Land Rigs: Jul 14, 2013

Sunday, July 14, 2013

Sudan, South Sudan Start Talks Over Former National Oil Company Assets

KAMPALA, Uganda - Oil producing Sudan and newly independent South Sudan started talks on Monday aimed at resolving a dispute over the sharing of assets belonging to former national oil company Sudapet, said officials.

A South Sudanese delegation from the oil and mining ministry has arrived in Khartoum for talks with their Sudanese counterparts, said Sudanese government spokesman Rabie Abdelaty, as the two former civil war foes continue to disentangle their oil assets.

"Both sides are keen to ensure that the issue of Sudapet is resolved quickly," said Mr. Abdelaty.

The talks are part of the African Union-mediated framework on the implementation of cooperation agreements signed in September last year.

Sudan is demanding up to $2 billion from South Sudan as compensation for assets including buildings, storage tanks, processing facilities and pipelines located in the south. Juba has in the past dismissed Khartoum's claim, arguing that it is the rightful owner of the assets within its territory following its independence in July 2011.

Sudan is also demanding compensation for damage to its oil facilities in the oil hub of Heglig that was briefly occupied by South Sudanese forces in April last year.

According to Barnaba Benjamin, South Sudan's information minister, the talks are expected to yield positive results.

"We have just restarted our oil, things are improving, we are hoping for the best," Mr. Benjamin said.

Land locked South Sudan broke away from Sudan taking control of as much as 75% of the oil fields but has to rely on ports and pipelines, which pass through the north, to ship its crude for export.

The two countries have since been embroiled in a number of disputes over the sharing of oil revenues, which led to the shutdown of the south's 350,000 barrels-a-day of crude last year plunging both economies into turmoil.

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America: On the Verge of Exporting LNG

In the past decade, drillers have unlocked so much unconventional play, that America is enjoying record gas supplies and prices that are just a quarter of what Eastern countries pay. It is estimated that the annual U.S. gas supply could grow a further 25 percent by 2035, according to the U.S. Energy Information Administration (EIA).

This phenomenon is being noticed globally and many are asking if America should begin to export liquefied natural gas (LNG) to lead the nation's return to economic health and restore its status as a global energy leader.

"A superpower does not punch below its weight class and stay a superpower forever," Dominion Chairman, President and Chief Executive Officer Thomas F. Farrell II said in a press release at the at the U.S. Chamber of Commerce's Institute for 21st Century Energy in Washington, D.C. "We owe it to the American public – and to future Americans – to act like the global leader we are and seize the energy opportunities before us … Exports will create incentives for American companies to drill for more natural gas, create more economic growth, more jobs and more government revenues – while at the same time, boosting international stability, supporting our country's geopolitical interests and reducing our trade deficits."

Dominion announced it is moving forward with its LNG export project at its Cove Point terminal on the Chesapeake Bay in Lusby, Md. The $3.4-3.8 billion project is slated for construction in 2014 with an in-service date of 2017. Cove Point, with access to the Marcellus and Utica Shale production areas, has signed 20-year terminal service agreements to Pacific Summit Energy, LLC, a U.S. affiliate of Japanese trading company Sumitomo Corporation, and GAIL Global (USA) LNG LLC, a U.S. affiliate of GAIL (India) Ltd.

Another company that is leading the pack in LNG exportation is Houston-based Cheniere Energy Inc. The company has been revamping its Sabine Pass liquefied natural gas port in coastal Louisiana. Built in 2008 before the shale boom, the company originally focused on making the refinery into an import facility. Five of the storage tanks that were built have the ability to hold 17 billion cubic feet (Bcf) of natural gas. Now, the company is making the refinery into an export facility with hopes to begin shipping 500 million cubic feet of gas a day by 2016.

The $12 billion investment should be able to export about 4 percent of America's current natural gas output. Sabine Pass Liquefaction is the first U.S. LNG export facility that has entered the construction phase and is currently developing five liquefaction trains adjacent to the existing receiving terminal.

Currently, there are 11 existing LNG import/export terminals, according to the Federal Energy Regulation Commission (FERC) with more proposed projects in the works. It appears that several projects that are close to near-completion will have combined in-service capacity exceeding 6 billion cubic feet per day (Bcf/d) by the end of 2018.

This mass amount is necessary considering that global LNG demand is expected to grow 39 percent (12.9 Bcf/d) over the next five years, faster than the projected 27 percent (8.5 Bcf/d) global gas supply growth, according to BENTEK's market report "LNG Exports: The Global Thirst for North American Shale Gas".

"It took 20 years to reach the point of a breakthrough on shale gas – which really occurred in 2003 – and it wasn't until 2008 that it started to become clear that this was not something on the fringes, but something that would have major consequences not only for the North American gas market but for the global gas market," said Daniel Yergin, vice chairman of IHS, at his keynote address at the LNG 17 conference.

LNG 17, which Houston hosted at the George R. Brown Convention Center, welcomed 16,000 decision makers from 80 countries, discussing the latest global trends, challenges and opportunities facing LNG today.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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Overall Oil, Gas Wages Flat, but Specialty Positions Still Command Top Pay

Overall compensation for global oil and gas industry workers have been flat since 2010, according to data gathered from over 75,000 oil and gas professionals from January 2010 to December 2012 to measure trends in oil and gas worker earnings worldwide. However, compensation levels seen in the industry remain strong, particularly for workers with specialized skills, as global exploration and production is forecast to rise in 2013 and global oil prices to remain strong.

The mean compensation level seen for industry workers in Africa, Australia/Oceania, Asia, Europe, Middle East, North America and South America was $98,023 in 2010. The average compensation level rose slightly in 2011 to $98,862, but slipped to $98,079 last year.

Out of the seven regions, workers in the Australia/Oceania region earned the largest average compensation levels over the past two years with $123,161. Meanwhile, compensation levels of Middle East and North America oil and gas workers average the lowest compensation levels of $94,309 and $94,722 respectively.

In terms of change in average compensation from 2011 to 2012, workers in Africa, Europe and the Middle East saw a significant increase, while oil and gas workers in Asia and North America saw a significant decrease in their average salaries.

Oil and gas workers in Australia/Oceania reported a 7 percent increase in mean compensation levels from 2010 to 2012. Mean pay rose from $114,902 in 2010 to $123,453 in 2011, but declined slightly to $123,161 in 2012.

Workers with more than 20 years of experience enjoyed the highest levels of compensation, reporting a 6 percent increase from $152,048 in 2010 to $155,013 in 2011 to $160,859 in 2012. However, workers with 11 to 15 years of experience saw an approximate 14 percent decline in mean compensation levels from 2011 to 2012, from $128,379 in 2011 to $111,082 in 2012, after reporting an increase from 2010 to 2011 from $113,448 to $128,379. Meanwhile, mean compensation levels for workers with high school level education grew by approximately 11 percent from 2010 to 2012 from $114,934 to $127,156.

North America oil and gas workers saw a significant decrease in average salary levels of over 4 percent from $99,175 in 2011 to $94,722 in 2012. From 2010 to 2012, the mean pay declined 2 percent, as the decline from 2011 to 2012 offset the gain made from 2010 to 2011, when the mean compensation level rose from $96,558 in 2010 to $99,175 in 2011.

In the downturn in average compensation levels, workers with all levels of education showed decreases except those with a master's degree. These workers reported average mean compensation levels of $110,667 in 2012, up from $109,805 in 2011. Workers with associates degrees reported the biggest change in mean compensation with an approximate 8 percent decline from $92,620 in 2011 to $85,500 in 2012. Workers with between 11 and 15 years of experience reported the greatest declines in mean compensation levels from 2010 to 2012, from $106,805 in 2010 to $105,060 in 2011 to $99,652 in 2012.

Mean compensation levels from 2010 to 2012 remained relatively flat for Africa-based oil and gas workers, while the average compensation level grew approximately 5 percent from 2011 to 2012. Mean pay declined from $105,453 in 2010 to $99,894 to 2011, but rebounded $105,107 in 2012.

