Kerr-McGee Corp., Oklahoma City, closed its initial public offering of Tronox Inc.’s Class A common stock in what the company described as “a significant step” in its transition to a pure-play oil and gas exploration and production company.
In other recent company news:
• Boots & Coots International Well Control Inc., Houston, agreed to acquire hydraulic workover contractor Hydraulic Well Control of Houma, La., a unit of Oil States International Inc., Houston.
• Neste Oil Corp. of Finland has sold its 50% stake in Russian oil producer Severtek to OAO Lukoil for $321.5 million.
• ConocoPhillips plans to buy a refinery in Wilhelmshaven, Germany, from Louis Dreyfus Energy Holdings Ltd. along with the UK’s Louis Dreyfus Refining and Marketing Ltd. Terms were not disclosed.
Kerr-McGee-Tronox
Kerr-McGee received about $800 million from the Tronox IPO and related debt-financing transactions. Kerr-McGee still will control Tronox, a manufacturer of titanium dioxide pigment, through its ownership of Tronox’s Class B common stock (OGJ Online, Oct. 24, 2005). It will consolidate the results of Tronox, including Tronox’s debt of $550 million, in its financial statements until the expected distribution of the remaining shares to Kerr-McGee shareholders through a spin-off or split-off in 2006. Kerr-McGee also sold North Sea and selected US land oil and gas properties. It used net proceeds from the IPO, concurrent debt issuances by Tronox, and various asset sales to pay off the $4.25 billion term loans issued in connection with the company’s modified “Dutch Auction” tender offer for 46.7 million shares of its own stock in May.
Kerr-McGee is evaluating bids for its Gulf of Mexico shelf properties. With the divestment of those properties, more than 95% of Kerr-McGee’s oil and gas reserves will be in the US, and 60% will be natural gas. It has more than 12,000 identified low-risk development projects within its two large resource plays at Wattenberg field in Colorado’s Denver-Julesburg basin and in the Greater Natural Buttes area in Utah’s Uinta basin. From these projects and development of major deepwater fields in the Gulf of Mexico, the company expects to increase production at a compound growth rate of 5-9%/year through 2007.
Boots & Coots acquisition
With the acquisition, Boots & Coots’s services will encompass well blowouts and fires, hydraulic workover, snubbing, and hot tapping as well as engineering and risk management.
Boots & Coots will issue Oil States 26.5 million shares of common stock and subordinated promissory notes with an aggregate balance of $15 million, subject to adjustment.
Closing is expected in the first half of 2006. After closing, Oil States will own 44% of the diluted shares of Boots & Coots, and Oil States will have the right to designate three members to the Boots & Coots board, which will be expanded to eight members.
Lukoil-Severtek
The transaction, which closed Nov. 23, makes Lukoil sole owner of Severtek, which produces 30,000 b/d in the Timan-Pechora area. The company had proved and probable reserves of 213 million bbl of oil at the beginning of 2005, according to independent consultants Ryder Scott Co. LP.
Severtek was Neste Oil’s sole oil production unit over the last few years, but none of its oil supplied Neste Oil refineries.
Neste Oil said it wants to focus on its core oil refining and marketing businesses and will use proceeds from the sale to finance refining operations and expand areas such as biofuels production capacity.
ConocoPhillips purchase
The refinery purchase includes the 275,000 b/d refinery, a marine terminal, rail and truck loading facilities, and a tank farm. The refining and marketing company provides commercial and administrative support to the refinery.
Subject to governmental approval and regulatory permits, closing is expected during the first half of 2006. The Wilhelmshaven refinery would increase ConocoPhillips’s overall European refining capacity to 647,000 b/d, the company said.
Jim Nokes, ConocoPhillips executive vice-president for refining, marketing, supply, and transportation, said upgrades are planned to cut operating costs and to enable the refinery to process more crude slates, including Russian blends.
The anticipated deep conversion is subject to German approvals and permits.
Two days after announcing the acquisition on Nov. 28, ConocoPhillips said it expects to increase its planned 2006 capital expenditures by $1.4 billion to provide for the acquisition, the planned deep conversion project, and other miscellaneous capital improvements. The company expects to release its 2006 capital expenditure plans in mid-December.✦