Asia: Buyers & Sellers Scrambling in a Competitive Market

Transcription

1 Asia: Buyers & Sellers Scrambling in a Competitive Market APPEX, London March 2010 Ian Cross, Moyes & Co, Houston Booth 11 1

2 Topics The Challenges Trends & Transactions Game Changing Wells Opportunities Objectives: Understand the climate of doing deals in Asia Offer direction as to where you could go 2

3 Asia Region NE Asia Indian Subcontinent SE Asia 3

4 Slide from 2000 Presentation No Progress Mixed Mixed Parity 4

5 What We Have Learnt in Last 20 Years? Not writing off mature areas Re-visit old prospects & review dry structures Not being afraid of gas Few surprises left for finding big oil fields Acquisitions lower risk than exploration Fiscal terms v prospectivity imbalance 5

6 Charge of Asian Tigers (NOCs) Brunei - PetroleumBRUNEI China - CNOOC, Sinopec, PetroChina et al India ONGC, OIL, GAIL et al Indonesia Pertamina Japan INPEX, Nippon, JAPEX et al Malaysia - Petronas Philippines - PNOC Singapore - SPC Taiwan - CPC Thailand - PTTEP Vietnam - PetroVietnam NOCs largely cash rich Created an uneven playing field But more serious now going beyond Asia 6

7 Slide from 2003 Presentation 7

8 Global Acquisition Prices, , 2P Reserves US$/boe, US is 1P 60 L. America W. Europe C&EE Australasia MENA Africa 50 ~US$12 40 Australia deals push price up Median US$ BOE 8 Source: Moyes & Co

9 Finding Costs: Asia Offshore Far East Finding Costs Average = US$0.9/boe Finding Cost ($/boe) Onshore Far East Finding Costs UK offshore = US$6.2/boe World average = US$2.2/boe Asia follows global trend of increasing costs Costs lower than world average But: Prolonged process to entry Length of time to commercialise (gas) Finding Cost ($/boe) Average = US$3.4/boe Europe onshore = US$9.4/boe World average = US$3.7/boe Source: JSI (2010) 9

10 UK v SE Asia Returns Potential reward 5 times better in UK v Indonesia But will vary on contract vintage UK has high cost wells & small block size Source: Serica, Oil Barrel,

11 Publically Available Farmouts/Sales Number of contract areas Healthy deal flow in 2009 in Asia Large number of 2010 opportunities Technically challenging to evaluate Some fiscal structures discourage selling of smaller discoveries Sources: DII & other public 11

12 Farmouts/Sales Available: Examples Legend Bid blocks Open blocks Licences Applications/Preawards Farmout available 60% of Philippines contracts Philippines available 20% of Thailand Thailand contracts available 12

13 Status of Bid Rounds & Opportunities Overall 2009 bid rounds disappointing Governments failing to react to underinvestment Afghanistan, Pakistan & India: in 2009 China: onshore Tarim Basin & offshore ongoing Thailand: 21 st Round in 2010 Cambodia: onshore in 2010 Malaysia: on & offshore ongoing Indonesia: on & offshore ongoing Philippines: on & offshore ongoing; PECR-4 Brunei: onshore in

14 Selection of Deals Late PanAsian - Ivanhoe merger (Mongolia & China), Nov 09 GS Caltex purchase of Chevron asset (Bangladesh), Feb 10 Arrow takes stake in Fortune (China), Dec 09 Origin farmin to Salamander blocks (Thailand & Laos), Dec 09 BHP farmin to Otto block (Philippines), Jan 10 Talisman purchase of Hess stake in block (Indonesia), Jan 10 KrisEnergy purchase of certain Serica assets (Indonesia & Vietnam), Dec 09 AED purchase of Nations (Brunei), Dec 09 Tap farmin to Lundin block (Indonesia), Mar 10 Niko purchase of Black Gold assets (Indonesia), Nov Source: Moyes & Co

15 Selection of Buyers 2010 The Majors & large NOCs Well-capilitalised independents & smaller NOCs Healthy smaller players with synergies ExxonMobil Sinopec Pan Orient Shell Statoil KrisEnergy Chevron Videocon Pearl PetroChina Talisman Pitkin Indian NOCs Hess AWE BHP Nexen Niko Petronas SK Energy Harvest BP Murphy Origin Total KNOC Carnarvon ENI Kufpec Carin India Repsol 15

