Royal Dutch Shell and several international subsidiaries have announced projects designed to optimize the company's worldwide portfolio. These include the acquisition of New Zealand's biggest petroleum company, stalling a mandated initial public offering in the Philippines, and decreasing holdings in Kazakhstan. The current company plans do not include a major merger with European or US companies, however, according to the company's chairman.
"A merger in Europe or the USA is difficult for us," said Royal Dutch/Shell Group Chairman Mark Moody-Stuart in a recent interview with German newspaper Welt am Sonntag. "The competition watchdogs would have a number of objections.
"But we will acquire a number of smaller companies within the next 1-2 years to cover niche markets," he added.
He said Royal Dutch/Shell has currently no concrete plans to acquire RWE AG's oil unit RWE-DEA AG but added that, "Of course, we are always looking for acquisitions that could do us good."
In other company news, shareholders of Calgary-based Renaissance Energy Ltd. approved in late August a $4.42 billion (Can.) takeover bid by Husky Oil Ltd., also of Calgary. The friendly takeover will create the second largest Canadian integrated oil company.
And Northern Border Partners LP, Omaha, is buying Enron North America Corp.'s (ENA) natural gas gathering facilities in Wyoming's Powder River and Wind River basins for $200 million.
New Zealand acquisition
One desired Shell acquisition appears to be New Zealand company Fletcher Challenge Energy Ltd. (FCE), which Shell has offered to purchase for $2.3 billion (Aus.). Shell has applied to New Zealand's Commerce Commission for clearance to acquire the recently spun-off energy unit of the Fletcher Challenge Group.
Fletcher Challenge dominates New Zealand's petroleum industry and is the major interest holder in the country's Maui gas field with 68%. Shell, holding 18.75% interest, operates Maui and would like a larger share.
Analysts point out that the acquisition of FCE is in line with Shell's global gas strategy; however, there is no guarantee that Shell will be successful in its ap- plication to the Commerce Commission, a prerequisite for any potential purchase.
Shell's application said it would sell FCE's fuel retailing division and 14% interest in New Zealand Refining Co., operator of the country's only refinery at Marsden Point on the east coast of North Island.
At the same time, FCE has not been idle in the acquisition game, recently having agreed to buy 33.7-58.6% of Australian company Petroz NL, which has an interest in Bayu-Undan field in the Timor Sea (OGJ Online, July 26, 2000).
Holding in the Philippines
Meanwhile, in Manila, subsidiary Pilipinas Shell Petroleum Corp. said it will ask the government to allow it to defer compliance with a provision under the oil industry's deregulation law requiring local oil refiners to offer at least 10% of their shares to the public by Feb. 28, 2001.
Pilipinas Shell Vice-Pres. Rey Gamboa said the company's request will be presented to the Philippines Department of Finance and the Securities and Exchange Commission.
Gamboa said launching an IPO at a time when the local stock market is weak would be impractical and costly.
Caltex (Philippines) Inc. earlier also had said it will seek temporary deferment of compliance with the provision.
Kazakhstan transfer
Shell Temir Petroleum Development BV, a wholly owned subsidiary of Shell Nederland BV, has agreed to transfer its operatorship and 60% interest in the Temir production-sharing contract to Maersk Oil Kazakhstan GMBH, a wholly owned subsidiary of Maersk Olie & Gas AS. Terms were not disclosed.
Temir is a 19,000 sq km area 100 km south of Aktobe in western Kazakhstan. Shell said the PSC is northwest of Zhanazhol, Kinkyak, and Alibekmola oil fields and contains the Saigak oil discovery.
The Kazakh government has approved the transfer, as has Veba Oel Kasachstan GMBH, a wholly owned subsidiary of Veba Oil & Gas GMBH, which holds the remaining 40% participating interest in the PSC.
Husky acquires Renaissance
Regulatory authorization for the Husky-Renaissance merger is still pending.
The merged company will be known as Husky Energy and will be headed by Husky CEO John Lau.
The company will have extensive oil and gas interests, including heavy oil and conventional resources in western Canada, a network of retail stations, and exploration acreage off Canada's East Coast. The merged company will have annual production of about 252,000 boe/d and proven and probable reserves of more than 1.43 billion boe.
Based on annualized first quarter 2000 results, Husky Energy would generate revenues in excess of $5 billion (Can.), earnings of more than $485 million, and cash flow of $1.55 billion in 2000. Husky said it expects to report increased production in 2001 from its interest in Terra Nova oil field off Newfoundland, which is scheduled to start production next year, and from growth in other properties.
Lau said Husky will be well-positioned to realize full profit potential of high-growth opportunities in heavy oil, oil- sands, and the East Coast offshore area. The company also expects to expand international projects, including ventures in Asia.
Husky is controlled by Hong Kong billionaire * Ka-shing and his family through their own holdings and through their trading company, Hutchison Whampoa Ltd., Hong Kong.
Renaissance became a major independent as a result of aggressive drilling programs and grew to be one of the stars of the Canadian oil sector. It gradually lost investor support, however, and in March 1996, the stock fell to $10.20/share from a previous high of $51/share. It was selling at $16 at the close of trading Aug. 18.
Northern Border-Enron deal
Included in the Northern Border Partners' purchase are Enron Midstream Services LLC, which holds an ownership interest in Bighorn Gas Gathering LLC, and the ENA subsidiaries that hold ownership interests in Fort Union Gas Gathering LLC and Lost Creek Gathering LLC.
ENA will continue to provide gas purchase and sales, finance, risk management and producer outsourcing services in the Powder River and Wind River basins. Northern Border will own and operate physical assets and will provide gathering and transportation services.
Larry DeRoin, chairman and chief executive officer of Northern Border, said the transaction will expand the company and diversify its asset mix. "The Powder River and Wind River basins offer us both growth opportunities and strong economics," he said.
Fort Union owns an existing 106-mile gas gathering system in the Powder River basin. Lost Creek owns a 123-mile gas gathering system in the Wind River basin that was expected to be in service late last month. Bighorn owns an existing 92-mile gas gathering system in the Powder River basin, with an additional 56 miles under construction.
The remaining ownership interest in Fort Union is held in varying percentages by subsidiaries of CMS Energy Services, Western Gas Resources Inc., Colorado Interstate Gas Co., and Barrett Resources Corp.
A subsidiary of Burlington Resources Inc. holds the remaining ownership interest in Lost Creek.
The interest in Bighorn adds to Northern Border's existing ownership position. CMS Field Services Inc. holds the remaining ownership interest in Bighorn.