The increase in average pay in 2012 was concentrated mainly among Africa-based workers with master's degrees; salaries for these workers grew over 8 percent from $107,393 in 2011 to $116,742 in 2012. In terms of experience, the gains in average 2012 salaries for Africa-based workers were concentrated among workers with six to 10 years of experience or more than 20 years of experience. Workers with six to 10 years of work experience saw their average salary level rise from $83,331 in 2011 to $88,890 in 2012. Workers with over 20 years of experience saw their average salary level grow from $131,264 in 2011 to $146,946 in 2012.

Average salary levels for Asia-based oil and gas workers declined by a little more than 3 percent from $101,703 in 2011 to $98,399 in 2012. From 2010 to 2012, mean compensation levels fell by over 2 percent, as the mean compensation level rose from $100,891 in 2010 to $101,703 in 2011.

Unlike other regions where workers with master's degrees typically hold jobs with higher salaries, Asia-based oil and gas workers who only have a high school education out earned workers with college degrees. High school-educated workers' average compensation levels for 2011 and 2012 were both over $10,000 higher than average compensation levels for workers with master's degrees. Overall, workers with between six to 10 years work experience experienced the largest decrease in pay, 6 percent, from $79,328 in 2011 to $74,748 in 2012. Middle-level mangers showed significantly decreased compensation levels in 2012 versus 2011, while staff workers saw their average compensation decline by more than 3 percent from $88,693 in 2011 to $85,647 in 2012. Upper management-level employees reported a 7 percent increase in average compensation levels, from $125,705 in 2011 to $134,352 in 2012.

Europe-based oil and gas workers at all levels of experience reported significant gains in compensation levels for 2012, with the average compensation level increasing almost 7 percent from $93,238 in 2011 to $99,683 in 2012. For the 2010-2012 time period, mean compensation levels for oil and gas workers working in Europe rose nearly 9 percent from $91,685 in 2010 to $99,683 in 2012.

Europe-based oil and gas workers with master's degrees enjoyed higher pay increases in 2012 versus workers with lower levels of education, except for those with bachelor's degrees. Workers with a master's degree reported an 8 percent increase in average compensation from $97,059 in 2011 to $105,148 in 2012.

Average salary levels and changes in these levels were significant for workers employed by companies with less than 20 employees and firms with more than 500 employees. Workers at companies with fewer than 20 employees saw their average compensation level rise from $88,250 in 2011 to $101,912 in 2012. Workers at companies with between 500 and 2,000 employees saw average salaries increase from $87,934 in 2011 to $98,459 in 2012. Employees at companies with over 2,000 employees reported mean compensation level increases from $99,030 in 2011 to $104,706 in 2012.

Average compensation for Middle East-based oil and gas workers rose nearly 4 percent from $90,905 in 2011 to $94,309 in 2012. For the 2010-2012 timeframe, mean compensation levels rose by approximately 3 percent, from $91,427 in 2010 to $90,905 in 2011 to $94,309 in 2012.

Overall, the Middle East oil and gas workforce saw a moderate increase in average compensation levels in 2012, but three groups saw significant increases in average compensation. Workers with technical certifications reported a change in mean compensation of over 9 percent from 2011 to 2012 to $86,608 to $94,593, while workers with bachelor's degrees saw a 5 percent increase from $82,029 in 2011 to $86,180 in 2012. Oil and gas workers with a master's degree saw their average compensation level grow from $98,102 in 2011 to $105,646 in 2012.

Workers with between two and five years of experience under their belt and more than 20 years of experience reported an increase in average compensation in 2012. Workers with two to five years' work experience reported a 12 percent increase in average compensation levels from $56,652 in 2011 to $63,615 in 2012. Workers with over 20 years saw their total average compensation levels rise from $126,758 in 2011 to $134,273 in 2012.

Average compensation levels remained stable for South America-based oil and gas workers last year, with a more than 1 percent increase from $103,019 to 2011 to $104,459 in 2012. For the 2010-2012 time period, mean compensation levels grew nearly 2 percent from $102,570 in 2010 to $104,459 in 2012. The proportion of workers who reported stable income grew from 2011 to 2012, while fewer workers reported a pay decrease in 2012.

Oil and gas workers with bachelor's degrees reported the biggest increase in average compensation levels. These workers reported a nearly 7 percent increase in mean compensation levels for 2012 from $94,154 in 2011 to $100,596 in 2012. Workers with 16 to 20 years of oil and gas experience reported the biggest gain compensation gain, with an increase from an average compensation level of $107,472 in 2011 to $124,248 last year.

In the North American oil and gas market, onshore and offshore specialists who are either in high demand or few qualified candidates who may fit the bill for certain positions could see an 18 percent to 21 percent increase in total compensation, said Chris Melillo, managing partner and practice leader with Dallas-based executive search firm Kaye/Bassman International Corp.'s energy practice.

Companies are drastically increasing total compensation levels due to companies' very finite qualifications for offshore workers. While there may be several people who feel they could perform in the role, Melillo's clients want "10 out of 10" on the checklist of experience, which has resulted in companies directly recruiting candidates from each other. The number of candidates who are actually qualified for open positions and at least in employed-but-looking mode for a job change is two to seven.

The surge in compensation for specialty roles has been balanced out somewhat by the drastic slowdown for onshore geology positions and a surplus of candidates in that specific area, Melillo commented. This slowdown is occurring as some companies switch their focus from exploration to production. The retirement of older workers who earned higher salaries – leaving behind younger workers making less – may also be behind the flattening of compensation.

To help with overall retention efforts, companies may be employing bumps in compensation of slightly higher than 4 percent. The long-term incentives plans are really the main financial drivers for retention-focused compensation efforts. Melillo notes that candidates on average are seeing a 12 percent to 15 percent increase in salary/compensation to make a lateral move. If it is also a job grade/title jump for that candidate, that number can move to a 22 percent to 25 percent jump.

The perceived skills shortage within the Australia oil and gas market continues, said Marcus Ward, associate director of NES Global Talent Australia, in an interview with Rigzone.

"Despite labor becoming available from other markets experiencing a downturn such as mining, the oil and gas sector within Australia continues to demand talent," Ward commented.

The highest paying salaries within Australia are positions associated with subsea, subsurface and drilling. These roles are in demand as oil exploration companies go into deeper and deeper waters to extract oil and gas resources. Workers with previous experience working on liquefied natural gas projects also can command higher salaries, as these skills are considered niche and the number of people globally who possess these skills limited, Ward noted.

Salary increases for these positions have been seen over the last five years as operator's battle for the talent required to push their project ahead.

"Salaries will continue to rise across the sector unless employers begin to employ alternative methods to paying the highest possible salary to someone currently engaged on another project," Ward commented.

These alternative methods for retention strategies include performance bonuses, flexible working hours, death, disability and medical insurance and salary packaging, allowing individuals to purchase cars and other benefits.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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Schramm Unveils New 'Walking, Talking' Telemast Rig

Walking and talking are two verbs typically not associated with a drilling rig. However, the latest version of Schramm Inc.'s Telemast drilling rig can do both, a company official told Rigzone.

The Westchester, Pennsylvania-based company recently shipped one of its new T500XD Telemast drilling rigs to a customer for use in the Utica and Marcellus plays.

The latest rig in Schramm's Telemast drilling rig line, the T500XD, has a number of interesting characteristics, said Fred Slack, vice president of business development at Schramm, in an interview with Rigzone. Unlike traditional rigs which are on rails that only allow movement from left to right or front to back, the T500XD has a walking subbase which lifts the entire rig six inches allowing the rig to turn.

The rig can walk at a pace of 30 feet per hour and move a full 360 degrees, rather than moving forward and back or side to side, and can move quickly from hole to hole without the traditional two-axis pad mounted design limit. The T500XD also "talks" in that it allows drilling data to be transmitted via the Internet or satellite communications systems to remote operations centers in multiple locations, Slack noted.

The T500XD is the latest in Schramm's Telemast line of drilling rigs.

The rig, which is in the 500,000-pound hook load class, can drill horizontally or directionally to 15,000 feet or more, and can control weight on bit without utilizing traditional drill collars and gross string weight alone. This method is not a particularly accurate science, Slack noted.

