Los Angeles investment management firm TCW and partners will acquire CDX LLC, Dallas, an onshore gas producer and drilling contractor focused on unconventional resources such as coal, shale, and tight sands.
In other recent company happenings:
• ExxonMobil Corp. has signed an agreement to acquire a 28% equity interest in giant Upper Zakum oil field off Abu Dhabi from Abu Dhabi National Oil Co. (ADNOC).
• A Plains All American Pipeline LP subsidiary plans to acquire Andrews Petroleum Inc. and Lone Star Truck Inc. for $205 million.
• Neste Oil Corp. plans to sell its 10% holding in Saudi European Petrochemical Co. (Ibn Zahr) to Saudi Basic Industries Corp. (Sabic) for $120 million.
• JED Oil Inc., Calgary, has signed a letter of intent to acquire JMG Exploration Inc., an affiliate incorporated in Nevada, with stock.
• Statoil ASA signed an agreement Mar. 8 with BP PLC to buy for an undisclosed amount the major’s 25% interest in License 218 on Blocks 6706/10 and 6706/12 in the Norwegian Sea.
• Berry Petroleum Co. has increased its capital budget for 2006 by $18 million over last year to $208 million.
• The European Commission has approved the merger by state-owned Dansk Olie & Naturagas AS (DONG) of Denmark of four regional electric providers.
• Syntroleum Corp., Tulsa, has signed a letter of intent to form a joint venture with Bluewater Energy Services BV to develop and finance gas-to-liquids plants on offshore floating production, storage, and offloading vessels.
• Cairn Energy PLC said it is considering an initial public offering of its Indian exploration and production business after confirmation of another hefty upgrade of oil in place in its key Rajasthan acreage.
• Medco Energy US LLC is the new name of Novus Louisiana LLC, the Lafayette, La., subsidiary of PT Medco Energi Internasional Tbk.
TCW to buy CDX
TCW will buy CDX membership units in a purchase valued at $835 million.
CDX is the parent company of CDX Gas LLC, Express Drilling Systems LLC, CDX Canada, and CDX Gas International.
It has interests in 8 million acres in the US and Canada, 17 drilling rigs, and a proprietary multilateral coalbed methane development system.
ExxonMobil in Abu Dhabi
ADNOC retains a 60% interest in the Upper Zakum field and Japan Oil Development Co. (Jodco), 12%. Upper Zakum is one of the world’s largest oil fields.
“ExxonMobil, with ADNOC and Jodco, will provide support to the joint operating company, Zakum Development Co., to increase production to a target of 750,000 b/d after all technical studies are completed,” ExxonMobil said in a statement. The field’s current production capacity is 550,000 b/d.
The project is part of the United Arab Emirates’ plans to raise production to 3.5 million b/d by 2012 from 2.7 million b/d now. The UAE recently added 200,000 b/d of capacity. Abu Dhabi dominates UAE production.
ExxonMobil, which will hold the interest through ExxonMobil Abu Dhabi Offshore Petroleum Co., was selected in April 2005 for exclusive talks on developing Upper Zakum (OGJ Online, Apr. 7, 2005). ADNOC said the expiry date of the interests of ExxonMobil and Jodco in Upper Zakum would be Mar. 9, 2026.
Plains acquisition
Plains’s transaction, subject to regulatory approval, is expected to close in 30 days, Plains LPG Services LP said Mar. 15. Andrews and Lone Star provide isomerization, fractionation, marketing, and transportation services associated with natural gas liquids throughout the western US.
The Bakersfield, Calif., assets include 200,000 bbl of NGL storage, a processing facility with butane isomerization capacity of 14,000 b/d and NGL fractionation capacity of 9,600 b/d, a rail rack able to service 30 tank cars, a truck rack to service seven trucks, a fleet of over 50 tractor trailers, and offices.
Neste Oil divesture
Neste Oil will book a capital gain on the sale of €85 million. The deal is expected to close in the second quarter.
The transaction will give Sabic 80% of Ibn Zahr shares. Other shareholders, Arab Petroleum Investment Corp. and Italy’s Ecofuel SPA, hold 10% each.
Neste Oil has been a shareholder in Ibn Zahr since its foundation in December 1984. The company, which produces methyl tertiary butyl ether and polypropylene, is in Al Jubail, Saudi Arabia.
JED-JMG
A wholly owned US subsidiary of JED will acquire JMG, which was formed in late 2004 and taken public last year.
