It's good to be a resource play in the U.S. M&A space this year. The first half of 2006 has been witness to the major players grappling for every last bit of the Barnett Shale, even going so far as to lease acreage beneath the Dallas/Fort Worth airport, despite the certain regulatory-approval frustrations developing this land may entail. If the resource plays have become the belles of the ball, the Gulf of Mexico shelf has found itself a lonely has-been, watching many of its biggest players exit, thanks to declining reserve potential and uncertainty of repeatable results. "The analysts are saying, 'The Gulf is bad, the Barnett is good,'" says Bill Marko, managing director with asset-marketer Randall & Dewey, a division of Jefferies. "There have been quite a few Gulf of Mexico shelf sales this year. The Gulf of Mexico has really fallen out of favor." Among those exiting the shelf so far this year have been Kerr-McGee Corp., which sold its shelf properties to W&T Offshore and itself to Anadarko Petroleum Corp. during this half; Houston Exploration Co., which found a willing buyer in Merit Energy Co.; Noble Energy Corp., which sold to First Reserve-backed Coldren Resources LP; BP, which sold Gulf assets to Apache; and Pogo Producing Co., which sold half-interest in its Gulf assets to Japanese conglomerate Mitsui. "Large public independents, with a handful of exceptions, have left the Gulf of Mexico shelf," says Mark Carmain of investment-banking firm Petrie Parkman & Co. "We refer to it as the treadmill because the wells deplete very rapidly; they only last for about two to three years. So every two to three years you have to re-invest your entire capital base. For more on this, see the October issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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