16 Selection of Sellers/Targets 2010 Mainlyconventional production & reserves Mainly unconventional production & reserves British Gas Arrow Tullow Marathon Fortune Mitra Anadarko Green Dragon (Greka) Soco Newfield Far East Energy Coastal Santos CBM Asia Pitkin Premier Devon Murphy Reliance Husky ConocoPhillips Smaller producers, early stage discoveries &/or frontier exploration Pan Orient Salamander Serica Transworld Otto Pearl 16

17 Game Changing Wells South Korea: Woodside, in Block 8 Pakistan: ENI, **Shark-1 Laos: Salamander, **Bang Nouan-1 Vietnam: ExxonMobil, in Block 119 & Talisman, in Blocks 133/134 Philippines: ExxonMobil, *Banduria-1 & Shell, **Silangan-1 Sri Lanka: Cairn in Block SL Indonesia: Hess, in Semai V, & Murphy, Cabe Merah-1 *Results awaited **Ongoing 17

18 Bang Nouan Prospect (Laos) Salamander-operated Savannakhet PSC Eastern Khorat Plateau Spudded February 2010 Permian carbonate main objective Associated with large Khorat anticline Source: Salamander (2009) 18

19 Dabakan Structure (Philippines) ExxonMobil-operated SC 56 Sulu Sea Basin Possible play opener early 2010 Source: Tap (2009) Toe thrust anticline Miocene deepwater turbidite sands Gas in multiple reservoirs & oil shows Sources: BHP (2005) & DII 19

20 Summary of Opportunities Prospective & entry possible - China (offshore) - India - Indonesia - Vietnam Limited prospectivity - Cambodia - Japan - Laos - Mongolia - Philippines - South Korea - Sri Lanka - Taiwan Political risk - Afghanistan - Myanmar - North Korea - Pakistan Prospective acreage tightly held - Brunei - China (onshore) - Malaysia - Thailand Market challenges - Bangladesh Boundary issues - Cambodia/Thai 20

21 Where Should We Be Looking? The Majors & large NOCs Well-capilitalised independents & smaller NOCs Smaller players including those seeking entry Bangladesh Bangladesh Cambodia China (offshore) Cambodia India India China (offshore) Indonesia Indonesia India Mongolia Malaysia Indonesia Myanmar* Myanmar* Malaysia Pakistan Pakistan Myanmar* Philippines Philippines Pakistan Thailand Vietnam Philippines Vietnam Thailand South Korea Vietnam * Certain sanctions 21

22 For Newcomers Permanent presence in region Contacts & understanding of culture Knowledge & expertise Partner with incumbent & good database Be patient & prepare for a long stay with strategy Good financial backing & project with cash flow 22

23 Some of the Competition: Asia Singapore-based with New Ventures BG BP ConocoPhillips ExxonMobil KrisEnergy Lundin Orchard Pearl Premier Repsol Salamander Sasol Serica Statoil SPC (PetroChina) Twinza 23

24 Success Story: Pearl Oil Founders set up KrisEnergy Permanent presence in region Contacts & understanding of culture Knowledge & expertise Good database Be patient & prepare for a long stay with strategy Good financial backing & project with cash flow 24 Source: Richard Lorentz (2009)

25 Views of the Market Short Term Majors focus on deepwater & unconventionals Continued disposal of assets by majors Abundance of smaller companies Lack of cash especially local players Local companies fill NOC void Finding markets for gas Long Term Withdrawal of majors unless into gas or unconventionals Consolidation of small players Small-medium size companies more competitive Larger number of key players Increased support from governments Better understanding of gas markets 25

26 Conclusions Prolonged entry & transaction processes Unfavourable for newcomers..but benefits incumbents Local knowledge is important Technically good deals difficult to find Expect gas & understand market Watch game changing wells 26

27 Asia: Buyers & Sellers Scrambling in a Competitive Market APPEX, London March 2010 Ian Cross, Moyes & Co, Houston Booth 11 27