Dansk Olie & Naturagas AS (DONG) plans to acquire BP PLC's 10.34% stake in Ormen Lange gas and condensate field on the Norwegian continental shelf for $1.2 billion.
In other recent company transactions:
- TGT Pipeline LLC, a subsidiary of Loews Corp., New York, agreed to buy an 8,000-mile interstate natural gas pipeline system from Entergy-Koch LP for $1.136 billion.
- Canadian Natural Resources Ltd. (CNR), Calgary, announced plans to buy a western Canadian subsidiary from Anadarko Petroleum Corp., for $698 million (Can.).
- Range Resources Corp., Fort Worth, plans to drill 100-150 new wells in West Virginia and Virginia in 2005 on $219 million of Appalachian basin properties it is acquiring from a private seller.
- BHP Billiton Ltd., Melbourne, sold its last interests in the Timor Sea—25% of Corallina oil field and 36.6125% of Laminaria oil field—for $150 million to the wholly owned subsidiary of Paladin Resources PLC, London.
- A new private independent oil company and the Navajo Tribe signed a definitive agreement to acquire ChevronTexaco Corp.'s interests in Greater Aneth field, Utah's largest oil field in terms of cumulative recovery.
- Enbridge Inc., Calgary, agreed to buy Shell Gas Transmission LLC from Shell US Gas & Power LLC in a $613 million deal that includes most of Shell's Gulf of Mexico natural gas pipeline business.
- Fort Chicago Energy Partners LP, Calgary, expects to close its $270 million (Can.) acquisition of the Alberta ethane gathering system (AEGS) by yearend.
- Inergy LP, Kansas City, Mo., agreed to acquire Star Gas Propane LP, the propane operating partnership of Star Gas Partners LP, Stamford, Conn., for $475 million.
- Two of India's largest public energy companies, Indian Oil Corp. and Oil India Ltd., agreed to form a joint venture to bid for international exploration and production projects.
- Kerr-McGee Oil & Gas Corp., Oklahoma City, is acquiring BP's 37.5% interest in the deepwater Gulf of Mexico Blind Faith discovery in exchange for Kerr-McGee's interests in oil and gas assets in southeastern Oklahoma's Arkoma basin.
- Kinder Morgan Partners LP (KMP) bought TransColorado Gas Co. for $275 million from Houston-based Kinder Morgan Inc. (KMI), which is reducing debt and buying back its shares.
- Quest Oil Corp., Arlington, Tex., has abandoned efforts to acquire two petroleum prospecting licenses in Papua New Guinea and will instead focus on "more immediate prospects" in Alberta and the US Illinois basin.
DONG deal details
The DONG acquisition will include BP's 10.2% stake in the Langeled export pipeline.
Ormen Lange field is slated to begin producing 2.5 bcfd in October 2007. The $9.5 billion development project is the largest in Norway's history.
The field lies on Block 6305/5 more than 100 km northwest of Aukra, Norway, in 3,300 ft of water. Reserves are estimated at 14 tcf of gas and 180 million bbl of condensate.
Participants in Ormen Lange are Norsk Hydro ASA, AS Norske Shell, Statoil ASA, Esso Norge AS, and Norway's state Petoro AS. Norsk Hydro is the operator of the development stage, and Shell will operate the field in the production phase.
TGT pipeline deal
TGT Pipeline expects to complete the purchase of the pipeline, Gulf South Pipeline Co. LP, by yearend.
Gulf South is a subsidiary of Entergy-Koch, a 50:50 venture of Entergy Corp., New Orleans, and Koch Energy Inc., Wichita, Kan. That joint venture was formed during the energy-trading boom in 2000, which ended after the financial collapse of Enron Corp. in 2001. Entergy-Koch announced plans earlier this year to sell its trading and pipeline businesses in two separate transactions.
TGT Pipeline is the holding company for Texas Gas Transmission LLC. Loews bought the 5,800-mile Texas Gas Transmission from Williams Cos. Inc., Tulsa, in April 2003.
CNR identifies prospect sites
CNR said initial assessments identified 90 new well locations and 200 well recompletion opportunities on the properties it is acquiring. The transaction will extend CNR's North Alberta core region into the light oil operating area of Dawson, executives said.
This is one of two transactions by Anadarko that is expected to close by yearend. Anadarko said it was selling a smaller package of Canadian properties to an undisclosed buyer for $155 million (Can.) but declined to provide any information about the second buyer, including whether it's a private company.
