A merger between an oil drilling equipment manufacturer and a manufacturer and supplier of drilling systems and rig instrumentation was the largest transaction among recent oil-related mergers and acquisitions.
National-Oilwell Inc. (NOI) and Varco International Inc., both based in Houston, agreed to merge in a $2.5 billion stock deal to create National Oilwell Varco in which NOI shareholders will own 51% interest and Varco shareholders 49%.
In other recent upstream company news:
- Newfield Exploration Co., Houston, agreed to buy privately owned Inland Resources for $465 million, plus $111 million in assumed debt. Closing is expected by early September.
- Anadarko Petroleum Corp. plans to acquire Access Northeast Energy Inc. (ANEI), a private company based in Halifax, NS, whose sole project is a proposed 1 bcfd capacity LNG receiving terminal on the Nova Scotia coast.
- ChevronTexaco Corp. sold its wholly owned Congo subsidiary, Muanda International Oil Co. (MIOC), to a subsidiary of Perenco SA, a European independent exploration and production company.
- Total SA signed an agreement with Santos Ltd. to acquire a 39.9% interest in a deepwater exploration block north of Bali, Indonesia.
- BG Group PLC signed a sale and purchase agreement with Lundin Petroleum AB under which BG is to acquire 60% equity in Lundin's wholly owned License Area PL 292 in the central Norwegian North Sea, with an option to acquire a further 10% interest.
- Forest Oil Gryphon Marin BV, a unit of Denver-based Forest Oil Corp., entered into interest participation agreements with two partners. Forest Oil Gryphon operates the Gryphon Marin PSC off southern Gabon.
- El Paso Production International Cayman Co., a unit of Houston-based El Paso Corp., acquired Unocal Global Ventures II Ltd.'s 50% equity interest in a jointly held company that owns Brazilian E&P venture UnoPaso Exploracao e Producao de Petroleo e Gas Ltda.
- Fellows Energy Ltd., Broomfield, Colo., signed a letter of intent to acquire a stake in coalbed methane properties in Wyoming's Power River basin from a private entity.
National Oilwell Varco
The boards of NOI and Varco unanimously approved the merger agreement.
The deal calls for Varco stockholders to receive 0.8363 share of NOI common stock for each Varco share.
The transaction is expected to be tax-free to Varco stockholders and is expected to be accretive to earnings and cash flow for both companies in 2005.
The deal is subject to various conditions, including stockholder approval of both companies and customary regulatory approvals. Closing is expected within 6 months.
Newfield-Inland
Newfield Pres. and CEO David A. Trice said the acquisition of Inland "places Newfield on the map in the Rockies, an area in which we intend to grow in the future."
Inland's main asset is the 110,000 acre Monument Butte field in the Uinta basin of northeastern Utah. Inland operates Monument Butte and has 80% interest.
Based on its internal estimate, Newfield said the acquisition involves 326 bcfe of proved reserves and 439 bcfe of probable reserves, of which 85% are oil and 70% are proved undeveloped.
Pro forma for this transaction, Newfield expects its 2004 production to be 240-250 bcfe, an increase of 9-13% compared with 2003.
Anadarko-ANEI
Anadarko said the ANEI acquisition provides "a competitive advantage in international natural gas development." Anadarko executives contend that commercialization of international gas resources is becoming more necessary in the upstream industry.
Bob Daniels, Anadarko senior vice-president, E&P, said, "We have gained a potentially low-cost, low-risk entry into the LNG business, one of the fastest- growing segments of our industry."
ANEI secured approval Aug. 9 of the environmental assessment for the terminal, and all remaining required permits and approvals are expected by yearend.
Front-end engineering and design for the terminal was completed June 30. The terminal site is at Bear Head, Point Tupper, on Cape Breton Island, along the Strait of Canso in an industrial-zoned area. Commercial operations are expected in late 2007.
"Anadarko is actively exploring and producing oil in Algeria and Qatar, two of the world's top LNG exporting countries. We are making a concerted effort to extend our gas exploration in those countries, as well as in other producing regions," Daniels said.
Perenco's Congo deal
ChevronTexaco closed its sale of MIOC to Perenco last month.
MIOC operates and holds a 50% interest in a 390 sq mile concession off Congo. The concession produces 19,000 b/d of oil from seven fields.
Meanwhile, ChevronTexaco Oil Congo still maintains an office in Kinshasa to handle ongoing Congo business and to consider potential new opportunities.
Total's Indonesia block
Total has an option to obtain another 10.1% interest in the Indonesian block, subject to certain conditions.
The block lies in 100-970 m of water in the 3,450 sq km North Bali 1 PSC area that Indonesia awarded to Santos (North Bali I) Pty. Ltd. in October 2003.
Total E&P North Bali I is slated to become the operator after the first exploration period. A well is to be drilled by yearend, based on results of a 2D seismic survey that was completed in January.
BG's Norwegian license
License area PL 292 incorporates Blocks N6/3 and N15/12d. Block N6/3 contains the Pi oil and gas discovery and is nearby UK central North Sea infrastructure, including the BG-operated Armada complex.
BG also will acquire operatorship of the license area effective either Apr. 11, 2005, or when the partners decide to drill a well, whichever comes first.
Completion is expected in the fourth quarter.
Forest's Gryphon Marin PSC
Forest Oil Gryphon Marin announced that London-based Paladin Resources PLC unit Paladin Resources (Gabon) Ltd. will earn a 20% interest in the 9,764 sq km, shallow-water prospect.
Tullow Oil PLC subsidiary Energy Africa Gabon SA will earn a 15% interest, in addition to its existing option on a 10% participation in the event of commercial development.
Following Gabon government approvals, Forest will hold 40%, PetroSA (Pty.) Ltd. 25%, Paladin 20%, and Energy Africa 15%.
Exploration activities will include reprocessing existing 3D seismic data and acquiring additional 3D data this year and drilling an exploration well in second half 2005.
El Paso in Brazil
With the deal finalized, El Paso now owns 100% of UnoPaso. El Paso paid $61 million plus about $7 million in working capital.
Unocal also could receive as much as $19 million in potential additional payments contingent on attainment of specified gas prices or volume thresholds.
In another international deal, the El Paso unit sold its shares in Coastal Indonesia Sampang Ltd. to Singapore Petroleum Co. Ltd. for $23.2 million, plus working capital. Coastal Indonesia owns a 40% working interest in the Sampang PSC in Indonesia.
Fellows CBM acquisition
Fellows plans to acquire the operating management interest in 41 producing CBM wells, interests in 126 wells scheduled to come into production within 12 months, and interests in nearby undeveloped acreage.
The working interest eventually will be 20-30%. Fellows recently acquired an option to purchase a 65% interest in the 183,000 acre Overthrust project in northern Utah.
The company also is negotiating for numerous projects in the western US and is evaluating other potential opportunities.