Several US independent exploration and production companies have reported acquisitions or proposed acquisitions that would bolster their oil and natural gas operations.
Some of the more recent transactions include:
- XTO Energy Inc., Ft. Worth, has agreed to purchase privately held Antero Resources Corp., Denver, a Barnett shale gas producer, for $685 million.
- Exploration Co., San Antonio, has retained financial consultants to pursue alternatives for the company that include merger or sale.
- Stone Energy Corp., Lafayette, La., has signed a purchase and sale agreement to acquire from a small independent company 35,000 exploration acres in the Williston basin of North Dakota and Montana.
- Chesapeake Energy Corp., Oklahoma City, has agreed to acquire privately held BRG Petroleum Corp., Tulsa, and related partnerships for $325 million. The acquisition is expected to close on Feb. 1.
Meanwhile, non-US independents also are fortifying their portfolios. Some recent deals include:
- Ivanhoe Energy Inc., Vancouver, BC, plans to acquire Ensyn Group Inc., Boston, and its subsidiary, Ensyn Petroleum International Ltd., which has a technology to upgrade heavy oil.
- Tullow Oil PLC, London, plans to acquire interests in Schooner and Ketch natural gas fields and associated acreage from Shell UK Ltd. and Esso Exploration and Production UK Ltd.
- EnCana Corp., Calgary, plans to acquire $255 million in Fort Worth basin properties in what may represent the company's first foray into the Barnett shale resource play in North Texas.
- Roc Oil Co. Ltd., Sydney, said it will acquire a 26% equity interest in Ardmore oil field in the UK North Sea from private British company Acorn Oil & Gas Ltd. Acorn will retain 9%.
XTO Energy
XTO's purchase, about half cash and half XTO equity, is to close April 1.
XTO will acquire 440 bcfe of gas reserves, 41% developed, producing a net 60 MMcfd of gas. The properties involve 61,000 net acres, mostly in Tarrant, Parker, and Johnson counties, Tex.
XTO held 80,000 net acres in the Barnett shale play before the transaction.
Exploration Co.
Exploration Co. released its 2005 capital budget, but Pres. and CEO James Sigmon said, "Longer term, we want to assure our shareholders that we consider all of the strategic alternatives available to us." Raymond James & Associates Inc. is to examine alternatives.
The $29-33 million budget is for 64 new wells and 3 reentries on the company's 554,000 acres in the Maverick basin of Southwest Texas.
The budget includes $18.8 million for 43 proposed Georgetown gas and oil wells, $5.3 million for 14 Glen Rose wells, $2.9 million for 10 new vertical wells in the Pena Creek field San Miguel waterflood, and funds for a seismic survey on the Burr and Quemado leases (see map, OGJ, Oct. 4, 2004, p. 30).
The basin received double its average annual rain in 2004, but the company maintained its second highest operating level through early December at 60 wells spudded and nine wells reentered. Net production was 1,169 b/d of oil and 10.6 MMcfd of gas on Nov. 30 in spite of partial curtailment.
Stone Energy
Much of the acreage being acquired by Stone is within the Bakken formation fairway with "attractive stacked-pay potential." Stone expects to begin exploring the acreage this year with a multiwell drilling program.
The $85 million acquisition includes proved reserves and a minimal amount of oil production. About 85% of the purchase price will be allocated to unevaluated acreage.
Stone Energy expects to fund the acquisition with borrowings under the company's bank credit facility pending final closing, expected in February.
Chesapeake Energy
Chesapeake's acquisition of BRG includes production of 30 MMcfed from 477 existing wells, 223 bcfe of proved reserves, and 277 bcfe of probable and possible reserves, it said. BRG's proved reserves have a reserves-to-production index of 20.3 years, are 93% gas, and are 48% proved developed.
BRG's properties are concentrated in the US Midcontinent and in Arkansas, Louisiana, and Texas. Chesapeake has identified 213 proved but undeveloped sites and 420 probable and possible locations on BRG's leasehold.
The drilling locations are in the Sahara gas resource play in northwestern Oklahoma and in the East Texas Cotton Valley gas resource play in Nacogdoches County, Tex.
Chesapeake expects that, through the use of two rigs in 2005 and four rigs in 2006, it can increase gas production on the acquired properties to 70 MMcfed in December 2006 from 30 MMcfed in February 2005.
Ivanhoe Energy
Ivanhoe, which already owns 15% of Ensyn, agreed to pay $85 million in cash and stock for the rest of the company. The transaction is expected to close early in the second quarter of 2005.
Ensyn Group will spin off its existing biomass processing business, Ensyn Renewables Inc., to its shareholders before the Ivanhoe-Ensyn transaction closes.
Ivanhoe said that it intends to apply Ensyn's technology to study development of a heavy oil field in Iraq, but the company gave no details on which field. The Ensyn acquisition will enable Ivanhoe to apply the upgrading technology in other countries with heavy oil deposits, including Venezuela, Canada, and the US, the company said.
Tullow Oil
Tullow agreed to buy Shell's and Esso's entire producing interests in those fields for £200 million. Closing, expected in early 2005, will be effective retroactive to July 1.
Schooner and Ketch fields bring producing assets as well as development and exploration upside, enhancing Tullow's strategic position in the southern North Sea, the independent said.
Tullow plans a 3-year development program designed to increase production levels. The work program will involve working over and sidetracking existing wells and drilling new wells.
The producing interests to be acquired are 90.35% interest in Schooner field and 100% interest in Ketch field. These fields together produce 60 MMscf/d of gas, which is transported via the Caister-Murdoch system, in which Tullow holds a 17% interest.
In addition, the agreements call for Tullow to acquire minority interests in the Topaz, Marjan, and 44/27-1 discoveries.
EnCana
EnCana is acquiring the Fort Worth basin properties from Progress Fuels Corp., Raleigh, NC, a subsidiary of Progress Energy, which owns electric utilities in Florida and the Carolinas.
EnCana is highly oriented toward resource or nonconventional gas plays in North America (OGJ, July 12, 2004, p. 39). One source said the properties to be acquired are producing 30 MMcfd of gas.
Progress plans to use the proceeds to cut debt. After closing, Progress will have net gas production of 22 bcfe/ year. The company owns proved developed and undeveloped gas and oil reserves in East Texas and western Louisiana.
Roc Oil Co.
Roc Oil's acquisition includes Ardmore plus surrounding acreage containing two small abandoned oil fields with redevelopment potential—Dalmore (formerly Duncan) and Innes. Roc Oil also will acquire an interest in the minor, undeveloped oil discovery Iris and several undrilled prospects, all of which have an estimated reserve potential of 60 million bbl of oil.
In a threefold arrangement, Roc Oil has initially agreed to pay £750,000 to acquire 75% of the £15 million secured debt facility provided to Acorn. The second part is an undertaking to provide secured debt to Acorn equivalent to 75% of Acorn's future joint venture cash calls. The third part is the payment of an effective option excise fee equal to as much as £1.9 million if and when Roc converts the loan into a direct equity in the assets.
A development drilling and work- over program is under way in Ardmore field.
Ardmore, originally known as Argyll field and operated by Hamilton Bros. Engineering Ltd., was brought on stream in 1975 and produced a total of 73 million bbl of oil before being abandoned in 1992.
It has an estimated 23 million bbl of remaining recoverable oil and was redeveloped as Ardmore field in 2003. Since then it has produced a further 4 million bbl and is currently producing 8,000 b/d. Plans are to increase this to 12,000 b/d by mid-2005.
The field is now operated by private UK company Tuscan Energy (Scotland) Ltd., which has 65% interest.