Most recent merger and acquisition activity in the oil and natural gas industry has involved multinational corporations, while independent firms continue to trade upstream properties within the US and Canada.
Arawak Energy Corp., Anguilla, British West Indies, plans to acquire a 50% interest in ZAO PechoraNefteGas of Western Siberia and a 100% interest in Altius Energy Corp., a Canadian company that operates in the Precaspian basin in western Kazakhstan.
In other recent upstream news:
- Austria's OMV AG acquired 51% of state-owned Romanian oil company Petrom SA through a combined direct purchase of 33.34% interest and a simultaneous increase in Petrom's stock.
- Harvest Energy Trust agreed to buy conventional oil and natural gas assets producing 16,800 boe/d from EnCana Corp. for $395 million. Both companies are based in Calgary.
- Magnum Hunter Resources Inc., Irving, Tex., bought $243 million worth of oil and gas properties in New Mexico from Tom Brown Inc., a subsidiary of EnCana.
- Newfield Exploration Co., Houston, plans to acquire all outstanding stock of Denbury Offshore Inc., a unit of Denbury Resources Inc., Dallas, for $187 million. Denbury Offshore holds all of its parent's Gulf of Mexico assets.
- Husky Energy Inc., Calgary, has purchased all the issued and outstanding shares of private oil and gas company Temple Exploration Inc., Calgary, for $115 million (Can.).
- In midstream news:
- Linde AG of Wiesbaden, Germany, agreed to buy Singapore Syngas Pte. Ltd., a unit of ChevronTexaco Corp., in a move to strengthen Linde's position in southeastern Asia.
- Inter Pipeline Fund of Calgary plans to buy three NGL straddle plants in southern Alberta from Williams Cos. Inc., Tulsa, for $540 million, subject to closing adjustments.
- MarkWest Energy Partners LP, Denver, agreed to buy a gathering and processing system in East Texas from American Central East Texas Gas Co. LP for $240 million.
- LaGrange Acquisition LP, a unit of Energy Transfer Partners LP, Dallas, plans to buy midstream assets from Devon Energy Corp., Oklahoma City, for an undisclosed price.
In marketing news:
- Madrid-based Repsol YPF SA signed an agreement to purchase the marketing and logistics assets of Royal Dutch/Shell Group in Portugal, excluding its lubricants and LPG marketing businesses.
- Dansk Olie & Naturagas AS (DONG), Horsholm, Denmark, established a subsidiary in the Netherlands, DONG Netherlands BV, to market gas directly to industrial customers.
- OMV agreed to buy the remaining half of shares in the joint venture OMV Istrabenz Holding PLC, a marketer of refined products, for 95 million euros. Simultaneously, OMV is selling its 25% stake in Istrabenz DD for 40 million euros.
Arawak-PechoraNefteGas, Altius
Arawak plans to acquire 50% of PechoraNefteGas, a Cypriot holding company, from Vitol Russia BV for $39.5 million, plus a working capital adjustment estimated at $3 million. Rosco SA, which holds 41.28% of Arawak's shares, is an affiliate of Vitol. Valkyries Petroleum Corp., Vancouver, BC, will hold the other 50% of PechoraNefteGas.
PechoraNefteGas produces 6,800 b/d of oil from a gross 24 million bbl of proved reserves in Devonian shelf-edge reefs in the Sotchemyu-Talyu fields in the Pechora basin in Russia's Komi Republic. It also holds exploration licenses on the unexplored 6,000 sq km Mutnomateric block and the small Kadzherom block.
Consideration for Altius is 61.4 million Arawak shares and up to $7.3 million cash.
Altius, whose principal shareholder is Rosco, has interests in Akzhar, Besbolek, and Karataikyz fields, where production climbed to 2,100 b/d in June 2004 from 760 b/d in 2003. Further production growth is expected through 2005. Gross reserves are 12 million bbl proved plus 13 million bbl probable.
Arawak also has interests in Azerbaijan (OGJ Online, June 17, 2004).
OMV-Petrom
OMV paid 669 million euros for 33.34% of Petrom. It is estimated that OMV's increased stock holding in Petrom will cost as much as 855 million euros. The deal was announced in the spring, but no transaction value was released at that time (OGJ Online, Apr. 26, 2004).
Petrom is the largest oil company in Romania, with production of 5.8 million tonnes of crude and 6.1 billion cu m of gas in 2002. It also has two refineries with a combined capacity of 8 million tonnes/year and a network of 690 retail stations.
OMV has been active in Romania for 5 years through its subsidiary SC OMV Romania Mineraloel SRL and has a 25.1% stake in the Rompetrol Group NV, the biggest private oil company in Romania.
Harvest-EnCana
Harvest's acquisition of EnCana properties, expected to close by Sept. 1, involves producing assets in east central and southern Alberta. The production is predominantly medium and heavy oil.
"This sale is one in a series of planned divestitures of conventional oil and gas assets, following our acquisition of Tom Brown Inc.," said Randy Eresman, EnCana's chief operating officer.
