Tuesday, March 22, 2011

Anadarko Enters Eagle Ford JV with KNOC

Anadarko Petroleum Corp. announced yesterday that it has entered into a joint venture with the Korean National Oil Company (KNOC) for its Eagle Ford Shale assets.  The $1.15 billion deal gives KNOC a 23.67% stake in Anadarko's position, comprising 80,000 acres of the Eagle Ford (oil/gas) and 16,000 acres of the Pearsall Shale (dry gas), which is below the Eagle Ford in places.  KNOC is not paying cash upfront but will instead fund the vast majority of Anadarko's drilling costs up to the $1.15 billion.

This is another in a long line of joint venture deals in North American shale.  The first participants were western multinationals, but the cash rich Asians (and Australians) have gotten involved lately.  It's interesting to see Asian companies - especially nationalized companies - sucking up natural gas assets.  They are taking advantage of the low prices while they last with a long-term view of the future.

While we here in the U.S. are quick to blame the government or whomever for not picking up the ball on natural gas, we have to realize that one of the downsides of our free market economy is that the government is not supposed to "pick winners."  That's what the market is for, right?  It kills me every day that we are sitting on this incredible domestic resource but are unable to take full advantage of it.  Other countries are not so encumbered.

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