Orion files Chapter 11, Valero buying refinery
Valero Energy Corp., San Antonio, has agreed to acquire privately owned Orion Refining Corp.'s 155,000 b/d refinery in Louisiana for $400 million plus $100 million in working capital.
Both the Valero and Orion boards approved the transaction, as did the US Federal Trade Commission. Orion filed for Chapter 11 reorganization in a Delaware bankruptcy court, and the sale requires court approval.
The refinery, adjacent to the Mississippi River, is in St. Charles Parish 15 miles west of New Orleans. About 74% of the refinery's product slate is gasoline, distillate, and other light products.
In other downstream news:
- Stone & Webster Inc., a Shaw Group Inc. subsidiary, and an affiliate of ExxonMobil Chemical Co. formed a joint venture company called Badger Licensing LLC to license, market, and develop petrochemical technology products.
- Mississippi Chemical Corp., Yazoo City, Miss., and most of its subsidiaries filed for Chapter 11 organization in US bankruptcy court in Jackson, Miss.
In midstream news:
- CNOOC Ltd., a unit of China National Offshore Oil Corp., has agreed to buy a stake of a new company, the China LNG Joint Venture, within Australia's North West Shelf (NWS) project for $348 million, said BHP Billiton Petroleum Pty. Ltd.
In other company news:
- BG Group PLC announced that five of the six partners in the North Caspian Sea production-sharing agreement project elected to purchase BG's interest, preempting BG's plans to sell the stake to two Chinese companies.
- BP Norge AS agreed to sell Talisman Energy Norge AS its operated interest in the Norwegian Gyda field, associated facilities, adjacent acreage, and tax pools for $123 million (Can.).
- The Denver-based Tom Brown Inc. agreed to acquire privately held Matador Petroleum Corp., Dallas, for $373 million in cash and assumed debt for a total of $388 million.
- Shareholders of OAO Yukos and OAO Sibneft approved a merger creating Russia's largest oil and natural gas company. The deal, expected to close Dec. 31, will be the largest merger in Russia's economy (OGJ, Apr. 28, 2003, p. 32).
- Marathon Oil Corp. completed its acquisition of Khanty Mansiysk Oil Corp. for $275 million (OGJ, Apr. 28, 2003, p. 32).
Valero
"The refinery will be a great strategic fit for Valero's refining network," said Bill Greehey, Valero's chairman and CEO. "If you just consider the $2 billion investment made in the plant since 1985, we're getting the refinery for only 20¢ on the dollar of replacement value."
The Norco, La.-based Orion petitioned the bankruptcy court for an expedited sale process.
If granted, the transaction is expected to close by June 30. Greehey emphasized that Valero is buying the Orion refinery rather than Orion Refining Corp.
The purchase agreement calls for a potential earn-out payment if refining margins reach a specified level during any of the next 7 years.
Badger Licensing
The JV, equally owned by Stone & Webster and ExxonMobil Chemical, is being completed concurrently with Stone & Webster's recent acquisition of Badger Technologies from Washington Group International Inc. for $17.7 million.
Badger Licensing will market, license, and develop new and improved technologies for ethylbenzene, cumene, styrene, and their derivative products. The JV also will supply catalysts and basic engineering packages for these processes.
Previously, Badger Technology was part of Raytheon Engineers & Constructors Inc., Philadelphia.
Mississippi Chemical
The proceedings, filed May 15, excludes Farmland MissChem Ltd. and its associated companies, a Houston ammonia terminal, and the company's subsidiaries outside the US.
Mississippi Chemical Pres. and CEO Charles O. Dunn blamed the firm's "substantial financial loss" on a depressed agricultural sector and natural gas price volatility.
In addition, Mississippi Chemical hired Gordian Group LLC to explore financial restructuring alternatives.
China LNG Joint Venture
The JV agreement follows purchase agreements to supply gas to China's Guangdong LNG project. CNOOC Ltd. is the vehicle through which China carries out oil and gas exploration, development, and production activities off China and internationally.
Last year, NWS participants and Guangdong LNG participants, including CNOOC, agreed to a 25-year contract to supply 3.3 million tonnes/year of LNG for Phase One of the Guangdong LNG project, beginning in late 2006 (OGJ Online, Nov. 22, 2002).
In the latest agreement, CNOOC agreed to buy 25% interest in the China LNG Joint Venture, a new company set up within the NWS project to supply LNG to the Guangdong LNG project. CNOOC will acquire title to 5.3% of NWS gas reserves.
Each of the six original NWS participants plans to hold 12.5% interest in the China LNG joint venture. Subject to regulatory approvals, CNOOC will pay each of the six participants $58 million.
CNOOC also agreed to pay a tariff for access to the processing infrastructure. The transaction does not include equity in, or access to, oil reserves or oil production facilities.
Woodside Energy Ltd. operates NWS.
North Caspian Sea PSA
The majority of existing owners blocked BG's plans to sell its PSA interest to CNOOC North Caspian Sea Ltd., a wholly owned subsidiary of CNOOC Ltd., and to Sinopec International Petroleum Exploration & Production Corp., a unit of China Petrochemical Corp. (Sinopec).
Previously, BG International Ltd., a unit of UK-based BG, said it is divesting its interest in two transactions. CNOOC and Sinopec each had agreed to acquire an 8.33% interest in the PSA for $615 million each (OGJ, Mar. 17, 2003, p. 42).
Italy's ENI SPA unit Agip SPA, ExxonMobil Corp., Royal Dutch/Shell Group, Total SA, and ConocoPhillips exercised their preemptive rights. The Kazakhstan government has yet to approve the preemption transactions.
Upon completion, Agip Caspian Sea BV, ExxonMobil Kazakhstan Inc., Shell Kazakhstan Development BV, and Total E&P Kazakhstan each will own 20.37%. ConocoPhillips Petroleum Kazakhstan Ltd. will own 10.19%. Japan's Inpex Corp. will maintain its 8.33% interest. Agip Caspian is the operator.
Talisman
The Gyda transaction upon closing, subject to Norwegian government approval, will be effective retroactive to Jan. 1. Talisman also secured a transportation agreement for the oil export pipeline.
The assets include a 61% working interest in license area PL 019B, comprising Blocks 2/1 and 7/12 and containing Gyda field and platform facilities. Partners are DONG Norge AS, 34%, and Norske AEDC, 5%.
Talisman Energy Norge also is buying 61% of a 43 km, 12-in. pipeline from Gyda to the Ekofisk platform.
The deal also includes a 45% working interest in license area PL 019C within Block 2/1, containing the Kark prospect
Talisman will acquire 18 million boe of net proven reserves for $3.70/boe (excluding tax pools). Gyda net production currently is 8,000 boe/d, of which 90% is 42º gravity crude oil.
Tom Brown Inc.
Matador's holdings primarily are in the Permian and East Texas basins. It is the 15th largest producer in Southeast New Mexico and the 4th largest in the Freestone County area of East Texas
Matador's reserves are 269 bcfe, 85% gas.
Production averaged 52 MMcfe/d in the year ended Dec. 31, 2002. Production averaged 61 MMcfe/d in the first quarter of 2003.