The largest deal for the 30-day period between mid-February and mid-March was Oklahoma City-based Chesapeake Energy's sale of all its assets in the Fayetteville Shale to Australia's BHP Billiton for $4.75 billion. The assets consisted mainly of about 487,000 acres of leasehold and producing natural gas properties in central Arkansas. For more information on this deal, see "Why did Chesapeake and Petrohawk sell their Fayetteville Shale assets" on page 37.
The largest deal outside the United States was in Russia where France's Total signed two Memorandums of Cooperation with Russia's Novatek and its main shareholders. The agreement is valued at about US$4 billion.
Under terms of the transaction, Total will become the main international partner on the Yamal LNG project, holding a 20% share. Novatek will hold a 51% interest in the project. In addition, Total will take a 12.08% shareholding in Novatek with the intent of both parties to increase the share total to 15% within 12 months and to 19.4% within 36 months.
The Yamal LNG project will develop the South Tambey field located in the arctic area of the Yamal peninsula. The resources of the condensate and gas field are estimated at about 44 trillion cubic feet of gas (1,250 cubic meters), allowing production of more than 15 million tons of LNG per year. With this project, Total will have access to proved and probable reserves of approximately 800 million barrels of oil equivalent within the license period and to a plateau production of about 90,000 boe per day in the next decade.
Novatek is the largest independent gas producer in Russia and supplies roughly 10% of the domestic market. It's 2010 production reached 37.8 billion cubic meters of gas per year (750,000 boe per day, including condensates). Novatek's portfolio of resources is made up of several giant fields that provide great growth potential. Total and Novatek have been jointly developing the Termokarstovoye field since 2009.
Total's 12% stake will be acquired by Total from Novatek's two main shareholders. The transaction is expected to close in April 2011 and is valued at approximately $4.0 billion. Total is the first international investor to participate in the development of the giant gas resources of the Yamal peninsula.
Total has been present in Russia since 1989 and is operator of the Kharyaga field located in the Nenets Autonomous region with a 40% interest. In 2010, Total's equity production reached 10,000 boe per day.
In 2007, Total and Gazprom signed an agreement to develop the giant Shtokman gas and condensate field located in the Barents Sea.
In a deal valued at approximately US$1.1 billion, Canada's Talisman announced it is deepening its relationship with South Africa's Sasol Limited in the Montney shale play to include the sale of a 50% working interest in its Cypress A assets. Talisman will operate and manage the Cypress A and Farrell Creek areas as an integrated development project.
In December 2010, Talisman and Sasol announced a similar transaction for the acquisition of a 50% net interest in Talisman's Farrell Creek properties in the Montney shale play, with Sasol acquiring an estimated 4.8 trillion cubic feet equivalent of net contingent resource. This transaction closed on March 1st.
The Cypress A transaction represents the sale of about 14% (5.6 tcfe) of Talisman's remaining estimated 39 tcfe of net contingent resource in the play and approximately 17% (28,600 net acres) of the company's net Tier 1 acres of land in the Montney shale. The transaction is expected to close in the third quarter.
Upon closing, Talisman will hold an estimated 34 tcfe of net contingent resource and 139,000 net acres of Tier 1 acreage in the Montney shale play, including Farrell Creek, Greater Groundbirch, and the Greater Cypress area
Sasol and Talisman have begun a feasibility study to examine a world-scale gas-to-liquids (GTL) facility in Western Canada, which could provide an alternative to a traditional gas pipeline of LNG markets. Sasol is leading the study with a front-end design decision likely in the second half of 2011.