Drilling contractor Noble Corp. plans to buy privately owned Frontier Drilling for $2.16 billion even though no near-term new drilling is expected for the Gulf of Mexico during court battles over the US moratorium on deepwater drilling.
In other recent company news:
• Total E&P Canada Inc. has agreed to acquire a 20% interest in the Fort Hills oil sands mining project in the Athabasca region of Alberta from UTS Energy Corp.
• Questar Corp., Salt Lake City, has completed the spin-off of its exploration and production business into a new entity, QEP Resources Inc. (OGJ Online, Apr. 21, 2010).
• Private Calgary independent Trident Resources Corp. emerged from bankruptcy protection in Canada and the US, saying it is poised to continue growing its operated unconventional natural gas assets in North America."
Noble-Frontier deal
In May, the Obama administration announced a 6-month moratorium on drilling in more than 500 ft of water, but a federal judge in New Orleans on June 22 granted a temporary injunction, blocking the moratorium.
US Interior Sec. Ken Salazar said he plans to announce new rules blocking deepwater drilling while government regulators and industry review operating procedures and safety regulations (OGJ, June 28, 2010, p. 22).
The moratorium followed the Apr. 20 blowout of BP PLC's Macondo well, resulting in an explosion and fire on Transocean Ltd.'s Deepwater Horizon semisubmersible rig (OGJ, June 28, 2010, p. 20).
Despite an ongoing oil spill off Louisiana and widespread concerns about deepwater drilling, Noble Chief Executive Officer David Williams said Noble continues looking for more opportunities to expand its fleet.
For us, no, I don't think it had a big impact," Williams said during a June 28 conference call on the Frontier acquisition. It may have for the other parties, but for us it was complicating noise."
Noble expects closing of the transaction by Judy 31 for Frontier, formally doing business as FDR Holdings Ltd. The acquisition adds six floating drilling units and one floating production, storage, and offloading vessel to Noble's fleet.
Frontier has three dynamically positioned drillships (including two joint venture-owned rigs under construction), two conventionally moored drillships (including one that is Arctic-class), and a conventionally moored deepwater semisubmersible rig.
Separately, Noble modified its rig contracts with Royal Dutch Shell PLC in the gulf, allowing Shell to suspend contracts, if necessary, during imposed drilling restrictions. Upon the return of drilling in the gulf, those contracts will resume at their full terms and usual day rates, Noble said.
In exchange, Shell will pay a reduced suspension rate designed to support Noble's highly skilled personnel as well as certain operational support costs, thus ensuring a safe and efficient restart of operations," Noble said.
Noble's agreements with Shell are subject to the closing of the Frontier transaction. Those agreements involve:
• A 10-year contract for the ultradeepwater drillship Noble Globetrotter, under construction. The contract calls for a $410,000 day rate for the first 5 years. During the second 5-year period, the day rate will be based on a market index.
• A 10-year contract for a second ultradeepwater drillship, to be constructed with anticipated delivery in second-half 2013. Contract terms and operational capabilities generally are the same as the Noble Globetrotter.
• A 3-year extension for the Noble Jim Thompson, a moored semi operating in the gulf. Under the agreement, Noble agreed to a reduced day rate of $336,200.
Total-Fort Hills deal
Total will pay $1.15 billion (Can.) to acquire UTS after UTS transfers assets other than the Fort Hills interest to a new entity. The deal is subject to approval by regulators and two thirds of UTS's shareholders. The UTS board has recommended the agreement.
Operated by Suncor Energy Inc., the Fort Hills project involves development of a resource estimated at 3.4 billion bbl of bitumen in two phases. The project is about 90 km north of Fort McMurray.
First-phase production of 160,000 b/d is expected to start in 2015-16, Total said.
Suncor holds a 60% interest in Fort Hills. Teck Resources Ltd. holds 20%.
Total said it is considering divestment of some of its 75% interest in the Joslyn mining project but wants to remain operator with an interest of about 50%. It plans to develop Joslyn in two phases producing 100,000 b/d each.
The Joslyn mine is southwest of and close to Fort Hills.
QEP spinoff
Based in Denver, QEP produces more than 600 MMcfd of gas equivalent, 90% of which gas, and has reserves of 2.75 tcf of gas equivalent.
It has large acreage positions in US resource plays including Bakken-Three Forks, Haynesville, Granite Wash, Woodford-Cana, and Pinedale.
Questar made a $250 million equity contribution to the new company.
After the transaction, QEP Resources operates through three subsidiaries: QEP Energy Co., formerly Questar Exploration & Production; QEP Field Services Co., formerly Questar Gas Management, a gas gatherer and processor in the Rocky Mountains and northwestern Louisiana; and QEP Marketing Co., formerly Questar Energy Trading.
Questar retains Wexpro Co., Questar Pipeline Co., and Questar Gas Co., a distribution utility with customers in Utah, Wyoming, and Idaho. Wexpro produces natural gas for the utility company.
Keith O. Rattie remains chairman of Questar and becomes chairman of QEP. Charles B. Stanley is president and chief executive officer of QEP. Ronald W. Jibson becomes president and chief executive officer of Questar.
Trident emerges
Under restructuring, Trident obtained $247 million of new equity investment from a group of pre-petition creditors including affiliates of Anchorage Advisors LLC, Chilton Investment Co. LLC, and Jennison Associates LLC. The company has reduced its long-term debt and obligations to $410 million from $1.9 billion as of Sept. 8, 2009, case commencement.
Trident said it has increased proved reserves and production during bankruptcy and that its lower debt will better enable it to develop its drilling inventory of more than 10 years.
Trident targets coalbed methane in its predominantly operated core producing areas in the Mannville and Horseshoe Canyon plays in Alberta and shale gas in the Montney play in British Columbia. It is the largest CBM producer in the Mannville and one of the five largest in the Horseshoe Canyon.
Trident also maintains 1.5 million gross acres (1.2 million net acres) of leasehold interests including large exploratory acreage positions in selected areas of the US Northwest.
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