COMPANY NEWS: Talisman sells noncore oil sands assets in two deals

Dec. 11, 2006
Talisman Energy Inc. agreed to sell some of its noncore oil sand assets in two deals worth a total of $582.5 million (Can.).

Talisman Energy Inc. agreed to sell some of its noncore oil sand assets in two deals worth a total of $582.5 million (Can.).

In other recent company news:

  • Surge Global Energy Inc. agreed to acquire a private Alberta oil sands company in a cash-stock transaction valued at $16 million (Can.) total. The name of the private company was not disclosed. Closing is expected Jan. 18, 2007.
  • Afren PLC of London executed a heads of agreement with Gulf Energy Resources to acquire a 5% stake in Angola’s Cabinda Central License Block B.
  • Dan L. Duncan and three corporate entities are seeking approval from the US Federal Trade Commission to sell their interests in Mont Belvieu Storage Partners to partner Louis Dreyfus Energy Services LP.
  • Mariner Energy Inc. on Nov. 1 completed the sale of its 20% working interest in the Cottonwood project in the Gulf of Mexico, to the project’s operator, Petrobras America Inc., for $31.8 million. Cottonwood lies on Garden Banks Block 244 in 2,300 ft of water.

Talisman sells assets

Talisman plans to sell its 1.25% interest in Syncrude to Canadian Oil Sands Ltd. for $475 million in a cash and equity deal.

Closing is conditional upon clarification of the transaction’s tax status for Canadian Oil Sands under Canada’s new trust taxation rules.

Talisman said its share of Syncrude production has averaged 3,400 b/d so far this year.

In the second deal, Talisman sold its royalty on Suncor Energy Inc.’s undeveloped Lease 23, west of Suncor’s Steepbank mining operations, to Suncor for $107.5 million.

Talisman said it’s still in negotiations to realize value from its remaining oil sands leases.

Surge buys oil sands firm

Surge’s agreement calls for it to pay owners of the private company $6.3 million in cash and $10 million worth of equity in Cold Flow Energy ULC, a wholly owned subsidiary of Surge, based in San Diego.

The oil sands company owns 30% interest in 86,400 acres in the Red Earth area of Alberta. The development involves four major contiguous blocks close to existing services and infrastructure.

Afren buys license stake

Afren PLC of London executed a heads of agreement with Gulf Energy Resources to acquire a 5% stake in Angola’s Cabinda Central License Block B.

Afren’s transaction is expected to close in first quarter 2007, subject to certain conditions including negotiation of a final agreement. The exploration license covers 1,125 sq km. Devon Energy Corp., Oklahoma City, is the operator and owns 30% interest. Other partners are Repsol YPF SA, Angola’s state-owned Sonangol, and Petrogal.

Several prospects already have been identified and mapped on this license, Afren said, adding that 32 wells previously were drilled, several of which found light oil.

Parties sell storage

The sale would satisfy FTC’s Nov. 3 final order requiring Duncan, EPCO Inc., Texas Eastern Products Pipeline Co. LLC, and TEPPCO Partners LP to divest their interests in land, pipelines, and other assets at the NGL storage site east of Houston by Dec. 31.

Agreements under which the partnership was formed require TE Products to offer the interests to Louis Dreyfus on the same terms proposed by any third party, the FTC said on Nov. 27. Louis Dreyfus then has 30 days to exercise the right of first refusal.

In the application, Duncan and the three firms he directly or indirectly controls ask to divest their interests in the Mont Belvieu storage partnership to Louis Dreyfus to satisfy the FTC order. FTC will accept public comments on the application through Dec. 27.

FTC’s order came from its Aug. 18 challenge of a 2005 acquisition that combined Enterprise Product Partners and TEPPCO Partners’ NGL storage businesses at Mont Belvieu. It said the transaction likely would result in higher prices and degraded service by reducing the number of salt dome storage providers there to three from four.

Cottonwood sale

The sale will result in a pretax gain of $22 million to Mariner in the fourth quarter. Mariner will not be required to fund $21 million of development costs necessary to establish first production, estimated to occur in first quarter 2007.

Consequently, Mariner’s 2006 capital spending forecast of $525-545 million (excluding hurricane repairs and acquisitions) is now expected to be about $504-524 million (excluding hurricane repairs, acquisitions, and dispositions).

Mariner acquired its interest in the Cottonwood project from Petrobras in April 2005 when Mariner allowed Petrobras access to Noble Drilling Inc.’s Noble Lorris Bouzigard deepwater semisubmersible, which Mariner has under long-term contract. Since acquiring its interest in 2005, Mariner participated with Petrobras in two sidetrack wells in the project.