Wednesday, February 17, 2010

Mitsui and Anadarko Partner in Marcellus Shale

Japanese giant Mitsui & Co., through its Mitsui E&P company, invested $1.4 billion for 32.5% of Anadarko's Marcellus Shale assets (press release).  Anadarko has 715,000 gross acres in the Marcellus Play (~300,000 net).  Mitsui will pay 100% of Anadarko's drilling costs in 2010 and 90% of the drilling costs in 2011 through 2013.  Mitsui also has the option to purchase 32.5% of Anadarko's share of its existing Marcellus wells for $100 million.

This is an interesting story because it is yet another independent gas company following the joint venture strategy with a bigger partner that is less experienced in the ways of shale.  It is also interesting to see Asian companies enter the shale fray. 

The word on the street recently has been to look for a new round of acquisitions by major oil and gas companies.  The Exxon/XTO deal back in December certainly validated this line of reasoning.  The big companies need to grow their reserves through exploration or acquisition but seem to have fewer and fewer options to do so through exploration these days, especially on the oil side.  But will the deals that folks see coming be acquisitions or joint ventures?

Anadarko hasn't been in a hurry to drill its 80,000 acres in the Haynesville Shale, but it is definitely on the clock in the Marcellus Shale.

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