US independent oil and natural gas exploration and production companies have been busy buying and selling properties recently.
Merit Energy Co., a private Dallas independent, plans to acquire Shell Exploration & Production Co.'s Michigan assets for $445 million. Closing is expected by early December.
Shell said the sale is part of the previously announced target of $2 billion in annual average divestments from the businesses in the Royal Dutch/Shell Group.
In other upstream news:
- Forest Oil Corp., Denver, agreed to buy 70 properties in the Gulf of Mexico and onshore Louisiana from Unocal Corp.'s gulf region business unit for $295 million.
- Unocal Corp. said its Chicago Carbon Co. subsidiary sold 4.9 million of its Tom Brown Inc. shares, which represented 85% of the 5.8 million shares held by Chicago Carbon.
- Harvest Natural Resources Inc., Houston, agreed to sell its 34% interest in Siberian producer Geoilbent to a nominee of OAO Yukos for $69.5 million and $5.5 million in repayment of loans.
- UK-based Premier Oil PLC completed its corporate restructuring, effective Sept. 12. Premier Oil CEO Charles Jamieson said Premier is "fully independent for the first time in 8 years."
- Kerr-McGee Corp., Oklahoma City, announced plans to generate $45 million in savings, including the reduction of its US workforce by 200-250 employees.
In pipeline news:
- Atlas Pipeline Partners LP, Philadelphia, agreed to acquire Alaska Pipeline Co. from Semco Energy Inc., Farmington Hills, Mich., for $95 million.
*Koch Capital Investments Co. LLC, Wichita, Kan., bought the Houston-based Marathon Oil Corp.'s 2.8% interest in Atlanta-based Colonial Pipeline Co. for undisclosed terms.
In other recent company news:
- Shell US Gas & Power LLC, an affiliate of Royal Dutch/Shell, sold its 30% interest in Enterprise Products GP LLC, the general partner of Enterprise Products Partners LP. Terms of the transaction were not disclosed.
- Luxembourg-based seamless steel pipe manufacturer Tenaris SA has concluded an exchange offer enabling it to own 99.9% of Mexico's Tubos de Acero de Mexico SA (TAMSA).
- GE Power Systems, Atlanta, agreed to acquire M.J. Harden Associates Inc. (MJH) of Kansas City, a geospatial data management and integration services company. The terms of the transaction were not disclosed.
Merit Energy
Shell gave no reserves or production figures for the properties that Merit Energy is buying.
But Shell background information shows Shell operates 450 oil and gas wells along the Niagaran Reef trend that produce 5,500 b/d of oil and 78 MMcfd of gas. Shell accounts for 20% of Michigan's oil and gas production.
Shell also operates the 350 MMcfd Kalkaska gas processing plant, the 35 MMcfd Manistee 23 sulfur treating plant, and four production units in Kalkaska, Manistee, Mayfield, and Gaylord, Mich. Throughput at the Kalkaska gas plant was 110 MMcfd last year.
Merit Energy owned reserves of 208 million bbl of oil and 555 bcf of gas in 14 states as of Dec. 31, 2002. It added 17.1 million boe of reserves during 2002.
The company produced a net 63,000 boe/d during 2002 and operated 5,660 of the 8,049 wells in which it held interests. Capital spending was $40 million in 2002.
Merit Energy's net income was $139 million on $436 million in revenues in 2002. The company had $1.3 billion in assets and employed 347 people.
The company's largest previous acquisition was a $395 million deal for Midcontinent and Permian basin properties in 2002.
Forest Oil
Unocal is selling gulf properties to Forest as part of Unocal's initiative announced earlier in the year to improve the profitability and sustainability of its Lower-48 exploration and production businesses, the company said (OGJ, June 23, 2003, p. 45).
The properties in the sale represent the majority of the gulf properties earlier earmarked for divestment, Unocal said, adding that it expects to divest the remaining 20 properties before Dec. 31.
The transaction, expected to close by Oct. 31, will be effective retroactive to July 1. Unocal plans to use the sale's net proceeds to reduce debt and increase funding capacity for its inventory of development projects and discoveries.
As of July 1, the fields included in the transaction held 34 million boe of reserves. Net production from the properties was 18,000 boe/d.
After the sale is completed, Unocal's gulf region unit will own about 25 fields with production of about 67,000 boe/d. Unocal said it retains the option to begin deep exploration in many of the fields being sold to Forest.
Tom Brown Inc.
Unocal expects to realize $120 million in pretax proceeds from the sale of Tom Brown Inc. shares. The price was $25.75/share minus transaction costs. Net proceeds will be used to reduce Unocal's outstanding debt. Unocal expects to record a $35 million pretax gain in third quarter results.
Following a mandatory 90-day waiting period, Unocal also said it expects to sell the rest of the equity that it holds in Tom Brown.
Unocal said its 2003 sales of exploration and production equity affiliate shareholdings will reduce proved reserves by 34 million boe from the Dec. 31, 2002, reserves level.
Standard & Poor's Ratings Services (S&P), New York, said Unocal's ratings would be unaffected by the sale of its investment in Tom Brown.
