A series of takeovers of mid-sized producers in Canada have topped merger and acquisition news in recent weeks. Meanwhile, other Canadian firms are honing their exploration and production portfolios.
Anadarko Petroleum Corp. said earlier this month it will acquire Berkley Petrole um Corp., Calgary, at a cost of more than $1 billion (US). It will pay $11.40/share (Can.) in cash for an equity value of $777 million (US) and assume Berkley debt estimated at $250 million (US).
PrimeWest Energy Trust, Calgary, launched a $790 million (Can.) friendly takeover bid for Calgary-based oil and gas producer Cypress Energy Inc.
Electricity producer Calpine Corp., San Jose, Calif., plans to acquire all the common shares of Encal Energy Ltd., a Calgary-based exploration company, in a stock-for-stock exchange worth about $1.2 billion (US), including Encal debt.
Other Canadian acquisition activities include:
- Alberta Energy Co. Ltd., Calgary, says it will sell its oil and gas interests in Argentina to invest in other countries. A unit, Alberta Energy Co. Argentine SA, has interests in fields with reserves of 78 bcf of natural gas and 173,000 bbl of oil. In 1994 the company acquired the properties covering 79,077 acres of developed lands and 140,696 acres of undeveloped land in central Argentina. AEC said it has opened its books to potential bidders and an auction will be open until Mar. 21.
- Canadian Natural Resources Ltd., Calgary, agreed to buy PanCanadian Petroleum Ltd.'s Pelican Lake property in northern Alberta. The property produces 5,000 b/d of heavy oil and 4.7 MMcfd of gas. The transaction includes 67,000 acres of land. PanCanadian said the asset is not one of its core businesses but is contiguous with Canadian Natural's holdings in the area.
Anadarko-Berkley bid
Berkley had rejected previous offers from a unit of Dallas-based Hunt Oil Co. Berkley's Canadian assets will become part of Anadarko's existing Canadian company, Anadarko Canada Corp., headquartered in Calgary.
Since Anadarko's offer, the Hunt Oil unit has extended its $10.50 (Can.)/share offer for Berkley, to 1:01 a.m. (Calgary time) Feb. 27 in response to a higher bid.
Hunt Oil said it is extending the expiry time on its offer from Feb. 15 to give it adequate time to study its options and determine its course of action. Hunt Oil's initial offer, made in late December, was $10/share.
Directors of both Berkley and Anadarko have approved the Anadarko offer and recommended it to shareholders. The offer emerged after a bidding process by Berkley opened data banks to interested parties earlier this year. Anadarko also said it would match higher offers by other bidders, if they emerged.
Robert J. Allison, Jr., Anadarko chairman and CEO, said, "This is a great deal for Anadarko shareholders. It fast tracks growth of our Canadian natural gas business. In addition to being a good fit with our existing strategy, the deal meets our basic criteria because it is accretive to earnings, cash flow, and growth."
Berkley Petroleum is an exploration and production company with 95 million boe of post-royalty, net proven reserves, about 70% of which is gas. Berkley has oil and gas interests in the Fort Liard region of the Northwest Territories, in Alberta and Saskatchewan, and in the East Lost Hills region of California's San Joaquin Valley. The company's net production is 10,900 b/d of oil and 116 MMcfd of gas. Berkley Petroleum has 140 employees.
Michael Rose, Berkley president and CEO, said, "We are pleased with this offer from Anadarko, a well-respected oil and gas exploration company, with a corporate culture similar to that of Berkley."
After the merger, Anadarko will hold 4.7 million acres net (3.5 million undeveloped net, 1.2 million developed net) in Canada.
Jim Emme, president of Anadarko Canada Corp., said, "Since the merger with Union Pacific Resources last year, Anadarko has implemented plans to grow its Canadian gas reserves. This deal accelerates our long-term strategy by at least 3 years."
PrimeWest-Cypress deal
PrimeWest's offer-worth $14/share in cash, stock, and the assumption of $140 million (Can.) in Cypress's debt-is a 33% premium over the recent Cypress closing price.
Cypress produces 14,000 boe/d, mainly in Alberta. The company recently signed a letter of intent to acquire Ranchero Energy Inc. (OGJ Online, Jan. 29, 2001).
The Cypress acquisition would make PrimeWest one of Canada's largest energy trust operations, with market capitalization of about $1 billion (Can.).
PrimeWest CEO Kent MacIntyre said the deal will benefit both PrimeWest unit holders and Cypress shareholders. He said Cypress assets are high quality and exceptionally well-suited to a royalty trust.
Calpine-Encal deal
Calpine said it will gain about 1 tcfe of proved and probable natural gas reserves, net of royalties. It said the deal will also give it access to firm gas transportation capacity from western Canada to California and the eastern US, and an accomplished management team to lead Calpine expansion in Canada.
Encal currently produces about 230 MMcfed of gas, net of royalties.
Calpine said the acquisition will increase the company's net production to 390 MMcfed of gas in North America. It said gas production under Calpine's control will be sufficient to fuel about 2,300 Mw of its power fleet. On completion of the deal, Calpine's proved and probable reserves will be 1.7 tcfe, net of royalties. Most of Encal's reserves are natural gas and gas liquids.
Calpine Pres. and CEO Peter Cartwright said Encal's properties are an excellent fit with Calpine's gas-fired electric generating assets, especially in California and the central US. He said the acquisition will give Calpine an opportunity to increase its margins through reduced fuel costs.
Under the terms of a definitive agreement, Encal shareholders will receive $12/share (Can.) in Calpine common equivalent shares.
The deal is subject to approval by Encal shareholders and regulatory and court approvals, and is expected to close in the second quarter 2001. Holders of about 34% of fully diluted Encal shares have agreed to vote in favor of the deal.