ONGC Videsh Ltd. (OVL), a unit of Indian company Oil & Natural Gas Corp., is moving closer to buying a 25% equity stake in the Sudan-based Greater Nile Petroleum Operating Co. (GNPOC), Indian government officials have confirmed.
Various press reports have placed the proposed purchase price of the stake at $750 million, but that could not be independently confirmed.
Other recent company mergers and acquisitions include:
- Petroleo Brasileiro SA (Petrobras) is considering acquiring Petrolera Santa Fe, the Argentine subsidiary of Oklahoma City-based Devon Energy Corp., said Joao Nogueira Batista, Petrobras's financial director.
- Kerr-McGee Corp., Oklahoma City, completed the sale of its KM Indonesia Ltd. subsidiary to Petronas Cariga* Overseas Sdn. Bhd., a subsidiary of Petroliam Nasional Bhd. (Petronas), for $170 million.
- Vermilion Resources Ltd., Calgary, agreed to acquire from Vintage Petroleum Inc., Tulsa, a 65% participating interest in and operatorship of the Trini- dad onshore Central Block. The $40 million deal is to close by the end of June.
Meanwhile, another deal has fallen through:
- Hurricane Hydrocarbons Ltd. said that its deal to purchase an interest in the Caspian Pipeline Consortium (CPC) from Amoco Production Co., a unit of BP PLC, has been terminated. Conditions of the sale and purchase agreement were not shored up by the June 13 deadline, Calgary-based Hurricane said.
ONGC's Sudan stake
A government panel comprising officials from several ministries has approved ONGC's proposal to acquire the equity from Talisman Energy Inc., Calgary, and the panel forwarded its recommendation to India's Cabinet Committee on Economic Affairs.
OVL said last year that it was negotiating participation in 14-15 oil properties abroad, including projects in Sudan (OGJ Online, Oct. 15, 2001).
On June 14, Talisman issued a statement at the request of the Toronto Stock Exchange saying the company will make an announcement "if and when there is a material change in its affairs." The statement said, "Talisman reiterates its position that all of the company's assets are for sale at the right price and routinely evaluates transactions in the normal course of business. The company is frequently in discussions with a variety of parties interested in buying or selling assets, including Talisman's Sudanese assets."
The GNPOC joint venture is run by a consortium that includes China National Petroleum Corp. 40%, Malaysia's Petronas Cariga* Sdn. Bhd. 30%, and the Sudanese national firm Sudapet 5%, in addition to Talisman.
The JV currently produces 500,000 b/d of crude oil in the Heglig fields complex in southern Sudan. Prices of the Nile blend crude are around $2-3/bbl lower than those of Brent crude. Reserves from oil fields tapped by the consortium have been estimated at 300 million bbl. The surrounding vicinity also is believed to contain oil, but its reserves estimates vary widely.
Talisman stock volatility
Amir Arif, analyst for Friedman Billings Ramsey & Co. Inc., Arlington, Va., said in a June 13 research note that Talisman's stock is experiencing volatility based upon news reports that ONGC is on the verge of offering $750 million for Talisman's Sudan assets.
"Such a sale would result in significant price improvement, since the sale would be at higher multiples and would also result in a multiple expansion for the remaining assets, given the reduced political risk and the removal of the controversial Sudan investment, which has kept some investors at bay," Arif said.
Talisman faced a barrage of criticism at its 2001 annual meeting for its involvement in Sudan. An estimated 200 protestors from civil rights groups and the Sudanese community demonstrated outside the meeting. One protestor waved a placard saying, "A share for Talisman is a share in genocide."
Pres. and CEO Jim Buckee told critics that Talisman shared the same values as themselves, and that the company was supporting a school and a hospital near the oil field in Sudan (OGJ Online, May 2, 2001).
Also last year, Talisman released its first independently verified corporate social responsibility report regarding its exploration and development operations in southern Sudan. The report outlined how Talisman was addressing human rights issues. Talisman made the report in compliance with the International Code of Ethics for Canadian Business that Talisman adopted in December 1999 (OGJ Online, Apr. 10, 2001).
Petrobras's acquisition
"The possible purchase of (Petrolera) Santa Fe is part of our company's strategic plan that calls for boosting Petrobras's international presence, particularly in Latin America," Batista said. Negotiations are quite advanced, he added, with Petrobras having completed a due diligence study of the Santa Fe unit and finding nothing unexpected.
The Santa Fe unit has proved reserves of 50 million bbl and produces 10,000 b/d of crude oil, according to Devon Energy executives. Some oil analysts say that the Santa Fe unit is worth no more than $200 million.
Petrolera Santa Fe's oil production could supply the Bahia Blanca refinery in Argentina acquired by Petrobras through a $1 billion asset swap with Repsol-YPF SA (OGJ, Aug. 7, 2000, p. 24).
However, before making a decision about the purchase, Petrobras is first analyzing Argentina's economic crisis-including the devaluation of the Argentine peso and the recent 20% tax on oil exports-to evaluate Argentina's long-term prospects, said a Petrobras official.
Kerr-McGee closes deal
Included in the Kerr-McGee sale was the company's 30% nonoperating interest in the Jabung block. Jabung field in Jambi Province is one of three production areas from which PT Peruhsahaan Gas Negara, Indonesia's state gas distributor, plans to ship gas to Singapore when it finishes a pipeline in 2003.
Proceeds will be used to reduce debt, officials said. "This transaction is part of our long-term strategic plan to rationalize noncore assets and focus on growth in our core areas," said Luke R. Corbett, Kerr-McGee's chairman and CEO.
Vermilion Resources deal
The Central Block contains two successful 2001 exploratory natural gas wells, one of which Vermilion said is contemplated to be tied in by yearend for a 6-month production test.
The Carapal Ridge and Corosan wells contain proved reserves of 64.4 bcf of gas and more than 1 million bbl of condensate. The block contains other prospects (OGJ, Apr. 1, 2002, p. 41).
Petroleum Co. of Trinidad and Tobago Ltd. (Petrotrin) has a 35% participating interest in the Central Block, subject to government approvals. Aventura Energy Inc., Calgary, will also hold an interest.
The acquisition will establish a third core area for Vermilion, which operates in Western Canada and France.
Vintage is amidst a plan to reduce long-term debt by $200 million and refocus on North America. It said, "The long-term benefits associated with the development of the gas markets in Trinidad are a better strategic fit for other companies."
Hurricane's CPC deal
As a consequence of Hurricane's CPC deal falling through, BP said it would return by June 22 Hurricane's initial $40 million payment for an interest in the pipeline consortium.
Last year, Hurricane entered into a heads of agreement with the BP unit to acquire a stake in the pipeline project, which was to be held through Kazakh- stan Pipeline Ventures LLC, for $100 million (OGJ Online, Nov. 29, 2001). Hurricane is a Canadian independent that produces nearly 100,000 b/d from several fields west of Kumkol in the South Torgay basin, 600 miles east of the Caspian pipeline's nearest point.
Hurricane said that the completion of CPC, expected for yearend, would improve the competition dynamics between export routes in favor of Kazakh producers. Also, Hurricane said it would benefit from such competition even not owning an interest in CPC. Hurricane said it would "actively pursue becoming a third-party shipper in CPC together with other export options already used or being explored."