Anadarko Petroleum Corp., Houston, is offering subsidiary Anadarko Canada Corp. as its first asset sale to help raise $15 billion to reduce debt from its pending $21.1 billion cash purchase of Kerr-McGee Corp., Oklahoma City, and Western Gas Resources Inc., Denver (OGJ Online, June 23, 2006).
In other recent company news:
- Petro-Canada’s wholly-owned subsidiary Nosara Holdings Ltd. increased its offer for all common shares of Canada Southern Petroleum Ltd. to $11/share from $7.50/share, raising the total value to $177 million. Both companies are in Calgary.
- Energy Partners Ltd. (EPL), New Orleans, said the board of Stone Energy Corp., Lafayette, La., has accepted its $2.2 billion acquisition offer in a transaction expected to close in the fourth quarter.
- BP PLC has started initial discussions with a number of potential buyers interested in its 163,400 b/cd Coryton refinery in Essex, UK.
- State-owned China Petroleum & Chemical Corp. (Sinopec) agreed to buy the Udmurtneft oil-production unit in Russia from TNK-BP.
- Citgo Petroleum Corp. unit Citgo Pipeline Holding I LLC is considering the sale of its 15.8% interest in Colonial Pipeline Co.
- Talisman Energy Canada, a wholly owned subsidiary of Talisman Energy Inc., agreed to sell noncore assets in Canada in 18 transactions expected to generate $379 million (Can.).
- Shell Development Australia has made an offer to Nexus Energy Ltd., Melbourne, to purchase 100% of Nexus’s rights to the natural gas from Crux gas-condensate field in the Browse basin off Western Australia.
Anadarko divestiture
Anadarko has received unsolicited expressions of interest from multiple parties, and the divestiture is expected to proceed quickly, company officials said.
“Anadarko has built one of Canada’s leading natural gas operations over the past 6 years,” said Jim Hackett, president and chief executive. “Properties like ours are in high demand in Canada right now, attracting valuations significantly above those reflected in our stock price. This arbitrage opportunity motivates us to essentially trade out of the Canadian operations and into the Kerr-McGee and Western properties.”
Anadarko Canada produces 340 MMcfd of natural gas equivalent, 85% gas. Its proved reserves in Canada were estimated at 1.6 tcf at the end of 2005, of which 85% was natural gas and 76% was proved developed. Based in Calgary, Anadarko Canada has 575 employees with major area offices in Edson, Grande Prairie, and Medicine Hat, Alta., and Fort St. John, BC.
The Western Gas acquisition is valued at $4.3 billion, including $560 million in indebtedness. Western Gas stockholders will receive $61/share. The company will be merged into an Anadarko subsidiary.
Kerr-McGee is to be acquired for $16.4 billion, plus assumption of $1.6 billion in debt. Its shareholders are to get $70.50/share. The deal is expected to close by the end of the third quarter.
“The resulting portfolio will include more than 8 million gross acres across 10 different basins, including the Denver-Julesburg and Uinta-Piceance basins, which will give them access to tight gas resources,” said Andrew Strachan, Lower 48 research manager for Wood Mackenzie Ltd., Edinburgh. “In addition, they will be able to build a very large coalbed methane position in the Powder River basin.”
The total net value of the remaining reserves in the Rocky Mountains is estimated at more than $13 billion. “It is inevitable that this deal will be compared to ConocoPhillips’s acquisition of Burlington Resources [Inc.] in 2005,” Strachan said. “On the basis of acreage, reserves, and value, Anadarko now moves ahead of ConocoPhillips in the rankings within the Rocky Mountains region.” ConocoPhillips remains in front for production at present, but strong growth over the next few years will make Anadarko the production leader by 2008, he said.
Anadarko is financing the acquisitions with a $24 billion short-term loan through UBS AG, Credit Suisse Group, and Citigroup Inc. It earlier announced plans to raise $15 billion to reduce debt over the next 18-24 months through asset sales, cash from operations, and issuance of equity.
At the end of 2005, Anadarko had 2.45 billion bbl of proved oil-equivalent reserves.
