By OGJ editors
HOUSTON, Apr. 28 -- Staoil ASA has agreed to pay $2 billion for all of Encana Corp.'s assets in the Gulf of Mexico, a decision that may be an attempt to counter declining reserves in the North Sea.
The transaction, scheduled to close by June 1, makes the gulf region Statoil's new core area, and reports indicate that this allows the European company to take steps toward participating in upcoming Gulf of Mexico licensing rounds in 2006-07.
The properties to be acquired consist of known discoveries and exploration acreage that are estimated to hold resources in excess of 500 million net bbl, of which 334 million net boe are in known discoveries. The assets, which currently are in the development and appraisal phases, may potentially boost Statoil's oil and gas production by 30,000 net boe/d by 2008-09, and to more than 100,000 net boe/d by 2012.
The assets include an average 40% working interest in 239 gross blocks, covering 1.4 million acres. The key assets are six deepwater discoveries comprising separate 25% interests in one of the largest finds in the area—the Tahiti discovery—operated by ChevronTexaco Corp.; the nonoperated Tonga, Jack, Sturgis, and Sawtooth discoveries; and a 6.25% interest in the St. Malo discovery.
The Tahiti development, which at yearend had 41 million boe proved reserves, is scheduled to go on stream in 2008. Production tests are scheduled for Jack and St. Malo, both in the Walker Ridge area, with output expected in 2013. Sturgis, in the Atwater Valley area, will be appraised next year.
Encana said proceeds from the sale would be directed toward debt reduction and the continuation of its share purchase program under which it currently may purchase as many as 20 million shares through October.
