Eni Picks Up Stake in US Onshore Unconventional Gas Play
Eni has executed a strategic alliance with Quicksilver Resources Inc., an independent US natural gas producer, to acquire a 27.5% interest in the "Alliance" area, located between the cities of Fort Worth and Dallas in Northern Texas.
The Quicksilver leasehold interest in Alliance covers an area of approximately 13,000 net acres (53 square kilometers), with production from unconventional gas shales located in the Barnett Shale formation of the Fort Worth Basin, at an average depth of 7500' (approximately 2,300 meters). Quicksilver will retain the 72.5% interests and operatorship of the alliance properties.
The alliance will foresee a mutual technical exchange between the two companies, particularly in drilling and completion technologies and geophysics. Eni will also have the right to 27.5% participation in additional future leaseholds that Quicksilver may acquire in the "Area of Mutual Interest" around Alliance covering approximately 270,000 acres (1,092 square kilometers).
The agreed price for the cash transaction is $280 million, with an effective date April 1, 2009 and closing expected by mid June. The acquisition will give Eni recoverable net reserves of 40 million barrels of oil equivalent (boe), of which 23 million boe are proved and 17 million boe are probable and possible reserves, at an implied cost per barrel of $7.
In 2009, Eni's net production share from the acquired assets is expected to amount to an average of 4,000 boed, growing to approximately 10,000 boed in 2011. The development plan for the Alliance area foresees additional drilling and completion of approx. 300 wells by 2013 and Eni’s share of the development capex is estimated in $210 million ($37 million in 2009).
The gas shale play is one of the fastest growing unconventional plays in the US and has become a major element of the domestic gas production. This deal allows Eni to progress its strategic plan of growth and portfolio balancing in the US, via the acquisition of valuable low risk/long life producing assets, as well as gaining experience to support the exploration of high potential unconventional gas opportunities worldwide.
In the US, Eni owns lease interests in 565 blocks (392 in GOM, 173 in Alaska) and is among the Gulf of Mexico leading producers with a daily net production in excess of 100,000 barrels of oil equivalent (60% operated).
Operates 11 Offshore Rigs
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Company: Quicksilver Resources Inc. more info
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