Major US energy companies and majors continue selling off assets to improve their balance sheets and their property portfolios.
Williams Cos. Inc., Tulsa, announced sale agreements worth more than $100 million involving the divestment of assets in its midstream, energy marketing, and risk management businesses.
ChevronTexaco Corp. plans to sell up to $2 billion in nonstrategic assets each year during the "next few years," Chairman and CEO David J. O'Reilly told analysts during an Aug. 1 meeting in New York.
In recent upstream moves:
- Indonesia President Megawati Sukarnoputri authorized state oil company Pertamina to take the necessary legal actions toward becoming a limited liability company (LLC) by November.
- Key Energy Services Inc., Midland, Tex., agreed to sell all its oil and gas properties for $19.7 million to an undisclosed buyer.
- Atlantic Petroleum UK Ltd. agreed to buy a package of noncore UK assets from Premier Oil PLC for £8.2 million in cash, £3 million of which will be deferred payments linked to first oil from the discoveries.
- In other industry news:
- A three-judge panel of the US Court of Appeals in Washington, DC, affirmed a $98.1 million judgment against Halliburton Co., Dallas. The judgment was issued last year in a patent infringement suit brought by BJ Services Co., Houston. In response, Halliburton said it will request a rehearing in the case.
Williams
In its midstream business, Williams sold its 20% interest in the 3,000-mile West Texas LPG Pipeline LP to Buckeye Partners LP, Radnor, Pa., for $28.5 million. This system transports natural gas liquids from throughout Texas to Mont Belvieu, Tex. Williams expects to complete the sale this month.
Williams also agreed to sell the West Stoddart natural gas processing plant in western Canada to Canadian Natural Resources Ltd., Toronto, for an undisclosed amount. The 120 MMcfd capacity West Stoddart plant is 50 km northwest of Fort St. John, BC. Williams acquired the plant from Calgary-based TransCanada Pipelines Ltd. (OGJ, Nov. 6, 2000, p. 28).
In its energy marketing and risk management business, Williams has sold or has agreed to sell distributed-generation units and an associated third-party contract for $31 million. The units have a total capacity of 154 Mw. Williams completed $21 million of the sales in June, and closing for the rest is expected in the third quarter.
In early July, Williams received $10 million from Williams Energy Partners for a refined products management business, plus an estimated $5.2 million for inventory.
The company expects to record pretax gains of $3 million in the second quarter and $20 million in the third quarter. Caught in the fallout from the Enron Corp. financial collapse in late 2001, Williams is selling assets to resolve liquidity problems (OGJ, Aug. 26, 2002, p. 37).
ChevronTexaco
To focus its upstream portfolio, O'Reilly said the planned divestment of upstream portfolio assets includes about 400 fields in the US and Canada along with interests in Papua New Guinea and three North Sea fields.
ChevronTexaco also expects to sell 550 company-owned or leased US service stations and 900 stations in Asia and Africa. The sell-off plan also targets retail and refining operations in Europe, Australia, South America, and the Middle East.
Few specific details were given.
Bear Stearns analyst Frederick P. Leuffer said the divestiture was "fairly typical of combined organizations." He said he is "disappointed" that ChevronTexaco is not selling merger-related assets faster.
Portfolio upgrading is normal, Leuffer said, adding he does not see any trends toward majors selling more properties than normal.
"Actually, our analysis shows that majors have been net buyers of reserves," over time, he said.
Pertamina
LLC status will enable Pertamina to structure its operations more competitively, focus on its growing core businesses upstream and downstream, and continue efforts to improve governance and transparency, the company said.
Under the decree, Pertamina will decide within 2 years whether to keep noncore business units, such as its hotel, hospital, and airline units. The LLC status will allow Pertamina the flexibility to realign its operations.
Pertamina Pres. and CEO Baihaki Hakim said, "Pertamina will now have to focus on both the domestic and international markets to grow its revenue and enhance the value of the firm." He noted that all oil refineries and natural gas liquefaction plants would remain under Pertamina's control.
Key Energy Services
Key Energy Services expects to use $12.4 million of the proceeds from the sale to pay off its volumetric production payment and to unwind related hedges, resulting in net cash proceeds of $7.3 million. Subject to certain conditions, the sale is expected to close by Aug. 28.
Chairman and CEO Francis D. John said, "The company is focused on developing and enhancing its production services capabilities and will seek to exit those businesses that do not meet these objectives. Our oil and gas operations are not core to our business and, in fact, compete with some of our customers. Therefore, we have elected to exit this business."
Atlantic Petroleum
Atlantic Petroleum's acquisition package includes a 3.75% interest in Rob Roy, Ivanhoe, and Hamish fields, a 3.75% interest in the Perth discovery in Block 15/21 near Scott and Telford fields, a 15% interest in Chestnut field, and an 11.03% interest in Block 20/2, which includes Premier's 8.27% interest in Ettrick field.
Premier retained a right to buy back a 5.5% interest in Block 20/2 (excluding Ettrick field). These interests represent Premier's entire interest in each of these assets.
All sales are subject to UK Department of Trade and Industry (DTI) approval and joint venture partner approval.
In other news, Premier has signed an agreement with Reach Exploration Ltd. to acquire 50% interest in License P1048 in the Moray Firth blocks 20/10b, 21/6a, 20/15a, and 21.11b. The license is on trend with the Buzzard discovery.
Reach will retain 5% carried interest. Intrepid Energy North Sea Ltd. has a 30% interest and First Oil Expro Ltd. has a 15% interest.
DTI has approved the assignment of the license. Premier will become the operator.
Halliburton
The full amount of damages in the Halliburton suit, interest, and costs total $101 million.
BJ Services filed the lawsuit in March 2000 charging Halliburton with infringement of BJ's patented method of fracturing oil and gas formations with a low-polymer fracturing fluid that BJ markets as Vistar.
Along with the damages awarded last year, the trial judgment prohibited Halliburton from continuing to sell its competing system called Phoenix.
Halliburton said full amount of damages and interest was reflected in the company's results for first quarter of 2002.