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Making the case for Asian investment in US tight oil


Making the case for Asian investment in US tight oil

Report summary

Can Asian upstream players afford not to invest in US tight oil? Almost totally absent from the Permania that has dominated M&A markets over the last 12 months, we believe this is about to change.

With portfolios currently heavily weighted towards mature conventional assets across Asia-Pacific, most top Asian players are facing long-term production declines. But given their relative financial strength, investing in tight oil that offers large volumes and low breakevens appears to be a compelling solution. At the same time, financially-stretched Lower 48 operators with ambitious growth plans may welcome capital investments from partners that share a long-term vision.

We focus on the Permian basin as a case study, identifying operators with near-term negative cash flows and large undrilled well inventory. These represent viable opportunities for Asian (and other) investors in tight oil's hottest basin.

What's included?

This report includes 1 file(s)

  • Making the case for Asian investment in US tight oil.pdf PDF - 1.45 MB

Description

This Upstream Oil and Gas Insight report highlights the key issues surrounding this topic, and draws out the key implications for those involved.

This report helps participants, suppliers and advisors understand trends, risks and issues within the upstream oil and gas industry. It gives you an expert point of view to support informed decision making.

Wood Mackenzie's 500 dedicated analysts are located in the markets they cover. They produce forward-looking analysis at both country and asset level across the globe, backed by our robust proprietary database of trusted research.

Proprietary data means a superior level of analysis that is simply not available anywhere else. Wood Mackenzie is the recognised gold standard in upstream commercial data and analysis.

  • Asian companies and new sources of production growth
  • The appeal of tight oil
  • Historical perspective on prior Asian investment in shale plays
  • Will it happen again in US tight oil?

In this report there are 14 tables or charts, including:

  • Asian companies and new sources of production growth
    • Oil and gas production - Asia vs United States
    • Top 20 Asian companies remaining reserves (2017) & Company peer groups production indexed to 2017
    • Upstream portfolio (NPV) - peer groups
    • Financial stregnth - Asian vs Focused US firms & 2017/19 breakevens - Asian vs Focused US firms
  • The appeal of tight oil
    • Pre-FID and US L48 future drilling production by breakeven in 2026 – by resource theme
    • Pre-FID Asian vs tight oil projects - breakevens
  • Historical perspective on prior Asian investment in shale plays
    • Total L48 M&A spend (2007-2016) & Asian companies (by domicile) - L48 M&A spend
    • Asian companies’ US L48 M&A spend (2007-2016) by seller types
  • Will it happen again in US tight oil?
    • Key reasons why might Asian capital return to the US upstream: Asian monetary/government policies, Flexible investors and structures, US tight oil could benefit from capital, Hedging strategies
    • Aggregate US L48 play cash flow
    • Permian companies with projected negative asset cash flow (2017) and large undrilled well inventories
    • Well performance across selected Permian Wolfcamp operators
    • Permian - Development well breakeven vs. undrilled portfolio value
    • Hurdles - issues and risks
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