Both transactions are expected to close by yearend, as part of Anadarko's previously announced plan to sell 15% of its 2003 yearend proved reserves and 25% of its current oil and gas production (OGJ Online, June 10, 2004).
Through the two sales, Anadarko is divesting assets in Alberta and northeastern British Columbia representing 55 million boe of proved reserves as of Sept. 1. Average production in September for the properties was 22,200 boe/d.
Anadarko Pres. and CEO Jim Hackett said the company is "ahead of schedule on the sale process and exceeding our value estimates."
Range expands
Range Resources' latest acquisition, to close by Dec. 31 retroactive to Oct. 1, comes on the heels of Range's purchase of the 50% of Appalachian operator Great Lakes Energy Partners Inc. that it did not own (OGJ Online, June 7, 2004).
The latest deal will add 205 bcf of gas-equivalent proved reserves and 14.8 MMcfd of net production. Production should rise 10-15%/year for at least the next 8 years with ongoing development, Range said.
About 85% of the acquired production is in Nora gas field, Dickenson County, southwestern Virginia.
The two acquisitions will more than triple Range's Appalachian production and reserves from 262 bcf of gas equivalent at yearend 2003.
Range is acquiring 417,000 acres, and the interests being acquired on 373,000 mineral acres include royalty and working interest.
About 30% of the proved reserves are derived from royalty interests, which bear no operating cost. Only 40% of the reserves being acquired are developed, and more than 80% are coalbed methane, Range said.
Of the 1,872 producing wells to be acquired, the company will own a royalty interest in 1,317 wells, royalty and working interest in 516 wells, and working interest in 39 wells. It has identified 1,550 drilling locations, of which 790 are classed as proven. Range will own a 50% working interest and 12.5% royalty on 90% of the locations.
Rights to all depths are being acquired, and deeper potential on the properties has yet to be evaluated, Range added.
"The acquisition involves the legacy oil and gas assets of an eastern coal company which date back almost a century," Range said.
Nora gas field is Virginia's largest gas resource. Production of conventional and shale gas began in 1951 and was joined by CBM in 1988. State figures show Nora averaged 21 MMcfd in 1997, two thirds of which was CBM. Federal data show the field averaged 44 MMcfd for an unspecified period earlier in this decade (see table, OGJ, Apr. 19, 2004, p. 40). The field covered 170 sq miles and had 649 wells in 1997.
Today, Nora has nearly 1,900 wells on 339 sq miles and has at least a further 1,408 identified drilling locations, Range said. Range will own interests in 742 CBM wells 1,200-2,500 ft deep and 373 tight sands wells 4,500-5,500 ft deep in the field.
Equitable Supply, Pittsburgh, operates nearly all of Nora field. After the acquisition, Range would have the right to propose wells and the right to participate for a 50% working interest in all CBM wells and a 20% working interest in tight gas wells drilled by Equitable in Nora field on non-Range acreage.
The other main fields in which Range is acquiring interests are Haysi and Slate Creek in Virginia and Widen/Fola and Blue Creek in West Virginia.
BHP's Timor Sea interests
Sale of BHP's interests in the Timor Sea will be finalized early next year. Woodside Energy Ltd., Perth, operates both fields. Shell Development (Australia) Pty. Ltd., Melbourne, is the third partner. These two firms have preemptive rights on the sale, but so far there is no indication they will contest the transaction.
Woodside discovered Laminaria field in 1994 as well as nearby, smaller Corallina field the following year. Both fields are about 550 km west of Darwin and are produced through the Northern Endeavour floating production, storage, and offloading vessel. Laminaria came on stream in late 1999 and Corallina in mid-2002.
The fields are in natural decline from peak production of 180,000 b/d of oil (reached in early 2000). This year they have produced at an average of 30,900 b/d.
BHP's said the fields are no longer core assets. BHP (then BHP Petroleum) began the modern petroleum era in the Timor Sea in the early 1980s with the discovery of Jabiru oil field. Until that point the only significant finds had been noncommercial gas at Petrel, Tern, and Sunrise-Troubadour fields and a small oil accumulation at Puffin field, all in the late 1960s and early 1970s.
Greater Aneth field
ChevronTexaco didn't give a price on the sale of its interests in Greater Aneth field in the Paradox basin.
Purchasers are Resolute Natural Resources Co., Denver, formed by managers of the former HS Resources Inc. and equity provider Natural Gas Partners VII LP, and Navajo Nation Oil & Gas Co. (NNOG), Window Rock, Ariz. Kerr-McGee Corp. acquired HS Resources for $1.8 billion in 2001.
