas assets

- in Investment

Activity and deal making while in the Montney, abundant in natural gas and liquids like butane, propane and pentane, will be ramping up

CALGARY – ConocoPhillips Co. is offering off land in the world’utes hottest oil play and acquiring up natural gas assets around Canada amid a flurry of deals in the home-based gas sector and in growing Canadian energy plays.

Houston-based petrol major ConocoPhillips announced this week them had sold off multiple terrain packages in Texas’ extremely effective Permian basin for US$250 million together with, at the same time, bought 35,1,000 acres of land while in the Montney play in northern Alberta together with B.C. for US$120 thousand.

International companies such as BP Plc, Overall ASA and Shell Plc have been marketing off Canadian assets in a big hurry over the past few years given direction constraints and higher taxes here, but analysts say ConocoPhillips is preparing for major growth in any Montney and the company sees the chance to “buy low.”

“Right now, Permian sales are getting pretty good prices consequently it’s probably looking like a chance to sell high there a little and buy low elsewhere together with improve your portfolio at the same time,” Edward Jones analyst Brian Youngberg explained of the ConocoPhillips deals.

Activity and work making in the Montney, abundant in natural gas and liquids like butane, lp and pentane, are ramping way up.

ARC Energy Research Institute estimations $30 billion will be spent in conventional and tight oil and gas clusters in Canada this year, that’s more than twice the $12 zillion in investment projected to penetrate the oilsands, but still well under the peak of $46 billion spent in Canadian conventional oil and gas development in 2014.

ConocoPhillips, which did not reply to a request for comment, is one kind of multiple companies striking deals in the Montney and emerging Duvernay along with Horn River formations nearby immediately. A string of discounts have been announced including terrain sales, assets being wear the block and midstream discounts in the Canadian tight gas and oil sector.

Imperial Oil Ltd. plus majority owner ExxonMobil Corp. have take their Horn River gas properties within the north-western-most corner of B.C. up for sale.

“After careful analysis, Imperial and ExxonMobil Canada have opened up marketing of the Horn River assets,” Imperial spokesperson Jon Harding said in an e mail. An advertisement announcing the investments are for sale shows offers for the properties – which include 228,A thousand acres of land, seven producing wells and a natural gas processing facility — by the end of Might.

In addition, Calgary-based Crescent Point Power Corp. confirmed months of supposition that it had built up any sizeable land position from the Duvernay formation, spending roughly $112 thousand thousand buying up 335,000 massive areas in the play, with deposits of light oil, natural gas, beverages like butane, propane and pentane.

“It’vertisements a big company play,” AltaCorp Funds analyst Thomas Matthews said with the Duvernay. “It has the potential to rival from any of the large oil plays that individuals currently have in Western The us.”

He said the ConocoPhillips and Cres Point deals are likely instances of big companies “looking for scale” inside of a specific play, as main producers need large parcels of land to meaningfully better their production.

Matthews said the quantity of deals in the gasoline space have included suppliers and pipeline companies.

Other deals announced this week, including gas-processing plans between Encana Corp. and Keyera Corp. and concerning Birchcliff Energy Ltd. and AltaGas Limited., will allow the producers to be able to drill more wells aiming for highly-valued natural gas liquids and involved gas in the Montney and Duvernay.

Similarly, Bloomberg announced Tuesday that Enbridge Inc. possesses hired the Royal Standard bank of Canada to sell a handful of its natural gas gathering and also processing assets in Alberta plus B.C. and hopes to raise $2 billion from the deal. The company has previously said hello was looking to sell $3 mil in assets this year.

“What we should haven’t seen just yet is really a corporate M&A transaction,” Matthews claimed.

“Until we start to see certain corporate M&A, then I don’testosterone levels expect to see a large flood for internationals coming back in. That will be the subsequent catalyst for our sector – any meaningful M&A transaction this shows the valuations have got fallen to the point where it would be goofy not to transact,” he said.

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