By the OGJ Online Staff
HOUSTON, Jan. 29 -- Petro-Canada, Calgary, agreed to acquire the international oil and gas operations of Veba Oil & Gas GMBH for $3.2 billion (Can.) cash.
Several companies have expressed interest in those operations, including Woodside Energy Ltd. (OGJ Online, Jan. 28, 2001). BP, which is negotiating for a 51% stake in Veba, has agreed to the transaction.
Closing is subject to several conditions, including host government approvals and rights of first refusal affecting assets in Norway, Egypt, and Venezuela.
Royal Bank of Canada and Deutsche Bank AG, Canada Branch, agreed to underwrite the purchase. It is expected that the deal will close in stages in May-September 2002.
Petro-Canada said the acquisition marks its expansion into a significant international player and the largest integrated oil and gas company in Canada.
Estimated combined production will be approximately 400,000 boe/d -- a 78% increase over Petro-Canada's stand-alone figure. Petro-Canada's and Veba's combined proven reserves are more than 1.4 billion boe, a 71% increase over Petro-Canada's previous position.
The production and exploration interests are focused on the North Sea, North Africa, and northern Latin America.
Petro-Canada President and Chief Executive Officer Ron Brenneman said, "For some time now, we have been evaluating international prospects ... The challenge has been to find sizeable assets that are geographically concentrated, that fit well with Petro-Canada's strengths and expertise, and that have both current production and strong growth potential. This deal is an excellent fit for us -- it positions Petro-Canada in some of the world's most prolific and high-potential petroleum basins, its size is significant but manageable, and it adds significant value for shareholders."
Veba's North Sea assets include stakes in Guillemot and Scott fields off the UK and in Hanze field off the Netherlands, production in Norway, and exploration interests in Denmark and the Faroes.
Petro-Canada said Veba has significant production with development potential in Libya, good production in Syria, a small position in Egypt, an interest in the Cerro Negro heavy oil development in Venezuela, and a stake in a gas development off Trinidad and Tobago.
Brenneman said Petro-Canada's existing knowledge of the Canadian offshore will serve it well in the North Sea and its integrated oil sands expertise is a good fit in Venezuela. "We will continue to invest in Veba's high-quality growth opportunities, and we are looking forward to welcoming Veba's 300 employees to our organization."
The acquisition increases Petro-Canada's production and total proved reserves by more than 70%; the company expects its production to double in 5 years.
Brenneman said, "The addition of this international strategy as a fifth core business, building on our core North American natural gas, East Coast offshore oil, Alberta oil sands, and refining and marketing businesses, positions us well for solid growth into the future."
If the deal is completed, Petro-Canada will keep its head office in Calgary and will manage its international operations through a wholly owned subsidiary in Essen, Germany.
BP agreed in principle to buy a 51% interest in Veba Oil AG in July 2001 (OGJ Online, July 16, 2001). Until 1999, the company was called Deminex.