Page 13 - NorthAmOil Week 43 2020

NorthAmOil INVESTMENT NorthAmOil

EQT buying Chevron’s Appalachian assets

APPALACHIAN EQT announced this week that it had agreed to coupled with our superior operating model, puts
BASIN buy Chevron’s assets in the gas-rich Appalachian these assets in the right hands to maximise the
Basin for $735mn. This follows reports from embedded value.”
mid-September that EQT had put in a bid for Chevron first said it was considering selling
the super-major’s Appalachian assets. the assets in late 2019. It subsequently reported
The deal includes roughly 450mn cubic feet an $8.2bn impairment charge for the fourth
(12.7mn cubic metres) equivalent per day of net quarter of the year, largely attributed to those
production, about 100 work-in-progress wells assets, as well as the Big Foot project in the US
and around 335,000 net acres (1,356 square Gulf of Mexico. However, the assets are seen as
km) in the Marcellus shale. Roughly 125,000 net making sense for EQT as the company – the
acres (506 square km) of this total are located US’ largest independent producer – focuses on
in the core of the play. The transaction also building scale in order to boost its performance
includes a 31% stake in Laurel Mountain Mid- in a challenging market.
stream, which is a joint venture between Chev- Analysts have said EQT is paying a fair price
ron, producer Laurel Mountain and pipeline for the Chevron assets given current market con-
operator Williams Cos. ditions. However, the transaction illustrates how
“This acquisition is a natural bolt-on exten- far acreage valuations have fallen since the early
sion of EQT’s dominant position in the core days of the shale rush, given that Chevron entered
of the southwest Marcellus and supplements the Appalachian Basin for $4.3bn, inclusive of
our already impressive asset base,” commented debt, when it acquired Atlas Energy in 2011.
EQT’s president and CEO, Toby Rice. “With the The deal comes as consolidation picks up pace
purchase price underpinned by [proven, devel- in the US, particularly in shale plays. Indeed, it
oped, producing] value, the extensive work- was reported last week that EQT had made an
in-progress well inventory, core undeveloped unsolicited bid for fellow Appalachian producer
acreage and water assets provide material value CNX Resources. EQT has declined to comment
upside. Our unique knowledge of these assets, on this.™

PERFORMANCE

Hess reports wider-than-

expected third-quarter loss

AMERICAS US independent Hess has reported a net loss of Hurricane Zeta passing through the region this
$243mn, or $0.80 per common share, for the week.
third quarter of 2020 compared with a net loss of Hess’ net Gulf output was 49,000 boepd,
$212mn, or $0.70 per share, in the same quarter down from 59,000 boepd in the third quarter of
of 2019. This was a wider loss than analyst expec- 2019. The Esox-1 well, which began production
tations of $0.67 per share, according to IBES data in February, reached its gross peak rate of around
from Refinitiv. 17,000 boepd, or 9,000 boepd net to Hess in the
The company’s net production, excluding quarter. The company noted that it had entered
Libya, averaged 321,000 barrels of oil equiv- into an agreement to sell its 28% working inter-
alent per day, up from 290,000 boepd in the est in the Shenzi field for $505mn in October. It
third quarter of 2019 but slightly below analyst also said the BP-operated Galapagos Deep well,
expectations of 323,000 boepd. In North Dako- in which it holds a 25% stake, was not a commer-
ta’s Bakken play, Hess achieved net production cial success. The third-quarter results included
of 198,000 boepd, up 21% year on year from exploration expenses of $37mn, primarily for
163,000 boepd. well costs.
Despite the quarterly production increase, Outside the US – and not including Libya,
Hess reduced its output forecast for the year to where output remains under force majeure –
325,000 boepd, from 330,000 boepd previously. Hess continues to focus on its operations at
This was attributed primarily to hurricane-re- Guyana’s Stabroek block, in which it owns a 30%
lated outages in the US Gulf of Mexico, where stake. The company’s net production from the
producers have had to go through a series of Liza field averaged 19,000 barrels per day (bpd)
shut-ins and evacuations of staff thanks to a of oil in the third quarter. During the quarter,
particularly active Atlantic hurricane season. the estimate of gross discovered recoverable
Indeed, roughly two thirds of Gulf oil produc- resources at the Stabroek block was increased to
tion was shut in as of October 28 in response to around 9bn boe.™

Week 43 29•October•2020 www. NEWSBASE .com P13