BP tests the waters with first L48 acquisition in 7 years

 

 

Although the San Juan Basin has seen limited drilling activity recently, BP US Lower 48 Onshore has just added to its significant legacy position there, with indications that it might be in the market for further opportunistic bolt-on acquisitions in 2016. We use our North America Well Analysis Tool to zoom into the area and assess what could be the driver for this deal.

BP's US Lower 48 Onshore business recently purchased Devon Energy Corporation's San Juan Basin assets, totalling 480 wells and spanning 33,000 acres. Although BP has been in this area historically and now holds 550,000 acres there, the relatively small deal could indicate a future move to revisit developing San Juan assets.

Area operators Encana and WPX, which own substantial acreage positions within the basin, have indicated that their 2016 investment focus lies elsewhere, with San Juan flagged as non-core acreage for them. This combination of events, along with low commodity prices persisting into 2016, could open the possibility of BP purchasing additional San Juan assets at attractive valuations this year.

In a written statement, BP US Lower 48 Onshore CEO David Lawler stated that “This acquisition clearly demonstrates the importance of New Mexico and the San Juan Basin to our future.”

Our North America Well Analysis Tool shows that the majority of BP and Devon's positions lie in the Fruitland Coal's "High-Rate Fairway," where wells often recover 2 billion cubic feet apiece—a far higher yield than typical wells outside the zone.NAWAT_graphic_BP_lower48.PNG

Numerous deals are closing or in the works as we enter the new year, and we examine the latest in our full US Upstream Week In Brief report, including:

  • Rice Midstream Holdings gaining a US$500 million preferred equity investment
  • Hilcorp Energy  partnering with The Carlyle Group
  • Carrizo Oil & Gas moving to put its Niobrara assets on the market

Learn more
As well as being available as part of our subscription service, our full US Upstream Week In Brief report is available to purchase.

In addition to analysing the latest M&A activity in the US Lower 48, this week's report also discusses the Wyoming Oil and Gas Conservation Commission's rate increase on reclamation bonds, stripper well economics, and the significant drop in rig count moving in to 2016.

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