Company News - Burlington buys Marathon's half of Netherlands JV

June 9, 2003
Burlington buys Marathon's half of Netherlands JV US-based oil and natural gas independents have been actively acquiring or divesting interests in international joint ventures recently.

US-based oil and natural gas independents have been actively acquiring or divesting interests in international joint ventures recently.

Burlington Resources Inc., Houston, agreed to acquire the remaining 50% interest, which it did not already own, in Clam Petroleum BV from its joint venture partner, Houston-based Marathon Oil Corp., for $100 million.

Teton Petroleum Co., Denver, signed an agreement to acquire the Anderman/Smith Overseas Inc. interests in LLC Chernogorskkoye in western Siberia. Anderman/Smith is an affiliate of St. Mary Land & Exploration Co., Denver.

In other upstream news:

  • NCE Petrofund Corp., a Calgary-based royalty trust, agreed to buy a package of western Canadian oil and natural gas properties from Murphy Oil Co. Ltd., El Dorado, Ark., for $66 million (Can.).
  • Harken Energy Corp., Houston, has hired financial adviser Petrie Parkman & Co. Inc., Denver, to evaluate its US oil and natural gas assets and to make recommendations to maximize their value.
  • Edge Petroleum Corp., Houston, plans to acquire Miller Exploration Co., Traverse City, Mich., for $12.7 million in stock, and Miller Exploration announced a separate deal in which it will sell its Alabama properties to a private party.
  • Patterson-UTI Energy Inc., Snyder, Tex., announced plans to acquire the remaining interest in rival TMBR/Sharp Drilling Inc., Midland, Tex., in a cash-stock deal.
  • In midstream news:
  • TransCanada Pipelines Ltd., Calgary, agreed to buy the remaining 50% of Foothills Pipe Lines Ltd. from Duke Energy Gas Transmission for $177 million. This includes $105 million of Duke Energy's share of Foothill's debt.
  • Cantera Resources Inc., Dallas, agreed to buy CMS Field Services, a subsidiary of CMS Energy Corp., Dearborn, Mich., for $115.5 million cash.
  • Duke Energy Field Services LLC (DEFS) plans to sell assets in Mississippi, Texas, Alabama, and Louisiana to Crosstex Energy Services LP, Dallas, and to sell eastern Oklahoma assets to ScissorTail Energy LLC, Stroud, Okla. The two deals together total more than $90 million and are expected to close by June 30.

Clam Petroleum

Marathon said that it would use the proceeds from the sale of Clam Petroleum to Burlington to pay down debt and make other investments.

Clam operates 25 natural gas fields in the North Sea off the Netherlands. Those fields provided net sales of 25 MMcfd in 2002. The sale is part of Marathon's previously announced plan to sell its noncore assets, both upstream and downstream, to strengthen its balance sheet. The company expects to raise more than $700 million from 2003 divestitures, it said.

Teton's acquisition

Teton declined to disclose the purchase price of its Anderman/Smith acquisition as terms of the deal are pending final due diligence. The agreement calls for a series of payments beginning in June; closing is anticipated in September.

LLC Chernogorskkoye, created to develop Chernogorskkoye oil field in Russia's Tyumen region, produces 8,500 b/d of oil (OGJ, Sept. 13, 1993, p. 27).

The Anderman/Smith interests comprise 50% of a JV with TNK Nizhnevartovsk, a subsidiary of Sidanco Oil Co. Sidanco and Tyumen Oil Co. (TNK) are being incorporated into a new company, TNK-BP, by BP PLC and two Russian investor groups (OGJ, May 5, 2003, p. 34).

NCE Petrofund's acquisition

Closing of NCE Petrofund's acquisition of certain Murphy Oil western Canadian assets is expected to close by early June, with the effective date retroactive to Mar. 1. About 40% of the assets are subject to first rights of refusal, NCE Petrofund said. The price remains subject to adjustment.

NCE Petrofund said the properties' established reserves are 25% gas, and production is 42% gas. Current production net to the acquired interest is 2,300 boe/d. The trust said 40% of the properties are operated.

The acquisition is expected to replace 100% of NCE Petrofund's base 2003 annual production.