The T500XD also offers best in class 35,000 feet-pounds of top head torque, third party directional steering interface and 80,000 pounds of hydraulic pulldown capacity, third party directional steering interface and 80,000 pounds of hydraulic pulldown capacity, meaning the rig can be used in a number of shale play opportunities globally.

The T500XD also features the LoadSafe XD automated pipe handling system can handle 24-inch diameter Range III tubulars weighing up to 10,000 pounds. In this system, drill pipe also is racked in the horizontal position for easy loading and offloading, dramatically improving operator safety.

"Traditionally you've had roughnecks working with their bare hands. With safety an important consideration, the joystick controls now allow workers to operate the rig without touching moving parts," Slack said.

The rig can be set up without a crane within a short period of time, and the rig, walking subbase, power unit and pipehandling system can be transported in only eight truckloads, said Slack. This compares with competitor rigs that advertise 12 truckloads.

Five to six crew members would typically be needed for a rig of this size, but the T500XD only requires three crew members, two in the control room operating joysticks and a helper, Slack noted. As a result, Schramm's rigs have a smaller footprint, and are less disruptive to the environment, Slack said.

Launched in 2002, the Telemast rig line features a telescoping mast instead of a traditional erector-set type gantry seen in traditional drilling rigs. The telescoping mast uses hydraulics to retract a rig into a truck transportable position in one piece, Slack said. The initial Telemast rig, the T130XD, was utilized in coalbed methane drilling; it then grew into the TXD rig, which has been used for tophole work in the Marcellus and Utica plays as well as the Permian Basin in Texas, Slack commented.

One approach operators have been using is to use a TXD rig to go in quickly and drill a tophole, the use a larger rig to drill the lateral. The latest Telemast rig now allows for both operations to be carried out with one large Schramm rig, Slack said.

The T500XD's cutting edge technology allows the rig to walk and talk.

Founded in 1900, the company made air compressors for a number of years – the company was the first to a portable engine driven air compressor, Slack noted. In the early 1950s, the company transitioned to manufacturing drilling rigs that used high pressure air instead of mud.

"We are an industry leader in mining and mineral exploration applications with reverse circulation that uses high pressure air to blow the material out of the hole instead of traditional cones with mud drilling applications," Slack commented. "One of the advantages of our rigs is that the TXD uses air hammer for tophole drilling, which allows for a more efficient process than traditional rotary drilling with mud."

Energy, mineral and water exploration make up the three legs of Schramm's business. The company has also been involved in the geothermal drilling market, although that market is quiet at the moment, Slack noted.

Approximately 70 percent of the company's rigs are exported overseas to markets that include China – where the company has enjoyed tremendous success – Australia, Uzbekistan, Iceland and Cameroon. The roster of countries in which Schramm rigs operate literally runs A to Z, from Australia to Zambia, said Slack. At a recent service school, the company actually had students from the two countries.

Slack said the company is in discussions with a number of operators for the rigs to be utilized in other U.S. shale plays in addition to the Utica and Marcellus.

The company, which currently has 250 employees, has had offices at the same location in WestChester since 1917, and has employees who are the fourth generation of families who have worked for Schramm. Schramm manufactures up to 200 rigs per year; the price of each rig ranges from $750,000 to $7.65 million. The newest Telemast rig has as a price tag of $7.65 million.

Slack credits the company's culture of doing good for the company's families, community and the industry – a principle driver of Schramm's business – with the company's ability to design and manufacture innovative products. This same culture was also behind the company's successful 2010 rescue of 33 miners trapped in in the San Jose Mine in Copiapo, Chile, after the mine collapsed in August of that year.

Nine Schramm rigs that were being used in mineral exploration nearby were used to drill holes to find the miners. A T685 rig, which drilled probing holes 5.5 inches in diameter approximately 2,300 feet deep, found the miners Aug. 22, two days before they would have run out of food. The hole drilled by the rig allowed rescuers to supply the miners with food and supplies. A second T685 rig completed a 5.5 inch hole that would ultimately become the Plan B borehole through which the miners were rescued.