Canada Southern
Canadian Oil Sands Ltd. (COS) is offering $9.75/share for Canada Southern in a deal estimated to be worth $165 million. COS is a unit of Canadian Oil Sands Trust (OGJ Online, June 20, 2006).
All Canada Southern shareholders tendering common shares to Petro-Canada will receive the $11/share price, including shareholders who already tendered their shares, Petro-Canada said.
In addition, Petro-Canada has extended the offer until July 17 unless further extended or withdrawn. Petro-Canada plans to request that Canada Southern waive its shareholder rights plan adopted on May 24.
If Canada Southern does not waive the rights plan, Petro-Canada said it will seek a hearing with the Alberta Securities Commission for an order to cease trading on securities issued or to be issued in connection with the rights plan before the expiry time. The Nosara offer is conditional upon termination of the rights plan, Petro-Canada said.
On June 26, Canada Southern rejected a cash-and-stock offer by Canadian Superior Energy worth $135 million.
EPL-Stone Energy deal
EPL and Stone Energy shareholders must approve the deal. The combined company would continue as EPL in New Orleans.
The agreement came after Stone terminated a separate offer from Plains Exploration & Production Co., which on Apr. 24 offered $977 million for Stone plus with the assumption of $483 million in debt.
EPL made its initial offer for Stone on May 25 (OGJ, June 12, 2006, p. 34).
Stone terminated its agreement with Plains on June 22. EPL said it will pay a $43.5 million termination fee.
BP to sell refinery
BP’s divestiture of its UK facility stems from the company’s decision to maintain a smaller network of European refineries.
The sale includes Coryton’s distribution terminal next to the refinery and BP’s UK bitumen business, which is integrated with the facility.
The buyer will be required to provide BP a long-term supply agreement and continuing use of the adjacent distribution terminal, BP said.
Excluding Coryton, BP owns or has interest in eight European refineries. Its principal refining assets are in Germany, Spain, and the Netherlands.
Sinopec buys Russia unit
Sinopec’s purchase of Udmurtneft would mark the first time a Chinese company has bought major Russian oil assets.
Terms of the deal were not disclosed, TNK-BP said in a statement posted on its web site June 20.
The parties have exchanged written confirmation of commercial terms, completing a tender process that started last year.
The Udmurtneft unit produces about 120,000 b/d of oil in the Volga region. TNK-BP’s total production is about 1.5 million b/d.
Citgo divestitures
Citgo also is considering the sale of its 6% interest in Explorer Pipeline. Both Colonial and Explorer lines transport products to markets in the US.
“As with the previously announced potential sale of some of our other nonstrategic assets, this is the result of an ongoing review of the company’s performance,” said Alejandro Granado, Citgo’s chairman.
Talisman transactions
Talisman Energy Canada’s assets being sold are producing 7,000 boe/d, with proved reserves of 16 million boe as of yearend.
Talisman has completed 13 transactions and expects to close the rest by July 19.
Talisman said it would divest some of its US, Canadian, and UK holdings following its acquisition of Paladin Resources PLC (OGJ, Nov. 21, 2005, p. 35).
Shell’s Crux field interest
Nexus said it will retain its 100% interest in the condensate from Crux field.
The arrangement will enable Nexus to begin final plans for its gas-condensate recycling project with gas reinjection at Crux field using a floating production, storage, and offloading vessel and shuttle-tanker offtake.
Nexus bought Crux, which lies in Ashmore Cartier Permit AC/P23, in December 2005 for a cash payment of $12 million (Aus.). Following interpretation of a recent 3D survey over the region, the company has estimated condensate reserves at 71 million bbl and gas reserves at 2 tcf.
Nexus has survived a takeover attempt by Anzon Australia Ltd., Melbourne, which is now a 20% Nexus shareholder.
Shell has recently stepped up its interest in the Browse basin by taking a 100% interest in nearby Permit WA-371-P.
The company bid 12 wells for the first 3-year’s work program, a figure that more than doubled the activity level bid by other contenders. Shell believes Inpex’s Ichythys gas field comes across the permit boundary into its acreage.
Shell holds Diamond Offshore’s Ocean Epoch semisubmersible under a 400-day contract with options to renew. It is using the rig elsewhere in Southeast Asia but will bring it to Australia for the Browse campaign.