Included in the deal are a 70% operated working interest in the Aneth Unit, smaller nonoperated interests in the McElmo Creek and Ratherford units, ChevronTexaco's interest in the Aneth gathering system, and the operating portion of the Aneth gas plant, all in San Juan County in the Four Corners area.
The Aneth Unit contains 146 active producing wells and 120 active injection wells.
A partnership agreement calls for Resolute to acquire 75% of the assets and NNOG to acquire 25%. Resolute will operate the Aneth Unit and gathering system. The companies said they plan to "work cooperatively with the Navajo Nation and local communities to expedite responsible development of the field."
- Enbridge's pipeline deal
The pending sale of most of its Gulf of Mexico natural gas pipeline business to Enbridge is part of Shell's plans to grow its upstream business and focus on core downstream activities.
The deal is expected to close by yearend.
Shell Gas Transmission owns or has interests in 11 gulf pipelines, operational or under construction in various production areas, with a combined landed capacity of 4.7 bcf/d.
After the deal is completed, Shell's exploration and production business will retain long-term contracts as an Enbridge pipeline customer. Shell will retain select gas gathering assets.
*Fort Chicago in Alberta
The 1,324-km AEGS pipeline system being bought by the Fort Chicago limited partnership delivers feedstock to the Joffre, Alta., ethylene facilities of NOVA Chemicals Corp. and Dow Chemical Canada Inc. It also delivers ethane to Dow Chemical's Fort Saskatchewan, Alta., ethylene facilities.
Fort Chicago said NOVA Chemicals will operate AEGS.
*Inergy's Star Gas deal
Upon completion, Inergy's acquisition of Star Gas will create the fifth-largest retail propane operator in the US. It is expected to close this month, pending regulatory approvals.
Standard & Poor's Ratings Services kept Star Gas Partners on CreditWatch with negative implications, noting uncertainty surrounding the company's ability to secure liquidity with its lenders. As of June 30, Star Gas Partners had about $510 million of debt.
"Although the proposed asset sale will provide proceeds for potentially significant debt reduction, S&P's remain concerned about the abrupt sale of Star Gas's more stable propane business," said S&P analyst Brian Janiak.
Star Gas Propane represented more than 50% of the total cash flow for its parent company, he added.
IOC-OIL partnership
The IOC-OIL agreement follows the suspension move for the companies to merge, following pressure from the Left Front, which is supporting the ruling Congress-led United Progressive Alliance government.
Sources from the Petroleum and Natural Gas Ministry (PNG) said the entities would hold equal equity in the proposed JV, which will have to be approved by their boards.
The PNG sources said the companies have estimated an initial investment of $2.21 billion in international E&P deals during the next 6-7 years.
Initially, the venture seek investments in Southeast Asia and Africa.
*Kerr-McGee, BP asset swap
In addition to the asset exchange, Kerr-McGee agreed to pay an undisclosed amount for the Blind Faith interest. The transaction is expected to close in first quarter 2005.
Blind Faith is on Mississippi Canyon Blocks 695 and 696 about 175 miles southeast of New Orleans (OGJ Online, Nov. 4, 2003).
ChevronTexaco Corp. operates Blind Faith with a 62.5% interest. Development options are being evaluated, and first production is slated for 2007.
KMP buys TransColorado Gas
TransColorado is a 300-mile interstate pipeline that transports natural gas from western Colorado to the Blanco Hub in northwestern New Mexico.
"We expect to use about $50 million of the proceeds to reduce debt in addition to the $100 million of budgeted debt reduction in 2004," said KMI Chairman, CEO, and Pres. Richard D. Kinder.
The remaining $160 million will be used to repurchase Kinder Morgan shares.
The boards of directors of both KMI and KMP approved the deal following the receipt of fairness opinions from separate investment banks.
Quest quits Papua New Guinea
Quest Oil, formerly known as GameState Entertainment Inc., Vancouver, BC, dropped its earlier efforts to acquire Grey Creek Petroleum, Vancouver, which has two licenses, PPL 257 and PPL 258, covering 4 million acres total in Papua New Guinea. PPL 257 is off Papua New Guinea in the Cape Vogel basin, and PPL 258 is in the East Sepik region.
Instead, Quest hired a consultant to identify and negotiate the acquisition of oil and natural gas prospects in the Alberta foothills. It also created Quest Canada Corp., Edmonton.
Quest Oil is negotiating directly for the acquisition of a company based in the Illinois basin.