JED has concentrated on development drilling and JMG on exploration in western Canada and the US, both working closely with Enterra Energy Trust, an oil and gas income trust set up in 2003.
Statoil ups offshore holdings
The agreement ups Statoil’s holding in License 218 to 75%. Other licensees are ExxonMobil Corp. 15% and ConocoPhillips 10%. The license area lies in about 1,300 m of water, and the reservoir is 2,800 m beneath the seabed. The field’s estimated reserves are 38 billion cu m of gas. This license area includes the Luva gas discovery, made in 1997. Luva field lies about 240 km west of Bodø. The license was awarded in 1996. BP recommends Statoil as new operator of the license. The move, Statoil said, will strengthen its position in Norwegian Sea’s deep water-an area expected to be an important one for gas in the future.
As a step toward development of the Luva find, Statoil said it will be necessary to drill a new exploration well on a nearby prospect. Plans call for the well to be drilled as early as 2007-08.
Berry’s spending plans
Recently, the Bakersfield, Calif.-based independent completed the acquisition of a 50% working interest in natural gas assets in the Grand Valley field in the Piceance basin of western Colorado for about $159 million. Berry will operate and own a 50% working interest in 6,314 gross acres targeting gas in the Williams Fork section of the Mesaverde formation. The company’s increased budget will accelerate the development of this resource, it said. Seven wells currently are awaiting completion.
Current production from these assets, net to Berry’s interest, is 1 MMcfd from three producing wells. The company internally estimates 330 bcf of proved and probable reserves, none of which are included in Berry’s 2005 yearend proved reserves of 126 million boe. With this acquisition, the company’s current estimate of its total proved reserves is more than 130 million boe.
Berry will ramp up drilling in the area to four rigs by yearend, the company said, with additional drilling rigs to be added throughout 2007. “With over 600 locations identified, we anticipate a very predictable drilling program on these lands for many years, adding both significant production and reserves at competitive metrics,” noted Logan Magruder, executive vice-president, Rockies and Midcontinent regions.
DONG merger approved
DONG will merge with Energi E2, Elsam, Nesa, Frederiksberg Forsyning, and Copenhagen Energy. The EC initially questioned the transaction, based upon concerns about both electric and gas competition.
For nearly a year, commissioners analyzed liquidity at gas trading hubs as well as storage issues. In response, DONG offered commitments promoting gas competition, and the commission accepted the following proposals:
• A program under which DONG will auction 400 million sq m/year of gas for 6 years, equivalent to 10% of Denmark’s total yearly consumption to ensure a liquid gas market in Denmark, regardless of whether Elsam and Energi E2 are removed from the market as potential wholesalers.
• The sale of DONG’s gas storage facility in Lille Torup in Jutland, which accounts for over half of the company’s storage capacity. DONG will retain the gas storage facility in Stenlille. This will ensure two independent storage suppliers in Denmark.
DONG addressed the electricity market concerns on June 1, 2005, when it agreed to sell power station and wind power activities to Sweden’s Vattenfall AB. That transaction involved about 2,400 Mw of electric generation. The commission approved the sale on Dec. 23, 2005.
Syntroleum-Bluewater JV
Syntroleum and Bluewater are pursuing projects that will allow the JV to participate in offshore oil and gas development and processing.
A detailed feasibility study addressed an FPSO design of up to 17,000 b/d of Fischer-Tropsch products, 40,000 b/d of crude oil, and 10,000 b/d of condensate. The vessel would have 2.3 million bbl of storage capacity.
Cairn mulls over IPO
Cairn, a Scottish E&P firm, said it intended to eventually return proceeds from any IPO on the Bombay Stock Exchange to investors through share buy-backs or dividends.
Cairn favors an IPO as the best way to increase the local autonomy of its Indian business, for which state-owned Oil & Natural Gas Corp. recently made an informal bid.
Cairn said the aim would be an IPO before the start of production from Mangala oil field, expected in 2008.
Cairn has increased its estimate of original oil in place in its Rajasthan acreage in northwestern India to 3.5 billion bbl from 2.5 billion bbl.
Novus now Medco
Medco explores, develops, and produces oil and gas and acquires assets in the Gulf of Mexico. It has an exploration and business development office in Houston. Medco acquired the former Novus Petroleum Ltd. in 2004.
Key personnel at Medco Energi US are Dave Gibbs, president, Mark Oliver, vice-president land and legal, Jackie Colwell, manager exploitation, and John Young, manager new ventures. ✦