Oil and gas company property divestitures have accelerated this year, and recent activity included two North Sea property deals.
UK independent Perenco PLC agreed to buy for $135 million cash some southern UK North Sea gas properties from BG Group PLC, including BG's interest in 11 nonoperated fields.
Separately, Norway's Statoil ASA acquired interests in two Norwegian North Sea licenses from Enterprise Oil Norge AS, a unit of Norske Shell AS.
Elsewhere, ChevronTexaco Corp. announced plans to sell 100 properties in California, Texas, Louisiana, Oklahoma, Wyoming, and Alberta. The company's net share of production from the properties is 25,000 boe/d. Multiple regional packages will be offered, with bids due in August and closing of all sales in the third quarter.
Meantime, Berry Petroleum Co., Bakersfield, Calf., agreed to pay Williams Cos. Inc., Tulsa, $49 million for oil and natural gas exploration and production properties in northeastern Utah's Uinta basin for $49 million. And Petroleum Development Corp., Bridgeport, W. Va., agreed to pay $28 million for Williams's properties in the Denver-Julesburg basin in northeastern Colorado.
In other recent company news:
*Evergreen Resources Inc., Denver, plans to acquire Carbon Energy Corp., also of Denver, for about $91 million, including assumption of debt, with closing planned in second quarter 2003.
*Regency Gas Services LLC, an investment vehicle of Charlesbank Capital Partners LLC, agreed to buy various Midcontinent and northern Louisiana midstream assets from El Paso Corp., Houston, for $120 million.
*Sunoco Inc., Philadelphia, signed a letter of intent to acquire El Paso Corp.'s Eagle Point 150,000 b/d refinery in Westville, NJ, along with related assets for $130 million plus fair market value for crude oil and refined product inventories at closing.
*A subsidiary of Flint Hills Resources LLC, Wichita, agreed to buy Shell Oil Co.'s 50% interest in Excel Paralube, which is a joint venture with ConocoPhillips and the JV's lube base oil plant. The US Federal Trade Commission must approve the sale, and terms have yet to be disclosed.
*Vancouver, BC-based Ivanhoe Energy Inc. finalized an alliance with China International Trust & Investment Corp. (CITIC), Beijing, to explore for and develop oil, gas, and coal, as well as to develop LNG and gas-to-liquid projects in China.
Perenco
Pending regulatory approvals, Perenco is expected to close on the BG deal by Dec. 31.
Fields included are Indefatigable (Inde) and South West Inde, Bessemer, Bell, Baird, Beaufort, Brown, East Leman, Boyle, Davy, and North Davy. The transaction also includes BG's interest in Inde and Leman joint facilities and in onshore processing facilities, including Bacton terminal.
As of Dec. 31, BG's share of proved gas reserves for the fields was 25.2 million boe. Its 2002 gas production share was 93 MMscfd.
Jon Wormley, BG's UK executive vice-president, said the sale is "part of BG's ongoing strategy to rationalize its UK portfolio and to capture value for shareholders. It will also allow us to concentrate on the North Sea assets where we have greater control. BG remains committed to the UK."
This is Perenco's second acquisition this year of UK southern North Sea assets. Perenco UK Ltd. is acquiring from BP PLC a package of gas assets for $162 million cash (OGJ Online, Feb. 27, 2003).
Statoil
The deal calls for Statoil to acquire a 50% holding in production licenses 001B and 028B, which cover Blocks 16/1 and 25/10 about 25 km southwest of Norsk Hydro AS's Grane field. Esso Norge AS holds the remaining interest in the licenses.
In 1997, a small oil and gas discovery was made on PL 028B and given the name Hanz (OGJ, July 7, 1997, p. 79).
The leases "represent an interesting exploration area" for Statoil in connection with its drilling plans on Block 16/1 in PL 167, said Øyvind Dahl Stamnes, Statoil's area exploration manager, North Sea.
Results from the program—which will begin this summer—"will be decisive for continued activity" on the licenses in which Statoil is acquiring interest, Stamnes said.
Williams
This year, Williams has agreed to sell certain gas properties for $477 million, and the company continues to market other gas exploration and production properties. Last year, the company announced plans to resolve some liquidity problems (OGJ, Aug. 26, 2002, p. 37).
Berry Petroleum is buying Williams Production RMT Co.'s Brundage Canyon properties covering 43,500 net acres and producing 2,200 net boe/d of light crude oil and natural gas. Berry said the proved reserves of 8.6 million boe are 75% light oil and 25% gas.
