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Wildcat’s Pick of the Week.
Every Monday, Wildcat will give you a headstart on the coming week, as well as a round-up of what mattered in the previous week.
Week Ahead
Tuesday, 31 July: BP Q2 results; EDF Q2 results; Shale World Australia, Brisbane (until 1 August); Coal Seam Methane 2012, Brisbane (until 1 August); New deadline for Cove Energy shareholders to accept take-over offer from Thai state energy company PTT Exploration and Production
Wednesday, 1 August: Eni Q2 results; CNG Infrastructure & Repowering Vietnam Forum, Ho Chi Minh, Vietnam (until 3 August)
Thursday, 2 August: ENEL H1 results; GDF Suez H1 results
Friday, 3 August: Petrobras Q2 results
Winners & Losers
Winner: State-controlled China National Offshore Oil Corp. (CNOOC) has agreed to buy Canadian company Nexen for $15.1 billion, giving the Chinese giant access to the Gulf of Mexico, North Sea and West Africa. The deal also increases CNOOC’s presence in Canada’s highly prospective oil sands. While Nexen is considered cheap at the moment, the deal still represents the largest-ever overseas acquisition by a Chinese company. CNOOC will pay $27.50 per Nexen share, which is a 61% premium to the closing price on 20 July. It will receive assets that produced around 207,000 barrels per day during the second quarter of 2012, boosting the Chinese company’s output by 20%.
Winner: UK gas explorers welcomed news on Wednesday that the UK Treasury will introduce a £500 million ($776 million) tax break for large shallow-water gas fields in the hope of stimulating investment and production on the UK Continental Shelf. Developments authorised on or after 25 July for gas fields with reserves of 10-20 billion cubic metres, in depths of less than 30 m, will be exempt from the 32% supplementary charge on the first £500 million of income. A tapering allowance will be available to fields between 20 and 25 bcm.
Winner: Colombia is inching towards its goal of a completely liberalised gas market by 2013 after announcing plans to remove the last controls on wellhead gas prices at Guajira fields, the country’s oldest and biggest producing gas fields. “The plan is to liberalise 100% of production in the coming year,” Germán Castro of Comisión de Regulación de Energía y Gas told Interfax.
Loser: The Philippines may be forced to delay the auction of three oil and gas blocks in northwest Palawan – originally scheduled for 31 July – as tensions mount between Manila and Beijing over drilling rights in the South China Sea. “With blocks soon to be offered by the Philippines in contested areas, there is the possibility of a further increase in tensions. If the Philippines proceeds with the auction, it would be interpreted as unilateral action by other claimants and the Chinese,” Rommel C Banlaoi, the director of the Philippine Institute for Peace, Violence and Terrorism Research, told Interfax.
Loser: The Browse LNG development in Australia is facing further challenges as environmental group Sea Shepherd leads protests against the project in the hope of generating enough public backing to overturn a conditional approval granted for the plant by Western Australia’s Environmental Protection Authority last week. This is the latest in a series of difficulties facing Woodside. Soaring costs for developing greenfield LNG projects in Australia, toughening environmental conditions and increasing international competition from other LNG exporters have all contributed to the company’s difficulties.
Loser: Japan’s Tepco, the operator of the Fukushima Daiishi nuclear plant, was slammed in a report published on Monday for being ill-prepared for the nuclear disaster in March 2011. The report is the second this month to harshly criticise Tepco and the bodies tasked with regulating the nuclear industry, and comes shortly after the government announced it was also investigating allegations that workers at the plant were asked to misreport the levels of radiation in which they were operating.
Quotes of the Week
“The ongoing issues with China [in the South China Sea] might well delay the forthcoming auction on the 31 July. In addition, there could be difficulties in the country’s most prospective area, the Reed Bank, and this falls with territory which the Chinese are also claiming,” a Philippine government source told Interfax on Tuesday.
“This nonsense that it will destroy the Kimberley is just ridiculous; it’s about 5,000 or 6,000 hectares out of an area that is about the size of Victoria,” Western Australian Minister for Mines and Petroleum Norman Moore told the Australian Gas Technology Conference and Exhibition in Perth on Wednesday, referring to a planned LNG hub in the scenic Kimberley region.
“We continue to starve dry gas drilling and divert capital to the liquids-rich plays,” ConocoPhillips Chief Executive Ryan Lance said during a conference call on Wednesday. Low gas prices made large dents in second quarter earnings for North American firms such as Conoco and Canada’s Encana.
Week in Numbers
High stakes
$15.1 billion: Price CNOOC will pay for Nexen.
$27.50: Share price of CNOOC’s bid
61%: Premium to previous day’s closing price.
African Promise
$8.78: BG margin per MMBtu on Tanzania LNG.
$5.82: BG margin per MMBtu on Queensland Curtis LNG.
$4.03: BG margin per MMBtu on Sabine Pass LNG.
Price gap
25%: Amount AAR wants of BP’s 50% stake in TNK-BP.
$30 billion: Average estimated value for 50% of TNK-BP according to analysts.
$20 billion: Market value of BP’s 50% stake, according to AAR’s Mikhail Fridman
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