Petroleum Geo-Services ASA (PGS), Oslo, and Veritas DGC Inc., Houston, have agreed to merge in a $772 million stock deal that will create the world's second-largest geophysical services company, offering 400,000 km of 3D seismic data.
The largest geophysical services company is WesternGeco, London, a joint venture of Schlumberger Ltd. and Baker Hughes Inc.
The combined PGS and Veritas will have an equity market capitalization of $1 billion and a total enterprise value of $3.5 billion. Executives said the merger is expected to achieve annual pretax cost savings of $35 million.
Separately, Kaneb Pipe Line Partners LP, Richardson, Tex., has agreed to acquire Statia Terminals Group NV, a Netherlands Antilles company, for $300 million.
Other recent company acquisitions include:
- UtiliCorp United Inc. has offered to reacquire the 20% stake in Aquila Inc. that it had spun off in April. Both UtiliCorp and Aquila are based in Kansas City, Mo.
- Stone Energy Corp., Lafayette, La., said it will pay Conoco Inc. $299.7 million for eight producing properties on US federal leases and for some gathering facilities.
- UK energy giant Centrica PLC announced agreements with four companies worth a total of $88 million to acquire natural gas and oil production assets in the North and Irish seas.
PGS-Veritas deal
PGS and Veritas will become wholly owned subsidiaries of a new holding company incorporated in the Cayman Islands. Initially, PGS shareholders will own 60% of the new company, and Veritas shareholders will own 40%.
PGS shareholders will receive 0.47 shares of the new company's common stock for each PGS share held. Veritas shareholders will receive one share of the new company's common stock for each Veritas share held.
Based upon the Nov. 23 closing stock prices of both companies, terms of the deal represented a value of $7.64/PGS share, or a 44% premium.
Executives expect the transaction to be tax-free to Veritas shareholders. Although the transaction is expected to be taxable to PGS shareholders, PGS said it expects to apply for tax-exempt treatment for Norwegian shareholders of PGS.
Reidar Michaelsen, PGS chairman and CEO, and Dave Robson, Veritas chairman and CEO, said the merger was prompted by growing demand for seismic data coupled with continuing industry consolidation.
The combined company, which will be based in Houston, will have 21 marine seismic crews, 83,000 land seismic channels capable of fielding 25-30 3D crews, 4 floating, production, storage, and offloading vessels for harsh environments, more than 20 data processing centers, and 8 data visualization centers.
Michaelsen will be chairman and co-CEO of the combined company with primary responsibility for the production business. Robson will be vice-chairman and co-CEO of the combined company with primary responsibility for the geophysical business.
The transaction is expected to be completed in second quarter 2002.
Kaneb-Statia deal
Kaneb plans to acquire all of Statia's liquids terminaling subsidiaries in St. Eustatius, Netherlands Antilles, and Point Tupper, Nova Scotia.
"We expect the acquisition to be immediately accretive to cash flow," said John R. Barnes, chairman and CEO of Kaneb Services LLC, whose wholly owned subsidiary Kaneb Pipe Line Co. LLC is the partnership's general partner.
The partnership will acquire Statia's subsidiaries for $193 million plus the assumption of $107 million in debt. The acquisition is expected to close in the first quarter 2002.
Statia's terminaling operations include a storage and transshipment facility on the island of St. Eustatius, east of Puerto Rico. That facility has tankage capacity of 11.3 million bbl.
The Point Tupper facility has tankage capacity of 7.4 million bbl. Both facilities provide storage and throughput, marine services, and product sales of bunker fuels and bulk oil products.
UtiliCorp-Aquila purchase
Utility holding company UtiliCorp already owns 80% of energy marketer and trader Aquila. In the tax-free exchange, UtiliCorp offered all public Aquila shareholders 0.6896 shares of UtiliCorp common stock for each outstanding share of Aquila common stock.
After completion of the exchange offer, UtiliCorp has agreed to a "short-form" merger of Aquila with a Utili- Corp subsidiary. UtiliCorp also said it intends to change its corporate name to Aquila Inc.
Richard C. Green Jr., UtiliCorp chairman and CEO, said the decision to reacquire all of Aquila stemmed from changes in the merchant energy sector, the general economy, and the impact of these changes on the capital markets.
"The most significant influence, however, was the realization that greater shareholder value could be obtained by recombining the financial strength of UtiliCorp with the growth opportunities that lie ahead for Aquila," Green said.
"We decided that UtiliCorp shareholders would be better served by embracing the Aquila energy merchant strategy as the company's core strategy rather than spinning the business off as a separate entity," he said.
Stone purchase
Although the deal was announced in October, the final price was not announced until late last month after all of the preferential rights to purchase that were applicable to any of the properties had expired.
Of the total, Stone noted that $4.1 million was associated with two crude oil pipelines that are subject to preferential rights-to-purchase elections due to expire on or before Dec. 17.
Stone said proved reserves associated with the acquisition are 25.7 million bbl of oil and 60.2 bcf of gas.
It said the properties have a reserve life of 9 years based on an initial production rate of 65 MMcfd of gas equivalent net to Stone.
The company said the properties also have some undrilled prospects near existing infrastructure.
The purchase properties are on Ewing Bank Block 305a, Mississippi Canyon Block 109b, South Marsh Island Block 9, Ship Shoal Block 176a, Main Pass Block 311, Main Pass Block 144, Main Pass Block 290a, and South Marsh Island Block 107a, all in the Gulf of Mexico.
Centrica acquisitions
After looking for some time to expand its gas supply operations, Centrica said the acquisitions will add annual production of 2.1 million bbl of oil and 110 bcf of natural gas to its portfolio. No price was disclosed for any of the four deals.
The largest acquisition is that of Innogy Holdings PLC's 6.97% interest in Armada field in the North Sea. The Armada gas complex recently won government approval for a Phase 2 drilling program, which is expected to reach maximum production by 2010.
BG PLC is operator with 45.27% interest. Partners are BP PLC 18.20%, TotalFinaElf Exploration Ltd. 12.53%, Phillips Petroleum Co. 11.45%, Centrica 6.97%, and Agip (UK) Ltd. 5.58%.
Centrica also is buying Amerada Hess Corp.'s stake in Amethyst field and related interests, including the Rose development, also in the North Sea. The purchases will take Centrica's interests in Amethyst to 8.95%. BP operates the Amethyst complex and has a 59.5% interest, BG Group has 24.15%, and Murphy Oil Ltd. has 7.4%.
Centrica said it had also reached agreements with Kerr-McGee Corp. and Burlington Resources Inc. for part of their interests in Block 110/3c in the East Irish Sea. The deal increases Centrica's interest in that field to 52.8%; Cal-Energy Ltd. has 13.2%, and Edinburgh Oil & Gas Ltd., 13.2%.
Kerr McGee and Burlington each will retain a 10.4% interest. Discussions are under way to determine who will operate the block.