Making the case for Asian investment in US tight oil

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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.

Table of contents

  • 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?

Tables and charts

This report includes 14 images and tables including:

  • 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
  • Pre-FID and US L48 future drilling production by breakeven in 2026 – by resource theme
  • Pre-FID Asian vs tight oil projects - breakevens
  • 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
  • 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

What's included

This report contains:

  • Document

    Making the case for Asian investment in US tight oil.pdf

    PDF 1.45 MB