CORRECTED-Energy deals elusive despite $110 bln in assets on the block

(In paragraph 6 of May 10 report, corrects to show Chevronwants to sell only some of its Gulf of Mexico oil fields)

* More than $110 bln of oil and gas assets on sale

* Majors need to fund dividends, smaller groups repay debt

* Buyers, sellers narrow gaps again after oil rally

* Oil and gas field deals, however, have yet to be struck

* GRAPHIC: Assets on the market http://tmsnrt.rs/1OehMq6

* GRAPHIC: Historic asset value http://tmsnrt.rs/1SMFAqG

By Ron Bousso

LONDON, May 10 (Reuters) - Energy companies, including someof the world's biggest, could be forced to slash prices of morethan $110 billion worth of assets they want to sell afterdealmaking in oil and gas fields ground to a halt due to thevolatile crude market.

The values that buyers and sellers assign to assets, largelybased on their view on the future oil price, drifted far apartin the past year, according to several industry bankers.

Asking prices have been as much as 50 percent higher thanwhat buyers are willing to pay in the era of cheap oil, althoughsome bankers believe the gap is now narrowing again as crudeprices rally, and activity is showing signs of picking up.

Oil majors including Royal Dutch Shell, Chevron and BP are offering assets to balance theirbudgets and maintain lavish dividend policies. For smallercompanies with heavy debt burdens such as Tullow Oil,Genel Energy or Enquest and U.S. shaleproducers, the need for cash can be even stronger.

Around 146 assets worth more than $100 million each are onthe block worldwide, according to data compiled by consultancy1Derrick. It puts their total value at $113 billion, althoughany estimate remains notional until buyers and sellers come toterms.

They include some of Chevron's Gulf of Mexico oilfields, North Sea assets owned by Italy's Eni, Shelland France's Total as well as a myriad assets inAfrica and Asia.

"Deals have been elusive because buyers are both few innumber and highly cautious," said Bobby Tudor, Chief ExecutiveOfficer of U.S. investment bank Tudor, Pickering, Holt & Co.

Business involving energy infrastructure remains buoyant.Even at low prices, pipelines are needed to move oil and gaswhile demand for storage is strong as sellers hold onto crudeand products, hoping the market will pick up.

It is selling oil and gas still under the ground that isproblematic. The rapid rise in recent years of "unconventional"production, largely from U.S. shale deposits, plus adetermination by major OPEC producers such as Saudi Arabia todefend their market share has kept the energy market weak.

Prices of the U.S. benchmark West Texas Intermediate (WTI)have recovered from lows near $27 a barrel in January to around$44 now for the prompt trading month, currently June. However,they remain far short of levels above $110 before the collapsebegan in mid-2014.

In the United States, buyers are still unwilling to valueassets at prices much above the oil price curve as measured byforward contracts, Tudor said. Known as the strip, thiscurrently values WTI at around $53 a barrel in 2020.

Tudor believes the market needs to rise only a little andstay there for mergers and acquisitions deals to pick up. "If wecan get the prompt month for WTI stabilized in the high $40s andthe 2020 price at $55 or higher, the M&A market will comealive," he said.

U.S. shale production is now declining with lowerinvestments, and dozens of huge oil and gas projects have beenscrapped around the world. Nevertheless, closing asset dealsremains elusive, according to one potential buyer.

"Did the bump up from $27 a barrel to the $40s suddenlychange the pace of industry dealmaking? I am not seeing that,"said Arun Subbiah, Founding Partner at Petroleum Equity, anupstream oil and gas private equity firm focused on the NorthSea and onshore Europe.

"People are still looking at the macro: (oil) inventoriesare still very high, U.S. unconventional production is slowlycoming down but is still stubbornly high and people will want tosee that before the industry believe the recovery is takingplace."

CLOSING GAP

While volatility heightens caution among both buyers andsellers, the rally and signs of slowing global production appearto confirm expectations of a recovery by the year-end,bolstering dealmakers' confidence, according to some analystsand bankers.

"The valuation gap is closing. If prices stay in the $40-$70band it will not change people's fundamental expectations onwhere the market is going," said Andy Brogan, Global Oil & GasTransactions Leader at consultancy EY. "A number of people arelooking very seriously at buying assets so (volatility) doesn'tseem to be stopping an uptick in processes."

Nevertheless, a major movement on the market could stillupset things, he added.

In a survey of industry executives conducted by EY, 88percent said they had failed to complete or cancelled a plannedacquisition over the past year. But 58 percent expect the dealmarket to improve over the next 12 months.

BP, like its peers, has announced large saleprogrammes to offset growing debt while maintaining a generousdividend policy.

BP Chief Financial Officer Brian Gilvary said last monththat the group was also looking at buying, preferably assets itcan operate, but noted the difficult conditions.

"It is tough to find things which are value accretive in thecurrent market and there are lots of assets out there rightnow," he said in a call to analysts following BP's first quarterresults. BP is also considering swapping assets, he added.

Shell's plan to sell $30 billion of assets by 2018 followingits $50 billion acquisition of BG Group in February is the mostambitious in the market.

(Additional reporting by Amanda Cooper; editing by David Stamp)