Harken hires Petrie Parkman

Harken's domestic assets involve properties and prospects in the Texas Panhandle and along the Gulf Coast of Texas and Louisiana.

Alan G. Quasha, Harken chairman, said the company's management has spent the last few months restructuring Harken's balance sheet and examining the cost structure.

"While Harken is still burdened with significant long-term debt, we have effectively dealt with most of our short-term debt without causing excessive dilution," said Quasha, who was elected chairman this year (OGJ Online, Apr. 1, 2003).

Harken fully impaired its $8.8 million investment in Costa Rica in its yearend 2001 earnings (OGJ Online, Feb. 20, 2002). Harken also has holdings in Colombia.

Edge Petroleum's deal

Edge Petroleum and Miller Exploration expect to close their deal by Aug. 1. After the Alabama sale, Miller Exploration expects to have no debt and working capital of more than $3 million.

Also concurrent with the Edge Petroleum transaction, Miller Exploration and K2 Energy Corp. of Calgary reached a settlement that ends all claims and litigation between Miller Exploration and K2 regarding the Blackfeet Indian reservation in Glacier County, Mont.

Based upon Edge Petroluem's closing price and the number of shares of Miller Exploration and its own stock outstanding on May 27, Miller shareholders would receive 2.5 million shares of Edge Petroleum common stock. The deal remains subject to approval by both companies' shareholders.

Patterson-UTI

Patterson-UTI, which already owns 20% of TMBR/Sharp Drilling, declined to discuss the transaction's total value. Analysts estimated it at about $92 million.

Both companies operate land-based oil and gas drilling rigs. After closing, Patterson-UTI will operate 358 rigs.

Under the deal, Patterson-UTI agreed to pay TMBR/Sharp Drilling shareholders $9.09 in cash plus 0.312166 of a share of Patterson-UTI stock for each TMBR/Sharp share. That amounts to a total of $20.20/share based on Patterson-UTI's May 23 closing price of $35.59/share.

TransCanada buys Foothills interest

The Foothills system extends more than 1,000 km across Alberta, British Columbia, and Saskatchewan. Current capacity is 3.3 bcfd.

"Our full ownership of Foothills will allow us to continue to grow and optimize our extensive network of natural gas pipelines," said Hal Kvisle, Trans- Canada Pipelines CEO. "The Foothills assets fit well with our western Canada facilities and are integral to moving future northern gas to North American markets."

The sale, subject to necessary regulatory approvals, is expected to close in the third quarter. Duke Energy expects $72 million in cash proceeds from the deal.

Cantera buys CMS Field Services

Cantera's acquisition of CMS Field Services also includes a $50 million note payable during 2004-08, contingent on the financial performance of the Fort Union and Bighorn natural gas gathering systems in Wyoming.

The sale is expected to close during the second quarter. The sale proceeds will be used to reduce debt.

CMS Field Services provides gathering, compression, treating, and processing services for natural gas and natural gas liquids in Oklahoma, Texas, Louisi- ana, and Wyoming.

Meanwhile, CMS Energy said it also is working to find a buyer for CMS Taurus Field Services LP, owner of the Shackelford processing plant in Callahan County, Tex., and the associated gathering system.

Crosstex Energy, ScissorTail deals

The assets being sold by DEFS to ScissorTail involve various gas processing plants and 2,800 miles of gathering pipeline.

Crosstex is paying $66.35 million for its package, which includes the AIM Pipeline System (previously known as Mississippi Fuels), and a 12.4% interest in the Seminole gas processing plant in Gaines County, Tex. The plant, operated by Amerada Hess Corp., is completing a capacity expansion to 210 MMcfd of gas from 150 MMcfd, CrossTex said.

In addition, Crosstex is buying the Conroe gas plant and gathering system. The cryogenic gas processing plant connects with 10 miles of gathering pipelines within Montgomery County, Tex.

The transaction also includes the Black Warrior Pipeline system's 125 miles of gathering systems in Alabama and two smaller systems, Aurora Centana and Cadeville, in Louisiana.

A gas gathering and processing business, DEFS is a joint venture that combined the midstream units of Duke Energy Corp, Charlotte, NC, and Conoco- Phillips.

Duke Energy owns 70% and ConocoPhillips owns 30% of the JV.