Petroleos Mexicanos earlier this month revised downward the estimate of its 2000 proved crude oil and natural gas reserve base to comply with US Securities and Exchange Commission filing guidelines. The adjusted totals were calculated to be lower by 6.755 billion bbl of oil, condensate, and natural gas liquids and by 2.334 billion boe of dry gas.
In other company news, two US-based energy firms are making progress in their divestiture programs.
Williams Cos. Inc. has inked a definitive agreement to sell its 6,000 mile Central natural gas pipeline to Southern Star Central Corp., a wholly owned unit of AIG Highstar Capital LP, for $380 million in cash and the assumption of $175 million in debt.
Kerr-McGee Corp., through its subsidiaries Kerr-McGee Ecuador Energy Corp. and KM Global Ltd., has completed the sale of all Ecuadorean assets to Perenco Ecuador Ltd., a unit of privately held French exploration and production firm Perenco SA, and another, unidentified firm, for $88 million.
Separately, in recent oil and gas services and suppliers news:
Stockholders of Petroleum Geo-Services ASA (PGS), based in Oslo and Houston, have been summoned to convene for an extraordinary general meeting Sept. 27 in Norway during which will be discussed—among other items —the election of a new board.
Tulsa-based contract drilling and service company Helmerich & Payne Inc. reported that the US Securities and Exchange Commission has declared effective the registration statement of H&P's wholly owned exploration and production subsidiary, Cimarex Energy Co., thereby setting the stage for acquisition of another E&P company.
Pemex revisions
According to Fitch Ratings, the revised volumes—which center in northern Mexico's Chicontepec region—"reflect the SEC's definition of proved hydrocarbon reserves to include the certainty that they will be developed in the short term, assuming existing technology and economic conditions."
Formerly, Pemex settled on its proved reserves volume using methodology and criteria from the World Petroleum Congresses and the Society of Petroleum Engineers, which are based on estimates that, with "reasonable certainty," the reserves were "commercially recoverable," Fitch said.
Fitch noted, "Although the adjustments are significant, reflecting reductions of 25% from previous WPC-SPE estimates of Mexico's proved crude oil, condensate, and natural gas liquids reserves and 41% of its dry natural gas reserves, the nation's hydrocarbon reserve base remains significant at 23.6 billion boe, yielding a proved crude oil reserve life of 15.6 years, as of July 2002."
Fitch added that the revised figures would not affect the Mexican state oil firm's current upstream production profile or its long-term upstream output growth objectives. "It is important to note that Pemex did not consider the Chicontepec proved undeveloped hydrocarbon reserves in the estimation of its discounted future net cash flows as presented in the Form 20-F. Thus, the above referenced adjustments do not affect those calculations," Fitch said.
The revisions, according to Fitch, also "will not have a material effect on Pemex's financial flexibility and credit profile." Pemex's senior unsecured foreign currency obligations carries a BBB– rating from Fitch. This rating includes Pemex's Project Funding Master Trust, and the firm's rating outlook is stable, Fitch said.
Williams sells pipeline
Williams's sale of its Central pipeline system marks the most recent of numerous divestitures for the Tulsa-based energy company, which has been in the process of selling off some of its assets in order to strengthen its balance sheet (OGJ Online, Aug. 20, 2002).
The Central system, which is headquartered in Owensboro, Ky., transports gas from Kansas, Oklahoma, Texas, Wyoming, and Colorado to the US Midwest and has a design capacity of 2.3 bcfd of gas.
The sale does not mark Williams's exit from the US natural gas transportation market, the company said. "Williams remains committed to the interstate natural gas pipeline industry," said Doug Whisenant, who heads Williams's interstate natural gas pipeline unit. Whisenant added that the company will continue to focus its efforts on its three other US gas pipeline units: Transcontinental Gas Pipe Line Corp., Northwest Pipeline Corp., and Texas Gas Transmission Corp.
Williams expects the deal, which is expected to close in 60 days, to reduce its capital expenditures by $50 million over the next 16 months. The company also will record a pretax loss of $90-95 million from the sale in the third quarter.
Kerr-McGee's divestitures
The assets sold include Kerr-McGee's 50% interest in two production-sharing contracts for Blocks 7 and 21 and its 4.2% interest in the Oleoducto de Crudos Pesados Ltd. pipeline. Production from the properties is 14,000 b/d of oil. The transaction is retroactive to July 1 and awaits government approval.
The transaction marks the halfway point for meeting a $1 billion goal for property sales this year, said Luke R. Corbett, Kerr-McGee chairman and CEO. "Our asset sale program is resulting in a significant reduction in debt. We also expect a reduction in our unit lease operating expense of more than 20% next year, relative to 2002," he said.
Recently, Kerr-McGee sold $170 million worth of assets in Indonesia; the Bayu-Undan project in the Timor Sea for $132 million; interests in company-operated northern North Sea fields Murchison, Ninian, Columba, Lyell, and Strathspey for $120 million, plus a 5% working interest in the Harding field; Ross field for $22 million; and the Hutton tension leg platform for $29 million (OGJ Online, Sept. 6, 2002).
PGS meeting called
PGS's upcoming shareholders' meeting has been scheduled in response to a written request sent by Lysaker, Norway-based investment firm Umoe AS, which holds more than 10% of PGS's stock. In a letter written by Umoe's CEO Jens Ulltveit-Moe, he said that, "in the shareholder's opinion, it is necessary to make changes at the company that must be decided by the company's shareholders." In addition to being asked to consider the election of a new board, shareholders are to consider an increase in PGS's share capital.
Although not mentioned in the letter, Ulltveit-Moe has indicated that he may seek nomination to serve as a director on PGS's board and may also seek chairmanship of the company.
In recent years, Umoe has grown through the acquisition and sale of a number of offshore industrial suppliers including Norwegian firms Haugesund Mekaniske Verksted AS and Harding Safety AS. Umoe AS said that it seeks to "develop companies through organic growth, acquisitions, and sector restructuring."
H&P gets nod for Cimarex
Earlier this year, H&P proposed the spin-off of its oil and gas division as a separate public firm to be named Cimarex, which would in turn acquire Denver-based Key Production Co. (OGJ Online, Feb. 25, 2002).
Key Production shareholders were to vote on the merger Sept. 20. If approved, the spin-off and subsequent merger is expected to close Sept. 30, H&P said. Cimarex also has applied for listing on the New York Stock Exchange.
H&P's rig fleet includes 64 US land rigs, 12 offshore platform rigs, and 33 international land rigs. Average rig utilizations for those markets are currently 88%, 58%, and 36%, respectively, H&P stated. H&P has estimated its capital expenditures for fiscal year 2003 to be $195 million, which includes $100 million for the completion of 17 FlexRigs during the year.
