Kerr-McGee to buy HS Resources for $2.15 billion


By the OGJ Online Staff

HOUSTON, May 14 -- Kerr-McGee Corp., Oklahoma City, Okla., said Monday that it is acquiring HS Resources Inc., San Francisco, Calif., for $1.7 billion plus the assumption of $450 million in debt.

Boards of both companies have approved the deal, which is subject to approval by HS stockholders and regulatory bodies. It is expected to be completed in the third quarter.

HS shareholders will be able to take cash or stock so that 70% of the total HS shares are acquired for $66 in cash and 30% are acquired in exchange for 0.9404 shares each of Kerr-McGee stock.

HS Resources is an independent oil and gas company with projects in the Denver-Julesburg basin, Gulf Coast, Mid-Continent, and Northern Rocky Mountain regions.

Nicholas Sutton, HS chairman and CEO, said, "As a small-cap E&P company our stock price is not accorded valuation multiples commensurate with the value of our work, assets, and production."

Kerr-McGee said the transaction involves proved reserves of 1.3 tcf equivalent, at a cost of $1.10/Mcf of proved gas equivalent, and gas gathering, undeveloped acreage, and other assets valued at approximately $300 million. It said the reserves, mostly gas in the Denver-Julesburg basin, will increase Kerr-McGee's proved US gas reserves by 77% and increase the company's reserve life for US gas by 2 years. Kerr-McGee's total proved reserves will increase by 20%.

Luke Corbett, Kerr-McGee chairman and CEO, said, "The addition of these long-lived natural gas reserves, concentrated near one of the fastest-growing energy markets in the US, creates another core operating area for our company that provides significant growth opportunities. These properties also offer the potential to add more than 500 bcf from probable reserves through identified projects that have a proven track record of success.

"HS Resources has a focused exploration program onshore in the Gulf coast that supplements Kerr-McGee's high-potential deepwater prospect inventory. This transaction dovetails with our strategy to build a balanced portfolio of quality oil and gas assets that offers meaningful upside potential."

After closing the transaction, Kerr-McGee's daily production volumes are expected to increase 15%, with daily gas production increasing more than 45% in the US. Total unit lifting costs are expected to decrease about 6%.

Related Articles

Escalera Resources to form Albania joint venture

04/03/2014 Escalera International Co. LLC, a subsidiary of Escalera Resources Co. (formerly Double Eagle Petroleum Co.), has signed a memorandum of understand...

AFPM: Petrochemical industry needs skilled workers

04/02/2014 The current boom in shale resource development has sparked an urgent need in the petrochemical industry for technically skilled workers to build, o...

Devon completes Canadian conventional assets sale

04/02/2014 Devon Energy Corp., Oklahoma City, has completed the sale of its Canadian conventional assets to Canadian Natural Resources Ltd. for $3.125 billion...

Ultra Petroleum selects senior vice-president

04/01/2014 Ultra Petroleum Corp., Houston, has appointed Brad Johnson to succeed William Picquet, who will retire from the company at the end of the month, as...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected