From Bloomberg News:
By James Paton
BHP Billiton Ltd. former oil and gas head J. Michael Yeager expects more industry mergers and acquisitions in the U.S. as onshore developers seek to sell assets they can’t develop and boost their technical skills.
“There’s a lot of churn that’s going to go on and you will continue to see a lot of transactional work,” Yeager, now chief executive officer of Maverick Drilling & Exploration Ltd. said in a phone interview from Houston. “Over time we hope to prepare ourselves to be part of that.”
Investor unrest over lackluster returns has prompted Occidental Petroleum Corp., Hess Corp., Apache Corp. and other energy companies to pursue breakup plans and global asset sales. Yeager, who led BHP’s $20 billion move into the U.S. shale gas industry before leaving the Melbourne-based company earlier this year, is focusing on oil in his new role at Maverick, an explorer developing fields south of Houston.
“When you take these large amounts of acreage, you have to drill it up, or you have to give it up,” Yeager said. “In some cases you may have three years to drill as much as you can and you lose the rest of it, so there’s acreage that people cannot handle on the market. There’s a lot of opportunity.”
Maverick shares have risen 12 percent in Sydney trading since the company announced Oct. 14 that it had hired Yeager. The company dropped 1 percent Thursday to 47.5 cents, while Australia's benchmark index fell 0.2 percent.
Yeager, 60, said a need for more technical expertise will also drive companies to combine. Yeager said he has been approached by a couple of groups seeking those skills.
Maverick, which trades in Sydney and has offices in Newcastle in Australia’s New South Wales state, as well as Houston, will consider expanding into new fields and joining with a “sister company that wants to work with us,” he said.
“A year from now we hope to be in a position where we can say, ‘we’re on top of our current portfolio, now is there something else we’d like to do,’” he said.
Even if oil prices decline, Yeager said he expects they would rebound.
The benchmark U.S. crude, West Texas Intermediate, dropped to a five-month low of $93.37 a barrel on Nov. 5 on speculation that inventories increased for a seventh week in the U.S. Brent crude, the benchmark for two-thirds of the world’s oil which has averaged $108.53 this year, probably will fall to the $70-to-$80 range, Fadel Gheit, an analyst at Oppenheimer & Co. in New York, said last month without providing a timeline.
“If it drops low for a while, that could happen, but I don’t think it’s sustainable,” Yeager said. “Liquids are scarce. The giant oil fields are few and far between and they are expensive and slow to develop. Adding more liquid barrels to a world that is thirsty, I’m bullish on that.”
Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.
Rig Count Interactive Map by Baker Hughes, an energy services company.
Shale Sheet Fracking, a Youngstown Vindicator blog.
The Ohio Environmental Council, a statewide eco-group based in Columbus.
Earthjustice, a national eco-group.
People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.
Concerned Citizens of Medina County, a grass-roots group.
No Frack Ohio, a Columbus-based grass-roots group.
Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.
Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
Allegheny Front, environmental public radio for Western Pennsylvania.