A unit of Japan's Marubeni Corp. has struck a deal to acquire a 35% stake in Dallas-based Hunt Oil Co.'s Eagle Ford Shale holdings. Marubeni pledged Friday to grow its stake in shales, in the United States and around the world.
Marubeni's Eagle Ford Limited Partnership will have a stake in Hunt's 52,000 net acres of oil and gas leases in Texas. There are plans for several hundred wells to be sequentially drilled for five to 10 years, with total development costs (including acquisition costs on Marubeni's share basis) of $1.3 billion, Marubeni said. It and Hunt have agreed to acquire additional acreage in the Eagle Ford as well.
"We believe that this project, including future expansion and the potential new businesses associated with it, will become a solid base for Marubeni providing a strong cash flow and profit on the mid- to long-term basis," Marubeni said. "Our acreage position in the Eagle Ford is believed to be prospective, and Hunt, the operator of this project, has extensive experience and expertise in the development and operation of a number of oil and gas shale plays including the Bakken [Shale] located in North Dakota..."
Wells Fargo Securities analyst David Tameron said in a note Friday that the deal "indicates still significant interest in [the] Eagle Ford and bodes wells for names such as [Forest Oil Corp.], who has acreage in the same vicinity and is currently trying to get a joint venture done."
While some view a transaction such as the Marubeni-Hunt deal as bearish for others pursuing their own tie-ups, Tameron said he doesn't follow this line of thinking "because industry players tend to move as a herd, and there are always buyers/cash willing whether international companies, national oil companies, or private equity to step up."
He said the deal was also a positive for oil-focused Eagle Ford participants such as EOG Resources Inc. and Anadarko Petroleum Corp.
Marubeni has been involved in projects in the Gulf of Mexico (with Marathon Oil Corp.), the UK North Sea, India, Qatar and the Niobrara Shale Oil [again with Marathon (see Shale Daily, April 8, 2011)] in the United States, which started its initial oil production last October.
With the Hunt deal Marubeni's total acreage for shale oil is 72,000 net acres, which makes Marubeni the largest acreage holder among Japanese firms, the company said.
"We will continue to expand our business by acquiring quality shale oil and gas assets in the U.S. as well as other countries leveraging our experience and know-how gained through the Niobrara shale oil project and the Eagle Ford project," Marubeni said. "We strongly believe that the shale oil and gas play will be spreading all over the world."