Three drilling plans – A, B and C – were pursued in the rescue attempt. The Chilean government had initially estimated that it would take up to four months to rescue the miners. However, the fast progress made in reaming out the Plan B borehole allowed the miners to be rescued Oct. 9, 2010, instead of sometime before Christmas.

Following the Chilean mine rescue, the company began offering a mine rescue rig package. Slack said the company recently sold such a package to a company in China for use in a mining accident there.

"They are making tremendous progress in improving safety," Slack commented.

In January, the company's quality management system received a number of American Petroleum Institute and ISO certifications. Three of the specifications – API-Q1, ISO-9001: 2008 and ISO/TS 29001 – certify that Schramm's rigs comply with internationally recognized quality management system requirements.

This certifications help Schramm ensure that its design, manufacturing and order fulfillment processes consistently satisfy its customers across all markets served. These certifications also are increasingly asked for by customers as safety, Slack commented.

"The API Q1 [certification] was a major event for us and very important for larger rigs," Slack noted. "Our customers are calling for that as safety becomes a major focus. The company also is getting into CE-marked rigs. The CE mark is a manufacturer's declaration that their product complies with European Union legislation, allowing the product's free movement within Europe. The company has sold a number of rigs to customers in eastern Europe," said Slack.

The company's rigs can be converted to burn natural gas, Slack said.

"We don't take the attitude that what you see is what you get. We have standard products but can also fit them out on a case-by-base to meet customer needs."

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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PwC: Foreign Buyers Boost US M&A Activity in 1Q

The acceleration of deals at the end of last year to get ahead of the fiscal cliff and the seasonality of low first quarter deal volume resulted in a decline of oil and gas merger and acquisition (M&A) activity in the first three months of 2013 compared with fourth quarter 2012, according to PwC US. While private equity (PE) activity moved to the sidelines, deal activity was propped up by foreign buyers, who focused on the upstream sector, and strategic investors who continued to look for opportunities in shale plays. These factors led to an increase in both deal volume and value compared to the same time period in 2012.

For the three month period ending March 31, 2013, there were a total of 39 oil and gas deals with values greater than $50 million, accounting for $27.0 billion in deal value, an increase from the 34 deals worth $25.7 billion in the first quarter of 2012. However, on a sequential basis, deal volume in the first quarter of 2013 dropped 48 percent from the 75 deals in the fourth quarter of 2012, with total deal value in the first three months of the year declining 52 percent from $56.2 billion in the fourth quarter of 2012.

"With the acceleration of deal activity in the final three months of 2012 due to the looming fiscal cliff, in addition to the seasonal slowdown of deal making during the first quarter, we had anticipated this drop-off in M&A activity," said Rick Roberge, principal in PwC's energy deals practice. "Foreign buyers, though, are still looking for opportunities to expand in U.S. shale plays and are extremely active in upstream prospects – and they're willing to acquire those assets at a premium. At the same time, while private equity activity in the oil and gas industry recently hit an all-time high, the increase in asset valuations has caused them to move to the sidelines so far this year. However, we expect private equity involvement to pick up, in line with our outlook in The US Energy Revolution: The role of private equity in oil and gas."

Foreign buyers announced nine deals in the first quarter of 2013, which contributed $4.1 billion or 15 percent of total deal value, versus six deals valued at $5.9 billion during the same period last year. On a sequential basis, the number of total deals remained the same as total deal value increased 28.1 percent.

Private equity deal activity in the oil and gas industry dropped in the first quarter of 2013 with only two transactions with values greater than $50 million, which represented a total deal value of $576 million, compared to seven financial sponsor-backed deals worth $13.0 billion in the first quarter of 2012.

Additionally, there were 34 strategic deals that contributed $26.4 billion and made up 98 percent of total deal value in the first three months of 2013.

There were 35 total asset transactions, representing 90 percent of total deal volume, which contributed $17.2 billion – a 30 percent increase in deal volume from the 27 asset transactions during the first quarter in 2012, but a slight decline from the $18.2 billion in total deal value during the same period last year. There were four corporate transactions totaling $9.8 billion in the first three months of 2013, a small dip from the seven corporate deals during the first quarter of 2012, although deal value had increased from $7.4 billion.

