UPDATE: Eni Links Up With Quicksilver To Develop US Shale Gas
18 Mai 2009 - 7:16PM
Dow Jones News
Italy's Eni SpA (E) is the latest European energy giant to buy
into prolific shale-rock natural gas fields in the U.S., entering
an alliance with independent producer Quicksilver Resources Inc.
(KWK) to develop acreage in Texas.
Quicksilver will get $280 million by selling to Eni 27.5% of its
Alliance properties in the Fort Worth Basin, which produce about 60
million cubic feet of natural gas a day. The companies are also
joining forces to buy and develop about 270,000 acres surrounding
Alliance.
The assets will give Eni a position in the Barnett Shale - a big
gas field in North Texas credited for a sizable portion of the
recent boom in domestic U.S. gas production. The deal will help the
highly leveraged Quicksilver pay down debt and sent the company's
share price up as much as 20% Monday.
Eni is the third European oil and gas company to buy into U.S.
shale fields - tight rock formations that recent technological
advances made economical to develop. Last year Chesapeake Energy
Corp. (CHK) entered into joint ventures with BP PLC (BP) in the
Oklahoma's Woodford Shale and with Norway's StatoilHydro ASA (STO)
in Appalachia's Marcellus Shale.
"Big guys clearly want to understand (the) secret sauce around
shale gas development," analysts with Houston-based Tudor Pickering
Holt & Co. Securities Inc. wrote in a note to clients Monday,
adding more of these transactions are likely to come.
Quicksilver shares were recently up 16% at $9.92 apiece. The
stock has fallen roughly 75% in the past year amid a plunge in
energy commodity prices and debt concerns. The company posted a
first-quarter loss on write-downs of the value of its oil-and-gas
properties, suspended its dividend and cut capital spending.
Quicksilver acquired the Alliance properties - which include
natural gas production, acreage and midstream assets - last July
from various private oil and gas companies for $1.3 billion. The
deal with Eni does not include an interest in the midstream
assets.
Many energy companies have run into trouble in recent months as
the credit crunch ended their debt-fueled expansions and plunging
prices have now made projects less economical. The troubles have
prompted companies to shed assets, cut spending and idle rigs to
shore up cash. Natural gas prices have fallen about 70% since July,
when prices peaked above $13 a million British thermal units.
David Kistler, an analyst with Simmons & Co. in Houston,
said the broad pullback in commodity and equity markets have
spurred more interest from major energy companies in shale-gas
production.
"It makes for an interesting time for companies to get a
foothold in these shales," Kistler said.
Quicksilver President and Chief Executive Glenn Darden said in a
press release that the deal represents 5% of its total proved
reserves at the end of last year. The agreement is expected to
close June 15.
-By Jason Womack, Dow Jones Newswires; 713-547-9201;
jason.womack@dowjones.com
(Tess Stynes contributed to this report.)