Geoilbent
Geoilbent is a joint venture established in late 1991 to develop Severo-Gubkinskoye oil and gas field. Partners are Purneftegasgeologia and Purneftegas, two local Russian oil companies (OGJ, Mar. 11, 2002, p. 36).
Net cash proceeds, minus expenses associated with the transaction, are estimated at $73 million. Harvest said it would use the proceeds to acquire and develop properties in Russia and Venezuela and for general corporate purposes.
Closing, expected in the fourth quarter, hinges upon approval from the Russian Ministry for Antimonopoly Policy and Support for Entrepreneurship and the European Bank for Reconstruction and Development.
Harvest Pres. and CEO Peter J. Hill, said, "Our commitment to Russia remains strong. We look forward to redeploying capital to Russian growth projects while maintaining our focus in Venezuela."
S&P said Harvest Natural Resources's announced sale was favorable to credit quality; however, the sale did not affect the company's credit ratings or outlook.
OAO Yukos and OAO Sibneft are in the process of merging into a company that will be Russia's largest oil and gas company and will rank among the world's largest oil producers (OGJ, Apr. 28, 2003, p. 32). That deal is expected to close by Dec. 31.
Kerr-McGee
Kerr-McGee's workforce reduction is expected to save $30 million/year in salaries and benefits. In addition, the company implemented a plan to mitigate $15 million of future annual medical and pension expenses. Kerr-McGee expects to take a $40 million after-tax charge in the fourth quarter.
"Competition is intense in both of our core operating businesses," said Luke R. Corbett, Kerr-McGee chairman and CEO. "As economic pressures continue and the global economy recovers more slowly, we must look for ways to reduce our current operating costs and offset future increases in other areas."
The company expects to reduce its workforce through early retirement and involuntary severance and separation programs, which will be completed by yearend.
Alaska Pipeline Co
Atlas Pipeline's acquisition of Alaska Pipeline Co. (APC) remains subject to various regulatory approvals, including that of the Regulatory Commission of Alaska.
APC owns and operates the high-pressure gas pipelines that transport gas from Alaska's Cook Inlet gas fields to Enstar Natural Gas Co.'s distribution system.
Enstar, a Semco division, has committed to use APC exclusively for its gas transmission service to Anchorage for 10 years and will provide operating and maintenance services to APC for at least 5 years.
The APC system's present design delivery capacity is 410 MMcfd with an average throughput of 132 MMcfd last year.
Alaska Gov. Frank H. Murkowski said the transaction will mean greater capital investment in natural gas exploration and development in Cook Inlet.
"Enstar has indicated to me that the sale will improve Semco's capital structure, which is crucial for continued gas exploration," Murkowski said. "We welcome this kind of restructuring and the potential new exploration and development it will support."
Atlas Pipeline Partners owns and operates natural gas pipeline gathering systems. Its primary asset consists of 1,380 miles of intrastate gathering systems in eastern Ohio, western New York, and western Pennsylvania.
Colonial Pipeline
The acquisition brings Koch Capital Investments' share in Colonial Pipeline to 28.1%. Koch Capital bought 18% interest in Colonial in 2002, making it the largest shareholder in the refined products pipeline company.
Colonial delivers 95 million gpd of gasoline, diesel fuel, home heating oil, aviation, and military fuels through its 5,519-mile pipeline system across the eastern US.
Koch Capital Investments is a wholly owned subsidiary of the privately held Koch Industries Inc.
Enterprise Products
Shell sold its interest to an affiliate of Enterprise Products Co., and affiliates of that entity now own 100% of the general partner. The sale is part of parent Shell's ongoing portfolio rationalization.
Shell and Enterprise have joint interests in five Gulf of Mexico pipeline systems, and Enterprise facilities process most of Shell's natural gas production in the Gulf of Mexico.
"Our commercial relationship with Enterprise Products Partners has been mutually beneficial, and we will continue to explore opportunities to extend that relationship," said Gus Noojin, Shell US Gas & Power president and CEO.
Tenaris
The exchange offer was launched in August when Tenaris had a 94.4% stake in TAMSA, a Sept. 15 news release said.
Tenaris plans to issue 19.58 million common shares to conclude the transaction, increasing Tenaris's overall 1.18 billion. The shares will be issued in the form of American Depositary Receipts. One ADR represents 10 common shares.
In addition, Tenaris said it will move to delist TAMSA's shares from the American Stock Exchange because TAMSA no longer meets the listing requirements.
Last year, Tenaris announced plans to acquire all outstanding shares of TAMSA and two other seamless steel pipe producers, Siderca SA of Argentina and Dalmine SPA of Italy.
Tenaris has pipe manufacturing facilities in Argentina, Brazil, Canada, Italy, Japan, Mexico, and Venezuela.
M.J. Harden
MJH will become part of the pipeline integrity services division of UK-based PII Pipeline Solutions, which GE acquired in 2002.
"The acquisition combines PII's engineering knowledge and best practices for pipeline integrity management with MJH's software and data management capabilities," said Claudi Santiago, president of GE Oil & Gas.
MJH provides consulting, database design, data conversion and integration, software application development, photogrammetry, and digital mapping. Primary industries served include oil and gas transmission, oil, gas, and municipal utilities, pipeline construction, and government.