Investments in shale plays in the US, which totaled $133.7 billion during 2008-12, highlight a renewed trend toward foreign joint ventures, the US Energy Information Administration reported. JVs by non-US companies accounted for 20% of this total.
Since 2008, foreign companies have invested more than $26 billion in tight oil and shale gas plays and participated in 21 JVs with US acreage holders and operators. The rest of the investments include part of outright acquisitions and joint ventures among American companies and financial institutions.
Foreign investors in JVs usually buy a percentage of the host company’s shale plays acreages through an upfront cash payment and commit to cover part of the drilling cost within an agreed-upon timeframe. These deals are mutually beneficial. US operators get financial support, while foreign companies gain the latest experience in horizontal drilling and hydraulic fracturing that may be transferable to other regions. Through the JVs, foreign investors also can benefit from operating in a stable market with a sound legal system and low political risk.
Similar to the trend of US operations, more liquids-prone areas—such as the Eagle Ford, Utica, and Wolfcamp plays—are becoming the focus of most of the recent JV deals.
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