For deals valued at over $50 million, upstream deals accounted for 23 transactions, representing $12.6 billion, or 47 percent of total first quarter deal value. The number of oil deals within the upstream sector totaled 11, compared to five upstream gas deals in the quarter. There were 11 midstream deals that contributed $10.0 billion, a 120 percent jump from the five midstream deals during the first quarter of 2012, which totaled $3.2 billion. Three downstream deals during the first quarter of 2013 added $3.9 billion, while oilfield services contributed two deals worth $465 million.

According to PwC, there were 18 deals with values greater than $50 million related to shale plays in the first quarter of 2013, totaling $16.3 billion, or 60 percent of total deal value. In the upstream sector, shale deals represented 11 transactions and accounted for $5.0 billion, or 40 percent of total upstream deal value in the first quarter of 2013.

Included in the shale-related deals in the first quarter of 2013 were three transactions involving the Marcellus Shale totaling $882 million and two Utica Shale deals that contributed $283 million. Compared to the first quarter of 2012, Marcellus Shale deal volume was flat, although total deal value decreased from $3.0 billion. Utica Shale deal activity increased from one transaction worth $112 million during the first three months of 2012.

"The main story in the first quarter of the year continues to be about shale. We're seeing interest in both the Marcellus and Utica, and we don't expect to see that enthusiasm dissipate anytime soon," said Steve Haffner, a Pittsburgh-based partner with PwC's energy practice. "While that interest hasn't translated to a dramatic increase in the volume and value of shale deals in the region, potential buyers are seeking the right opportunities to establish their footprint in the area – or to expand – and that includes both private equity and foreign buyers."

The most active shale plays for M&A with values greater than $50 million during the first quarter of 2013 include the Eagle Ford in Texas with five total transactions representing $5.1 billion, followed by the Marcellus Shale, the Utica Shale, and then the Bakken in North Dakota with one deal totaling $513 million.

"The first quarter saw a divergence in buyer-seller price expectations around gas assets, as natural gas prices bumped up from recent historical low levels," added Roberge. "These higher valuations for gas assets, combined with continued high valuations in the sweet spots of the liquid rich shale plays, were a major contributor to PE firms largely sitting out this quarter, but it's critically important for PE's and strategics alike to be ready when opportunity surfaces and prices are more favorable, as buyers will be lining up. Making sure they have the right strategies, integration plans, and controls in place will make for a better prepared buyer that maximizes the chances for success."

PwC notes that during the first quarter of 2013, master limited partnerships (MLP) were involved in eight transactions, representing more than 20 percent of total deal activity and continuing the trend of MLP involvement in deal transactions, as MLPs represented 20.6 percent of total deal activity in 2012.

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Alberta Government Charges Plains Midstream Over Oil Spill

TORONTO - The Alberta government has filed charges against Plains Midstream Canada ULC, a unit of U.S. energy pipeline operator Plains All American Pipeline L.P., for an oil spill in 2011 in northern Alberta, according to a notice on the western Canadian province's web site.

The oil spill, which happened in a fairly isolated stretch of boreal forest in northern Alberta, leaked about 28,000 barrels from Plains Midstream's Rainbow pipeline system, making it one of the province's largest in 36 years. The pipeline runs from northern Alberta to Edmonton, the provincial capital.

Plains Midstream faces three charges under the Environmental Protection and Enhancement Act, according to the provincial notice. They include one charge for the release of a substance that causes or could cause an "adverse effect" on the environment; another charge alleging failure "to take all reasonable measures to repair, remedy and confine the effects of the substance" as soon as the company "knew or ought to have become aware of the release;" and a third charge for "failing to take all reasonable measures to remediate, manage, remove or otherwise dispose of the substance...in such a manner as to prevent an adverse effect or further adverse effect," according to the government notice.

A representative for Plains Midstream couldn't be reached. But the company on its web site said that its efforts to clean up the spill are working.

"In the 22 months since the release, ongoing inspections have confirmed that remediation activities are complete (and) third-party remediation and reclamation experts inspect the site and assess the monitoring results to confirm the absence of contamination," the company said on the web site.