Friday 29 Mar 2024
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 (Nov 13): A pullback by U.S. energy companies from Asia is opening the door for competitors looking to snap up unwanted oil and gas assets in the region.

U.S. producers are facing pressure to cut spending, reduce exposure overseas and focus on the domestic market, where oil production is forecast to reach the highest in 45 years in 2015. Apache Corp. and Murphy Oil Corp. are among companies in disposal mode this year in the Asia-Pacific region.

“The American companies in particular are struggling to continue to invest in the Asian economies,” David Knox, chief executive officer of Santos Ltd., said today in a Bloomberg Television interview in Brisbane before this weekend’s Group of 20 summit.

“Their capital is being forced back home. That opens up opportunities for players like us who are committed to Asia.”

Apache is looking to sell its interest in an Australian liquefied natural gas venture, while Indonesia’s PT Pertamina agreed in September to purchase a stake in Murphy’s oil and gas assets in Malaysia for $2 billion in cash.

Explorers from Santos to fellow Australian company Woodside Petroleum Ltd. are seeing increasing targets in Asia.

From a buyer’s perspective, prices in Asia have improved, Perth-based Woodside said in August, as large oil and gas producers have shifted their focus to unlocking shale gas and oil reserves in North America. Sliding oil prices meanwhile have pressured producers to curb spending.

Buyer’s Market

“You’ll see a continuous theme of cutting forward capex programs and looking at further asset divestments,” Nik Burns, a Melbourne-based analyst at UBS AG, said today by phone. “It seems to be more of a buyer’s market.”

The Energy Department’s statistical arm said yesterday U.S. production will rise to 8.57 million barrels a day this year and 9.42 million in 2015, the most since 1970, up from 7.46 million last year.

Houston-based Apache, facing pressure from activist hedge fund Jana Partners LLC to lower spending and focus drilling in the U.S., said earlier this year it’s looking to sell its stake in the Wheatstone LNG project.

Thailand’s PTT Exploration & Production Pcl earlier this year agreed to pay about $1 billion in cash for Hess Corp.’s stakes in oil and gas assets in the country. The purchase followed PTTEP and PT Pertamina’s deal last year to buy Hess’s Indonesian assets for $1.3 billion.

Other oil and gas companies in North America are looking to sell assets. Talisman Energy Inc. Chief Executive Officer Hal Kvisle has been seeking to shrink the global reach of a company with operations spanning six continents, while lowering debt with asset sales.

It may take time in some cases for deals to be completed and the expectations of buyers and sellers to align, UBS’ Burns said. Many sellers will want prices that reflect their assumption that oil will rebound, he said.

 

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