Company News: Anadarko sells properties; nears divestment goal

Sept. 20, 2004
Anadarko Petroleum Corp., Houston is nearing its announced divestment goal.

Anadarko Petroleum Corp., Houston is nearing its announced divestment goal.

Apache Corp. will pay $537 million for Anadarko's Gulf of Mexico shelf properties, and Morgan Stanley Capital Group Inc. will buy for $775 million the company's royalty interest in production from those properties.

In a separate deal, Anadarko plans to divest certain US properties for $850 million in cash along with an interest in two oil and natural gas fields in Wyoming. The names of the buyers were not disclosed.

The transactions are part of Anadarko's previously announced plan to reduce its debt and buy back stock. Anadarko plans to sell properties representing 15% of its yearend 2003 proved reserves and 25% of its current oil and gas production, with aftertax proceeds expected to exceed $2.5 billion (OGJ Online, June 10, 2004).

In other recent upstream news:

  • PrimeWest Energy Trust agreed to buy all oil and gas assets owned by Calpine Energy Holding Ltd. and Calpine Canada Natural Gas Partnership for $806 million. All are Calgary-based firms.
  • Whiting Petroleum Corp., Denver, agreed to buy interest in 17 fields in the Permian basin of West Texas and southeast New Mexico for a total $345 million from private companies whose identities were not disclosed.
  • Calpine Corp., San Jose, Calif., agreed to sell its Rocky Mountain gas reserves in the Colorado Piceance basin and New Mexico San Juan basin for $223 million total to two US companies.
  • Pogo Producing Co., Houston, agreed to acquire gas properties in the San Juan basin for $189 million in two separate transactions.
  • Uranium Power Corp., Calgary, agreed to purchase the remaining 49% interest in the Firebag East Athabasca Oil Sands Project, giving it 100% interest in the Fort McMurry, Alta., project, subject to a 2.5 % royalty.

In other company news:

  • First Reserve Corp., a Greenwich, Conn., private-equity firm, agreed to buy Dresser-Rand Co. from Ingersoll-Rand Co. Ltd. for $1.2 billion.
  • Kinder Morgan Energy Partners LP, Houston, has purchased 100% of Kaston Pipeline Co. LP, an affiliate of Western Refining Co. LP, for $100 million. The acquisition involves a crude oil pipeline system in West Texas.

Anadarko offshore

The Apache acquisition and Morgan Stanley royalty stake transactions, expected to close by Sept. 30, are subject to normal closing conditions and purchase price adjustments. The sale to Houston-based Apache is subject to US regulatory review.

The Apache and Morgan Stanley sales package represents 98.6 million boe of proved reserves as of yearend 2003 and current net production of 46,000 boe/d.

Anadarko's shelf properties include 78 fields and 112 platforms. Upon completion of the announced sales, Anadarko will operate one offshore platform, the newly commissioned Marco Polo tension leg platform on deepwater Green Canyon Block 608 (OGJ Online, July 19, 2004).

"By exiting the shelf, we can focus our gulf program on the deepwater, which is expected to be the single largest contributor to Anadarko's targeted 5-9% annual [production] growth rate through 2009," the company said.

Anadarko's sale of an overriding royalty interest to Morgan Stanley is in the form of a volumetric production payment, which provides the buyer ownership of a certain volume of oil and gas to be produced from the properties during a set number of years.

Anadarko onshore

Anadarko will receive cash as well as the buyers' interests in Brown Cow and Hartzog Draw fields in Wyoming, representing 2 million boe of proved reserves and 7 million boe of probable reserves.

Terms of the transaction include 108 million boe in proved reserves as of yearend 2003 and current production of 38,000 boe/d in 180 fields across Texas, Oklahoma, Kansas, Wyoming, Utah, Louisiana, and Alabama.

The properties to be divested include about 30% of Anadarko's fields worldwide, but only 4% of the company's yearend 2003 reserves and 7% of its current production.

PrimeWest Energy

PrimeWest Energy said the purchase of reserves accounts for $649 million, $48 million for undeveloped land and seismic data, $35 million is for third-party processing income, and $74 million is for the purchase of a 25% interest in Calpine Natural Gas Trust.

PrimeWest is acquiring 14,500 boe/d of gas production in west-central and southern Alberta. The production is 83% natural gas, 11% natural gas liquids, and 6% crude oil.

Whiting

Whiting estimates that current net production from the properties being purchased is 37.8 MMcfed and that net proved reserves are 251.1 bcfe. Closing is expected Sept. 23.

Whiting plans to operate 72% of the net daily production from these properties. The acquisitions involve Parkway field in Eddy County, NM; Would Have and Signal Peak fields in Howard County, Tex.; Keystone field in Winkler County, Tex.; and DEB field in Gaines County, Tex.

Coupled with three other recently announced property acquisitions, this brings Whiting's total 2004 capital committed to cash acquisitions to $443.5 million for proved reserves of 333.7 bcfe.

Calpine

One Calpine deal is for $140 million, and the other is for $83 million. The buyers were not identified, Calpine said. Closings, subject to regulatory approvals, are expected in early September.

The Rocky Mountain assets being sold represent 120 bcfe of proved gas reserves, producing 16.3 MMcfed net.

Net proceeds from the Canadian and Rocky Mountain sales will be used to reduce Calpine's debt.

Pogo

Through two transactions, Pogo will acquire an estimated 100 bcfe of proven reserves and current production of 15 MMcfd in the San Juan basin.

Pogo will operate these properties. The proven reserves have a reserves-to-production index of 18 years. Plans for these properties will involve an active 2005-06 drilling program of 50 wells.

The first acquisition was expected to close Sept. 1, and the second is expected to close Dec. 1.

Upon closing of these two transactions, Pogo's total acquisitions of proven reserves so far this year will total 150 bcfe for $235 million.

Uranium Power

Specifics of the deal were not disclosed. Uranium Power will become project operator, and the company said an initial exploration and drilling program could begin this month.

The Firebag East Oil Sands Project totals 1.4 million acres, which include prospective Fort McMurray and Wabiskaw paleochannel zones.

"This is the largest land holdings in the Athabasca Oil Sands region and is adjacent to and east of several world-class oil sands projects in the Firebag area," the company said.

First Reserve Dresser-Rand

The Dresser-Rand acquisition marks First Reserve's second oil industry-relatedacquisition and its second billion-dollar transaction in the past 6 months.

Dresser-Rand supplies compressors, turbines, engines, parts, and services for the energy industry.

The acquisition is expected to close during the fourth quarter. In an earlier deal, First Reserve announced that it is acquiring Halliburton Co.'s surface well-testing business.

Kinder Morgan

Kinder Morgan utilizes carbon dioxide injection to enhance oil production from mature fields in West Texas.

The acquisition provides the company with strategically located infrastructure that will benefit the company's growing CO2 business, a spokesman said.

The pipeline system and associated storage facilities will help manage crude deliveries from Yates field.