Berry Petroleum Pres. and CEO Jerry V. Hoffman said, "This acquisition will establish an operating position for Berry in the Rockies, which meets one of our 2003 state goals and provides the company with geographic and reserve diversification."
Depending upon the timing of the closing, Hoffman said Berry Petroleum could drill up to 26 wells in 2003. He said the effective date of the transaction, expected to be finalized in the third quarter, will be retroactive to Apr. 1.
Separately, Petroleum Development is buying Williams's gas exploration and production properties in the Denver-Julesburg basin.
The properties represent 6 MMcfd of net production and less than 1% of Williams's proved reserves of 2.8 tcf as of Dec. 31, 2002. The Denver-Julesburg properties are among those previously announced for sale as part of Williams's divestiture plans to help resolve some liquidity problems (OGJ, Aug. 26, 2002, p. 37).
Carbon Energy
The transaction remains subject to the approval of Carbon Energy's shareholders and the satisfactory completion of due diligence by Evergreen. Closing is expected in second quarter 2003.
The properties to be acquired contain at least 57 bcfe of proved reserves in the Piceance and Uinta basins and 31 bcfe in central Alberta and Southeast Saskatchewan, Evergreen said. Almost all of the reserves are gas. Net gas production averages 13 MMcfd.
Evergreen is to acquire 150,000 gross acres in the US and 77,000 gross acres in Canada. The Canadian acreage contains substantial unexploited potential in a number of formations, including coal seams, tight sands, shales, and conventional gas, Evergreen said.
Ivanhoe
The agreement between Ivanhoe and CITIC builds upon an initial partnership that the companies formed in October 2002.
The alliance will see CITIC Energy, a Hong Kong-based subsidiary, combine resources with Sunwing Energy, Ivanhoe's China subsidiary.
This will accelerate Sunwing's exploration and development projects in China,
including Dagang oil field and the Zitong and Yudong natural gas projects in the Sichuan basin. CITIC plans first to directly invest in Dagang's redevelopment.
Sunoco
The transaction, subject to regulatory approval and final definitive agreement, is expected to close in the second or third quarter. Eagle Point refinery is across the Delaware River from Sunoco's 175,000 b/d Marcus Hook, Pa., and 330,000 b/d Philadelphia refineries.
Sunoco Logistics Partners LP, a master limited partnership of which Sunoco Inc. owns 75%, probably will acquire the associated pipeline and logistics assets.
Sunoco Chairman and CEO John G. Drosdick said, "Like our Northeast refineries, the Eagle Point refinery processes light, sweet crude oilsUfor sale into the large Northeast US product market."
El Paso acquired these assets through its $24 billion merger with Coastal Corp. (OGJ Online, Jan. 29, 2001). The Eagle Point sale supports El Paso's previously announced plan to divest noncore businesses and simplify its balance sheet while maximizing its liquidity.
Prudential Securities Inc. analyst Andrew F. Rosenfeld of New York expects regulators will approve the deal, although Sunoco has "a significant number of hurdles to overcomeUin light of its dominant geographic position."
Moody's Investors Service confirmed Sunoco Inc.'s existing senior unsecured debt rating with a stable outlook. Fitch Ratings said it does not expect to change Sunoco's credit because of the refinery acquisition. The rating outlook remains stable, Fitch said.
Flint Hills Resources
The Excel Paralube base oil plant, adjacent to the ConocoPhillips refinery near Lake Charles, La., is capable of producing 21,000 b/d of high-quality hydrocracker lubricating base oils. ConocoPhillips holds 50% interest in the plant.
Flint Hills Resources Pres. and CEO Dave Robertson called the acquisition "a natural extension of our existing refining business activities, and Excel is well-positioned in the base oil market."
Shell acquired its stake in Excel Paralube when it bought Pennzoil-Quaker State Co. last year. Under an FTC consent order on the Shell-Pennzoil transaction, Shell agreed to sell its interest in Excel Paralube to a commission-approved buyer (OGJ Online, Sept. 30, 2002).
El Paso
Regency Gas Services' acquisition of El Paso's midstream assets, subject to customary closing conditions, is expected to close by the end of the second quarter.
The transaction supports El Paso's business plan to simplify its balance sheet while maximizing liquidity.
El Paso has either closed or has under contract noncore asset sales totaling $2.3 billion for 2003. Its asset sales goal for calendar year 2003 is $3.4 billion.