EnCana agreed to buy Tom Brown earlier this year for $2.7 billion, including the assumption of debt (OGJ, May 3, 2004, p. 44).
Magnum Hunter-Tom Brown
Tom Brown's acquisition more than doubled Magnum Hunter's well count in southeastern New Mexico. Most of the properties bought from Tom Brown were in Lea and Eddy counties, near Magnum Hunter's Morrow-Atoka-Strawn drilling program area.
The acquisition, subject to customary closing conditions, was retroactive to May 1.
An independent reservoir engineering firm estimated that the New Mexico properties to be acquired represent 99 bcfe of proved reserves (77% natural gas), including 45 proved undeveloped locations.
Magnum Hunter's geologists and engineers identified numerous additional locations and estimate that another 50-70 Morrow formation locations can be developed. Magnum Hunter's internal reserve estimate calls for 50 bcfe of proved, probable, and possible reserves from these additional wells.
In addition to 458 producing oil and gas wells, Magnum Hunter also plans to acquire 44,000 net acres of undeveloped leasehold mineral interests.
Newfield-Denbury
Newfield said the Denbury Offshore assets include operatorship and high working interests in several mature, giant fields.
The transaction will add 50 MMcfed of net production to Newfield's portfolio, and 97% of that production is gas.
Upon closing, Newfield will acquire 38 Gulf of Mexico blocks, of which it will operate 32. The blocks features 16 fields, 7 of which hold 90% of the reserves and produce 95% of existing production.
Husky-Temple
Husky estimates Temple property production will average 4,400 boe/d for the rest of this year.
Temple's 29 bcfe of proven reserves consist of 21.4 bcf of gas and 7.6 bcfe of natural gas liquids in Deep basin in northwestern Alberta. Probable reserves are 15.6 bcfe, including 11.8 bcf of gas and 3.8 bcfe of NGLs.
Husky expects to double production through a program that calls for as many as 25 wells to be drilled by 2006.
Linde-Syngas
Neither Linde nor ChevronTexaco disclosed financial terms for the plant.
Syngas operates one of the world's largest gasification plants for generating hydrogen and carbon monoxide. The plant is on Jurong Island, a large integrated petrochemical complex in Singapore.
ChevronTexaco said it was selling the plant as part of its continuing portfolio review.
Inter Pipeline-Williams
Inter Pipeline is buying Williams's 100% ownership interest in the Cochrane and Empress II plants and 50% ownership interest in the Empress V facility.
The transaction does not involve Williams's olefins business that extracts NGL and olefins from oil sands refining near Fort McMurray, Alta.
In addition to sale proceeds, the transaction will release $30 million in funds of letters of credit and prepayments to Williams by Dec. 31.
MarkWest-American Central
MarkWest Energy is buying American Central's Carthage gathering system and gas processing assets, which provide low and high-pressure service to Carthage field producers.
The system gathers gas from the Cotton Valley, Pettit and Travis Peak formations via 180 miles of pipeline that connect with 1,700 wells. An additional 82 miles of pipeline is under construction. The gathering system includes 65,000 hp of compression, and another 35,000 hp is being installed.
Current system throughput is 245 MMcfd and is slated to increase to 310 MMcfd by Dec. 31. The acquisition includes a 175 MMcfd processing facility under construction. An NGL pipeline is slated for construction next year.
LaGrange-Devon
LaGrange Acquisition is buying Devon's Texas Chalk and Madison gas gathering systems in East Texas, including 1,800 miles of pipeline and compression.
Having 80 MMcfd processing capacity, the Madison gas plant has four treating plants, a fractionator, and a condensate stabilization facility near College Station, Tex.
"This transaction is the latest in a series of dispositions of acquired assets that we considered to be noncore," said Darryl G. Smette, Devon senior vice-president, marketing and midstream.
Repsol YPF-Shell
Repsol is buying 303 service stations in Portugal from Shell, which Repsol YPF said would increase its annual petroleum product sales by 1.85 million cu m.
The deal also includes storage terminals, a 15% stake in Cía. Logística de Combustibles, and direct sales for fuels and bitumen and marine fuels.
Closing is subject to regulatory clearance. Upon closing, the transaction will quadruple the number of Repsol YPF's Portuguese service stations to 417, giving it a 19% retail market share and a 21% market share of direct petroleum product sales.
DONG
DONG is setting up a Netherlands office in Schagen. The decision follows liberalization of the European gas market, the company said.
Plans call for DONG to enter the Dutch gas market on Oct. 1. Gas will be supplied through a new pipeline from Danish gas fields in the North Sea to the Dutch gas grid.
DONG owns 50% of a pipeline between the Danish gas fields and the Dutch pipeline system.
OMV
OMV and Istrabenz established the JV in 1992. Now OMV wants to make Istrabenz a wholly owned subsidiary, strengthening OMV's position in the Adriatic region.
Slovenia regulators are expected to approve the purchase in the third quarter. As of May 1, OMV Istrabenz operated 228 filling stations—83 in Italy, 105 in Slovenia, 30 in Croatia, and 10 in Bosnia and Herzegovina.