Korea to earn $1.55B stake in Eagle Ford Shale via Anadarko

By Oil & Gas Financial Journal staff

Anadarko Petroleum Corp.
(NYSE: APC) has signed over roughly one-third of its interest in the Maverick Basin in the Eagle Ford Shale to a subsidiary of Korea National Oil Corp. (KNOC). As part of the joint venture agreement, KNOC will fund 100% of Anadarko’s 2011 post-closing capital costs in the basin and up to 90% thereafter until the $1.55 billion total investment is reached.

If allocated solely to the Eagle Ford acreage, the $1.55 billion pricetag implies a value of $18,750 per acre, according to a March 21 research note by Global Hunter Securities.

The total $1.55 billion carry is expected to be exhausted by year-end 2013. Anadarko has emerged as the largest producer in the Eagle Ford shale in the fourth quarter of 2010, and plans for the liquids-rich play are ambitious.

In a prepared statement, Anadarko president and chief operating officer (COO), Al Walker said the company, after having expanded its midstream infrastructure and securing various service agreements, plans to “further accelerate the value” of the Eagle Ford Shale play by increasing its operated rig count from nine to 10 early in the second quarter of this year. A company presentation dated March 28 says the company plans to drill over 200 wells in 2011.

KNOC will also reimburse Anadarko for net cash outflows, relative to their acquired interest, subsequent to the effective date, which are expected to be approximately $50 million. In exchange, KNOC will receive nearly 80,000 net acres liquids-rich Eagle Ford Shale play, approximately 16,000 additional prospective net acres for the deeper dry-gas Pearsall Shale, as well as Pearsall opportunities underlying the aforementioned Eagle Ford Shale acreage.

KNOC also has an option, no later than 30 days post-closing, to participate as a partner with an approximate 25% working interest in the associated gathering systems and facilities, by paying its share.

Closing is expected to occur during 2Q11. Jefferies & Co. Inc. and Deutsche Bank Securities Inc. advised Anadarko on the transaction.

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