Maersk Olie & Gas AS, Copenhagen, plans to buy most of Kerr-McGee Corp.’s North Sea assets for $2.95 billion. The UK’s Centrica PLC agreed to buy four North Sea fields and exploration acreage from the Oklahoma City producer for $566 million.
In other recent company news:
• Total SA plans to acquire Deer Creek Energy Ltd., Calgary, for $1.11 billion as part of its strategy of expanding heavy oil operations.
• El Paso Production Holding Co. plans to acquire the privately held Medicine Bow Energy Corp. for $814 million.
• Whiting Petroleum Corp., Denver, plans to buy the oil and gas assets of Celero Energy LP, Midland, Tex., in two separate agreements worth a total combined cash-stock value of $802 million.
• Crosstex Energy LP, Dallas, agreed to acquire El Paso Corp.’s gas processing and liquids business in southern Louisiana for $500 million.
Maersk in North Sea
The buyers assumed all related abandonment obligations, which totaled $182 million as of June 30. The buyers also agreed to assume $175 million in after-tax derivative liabilities.
Subject to approval from government agencies, the transactions are expected to close during the fourth quarter.
“Our remaining oil and gas property portfolio will be weighted toward longer-life, less capital-intensive properties,” said David Hager, Kerr-McGee chief operating officer.
Kerr-McGee plans to accelerate development drilling in the Wattenberg and Greater Natural Buttes areas of the Rocky Mountain region. The company also wants to focus on the deepwater Gulf of Mexico, Hager said.
Kerr-McGee’s North Sea assets include proved reserves of 231 million boe. Its North Sea production for the second quarter averaged 77,700 boe/d, representing 21% of the company’s total second-quarter production.
At closings, Kerr-McGee expects net after-tax cash proceeds to be $3.1 billion. The company plans to use all net proceeds to reduce debt.
Kerr-McGee plans to sell some Gulf of Mexico shelf properties and selected US onshore properties. The total combined divestitures are expected to represent 25-30% of the company’s proved reserves as of Dec. 31, 2004.
In addition, Kerr-McGee is proceeding with efforts to sell or spin off its chemical business, the world’s third-largest producer and marketer of titanium dioxide (OGJ Online, Mar. 9, 2005).
Kerr-McGee expects to complete the chemical business separation and most of the divestitures before yearend.
Total-Deer Creek
Deer Creek’s board unanimously approved Total’s offer and will recommend that shareholders accept the offer. Deer Creek holds 84% interest in the Joslyn oil sands project in Alberta’s Athabasca region.
The Joslyn oil sands project is in the start-up phase (OGJ, Apr. 11, 2005, p. 22). The Alberta Energy and Utilities Board approved the first two phases of steam-assisted gravity drainage (SAGD). Joslyn’s pilot is expected to become commercial in 2006 with production of 10,000 b/d.
Total already owns a 50% interest in the Surmont SAGD project, 125 km south of the Joslyn project.
El Paso-Medicine Bow
Medicine Bow Energy, Denver, has an estimated 356 bcfe of proved reserves, 65% natural gas, mostly in the US Rockies and East Texas.
The transaction is expected to close during the third quarter.
Whiting-Celero deal
Celero’s two core assets, Postle field in the Oklahoma Panhandle and North Ward Estes field in the Permian basin, account for most of the total asset value. Anticipated closing dates are Aug. 4 for Postle field and Oct. 4 for North Ward Estes field.
Total estimated proved reserves for the properties at 734 bcf of gas equivalent as of July 1, of which 94% is oil and 43% is developed. After the closings, Whiting will operate 95% of the properties, which produced during the first quarter at an average net rate of 7,510 b/d of oil and 2.8 MMcfd of gas.
Whiting said the Celero properties hold potential for exploration, development, and enhanced recovery.
Celero said the transactions involve cash and equity consideration of $785 million cash and 441,500 shares of Whiting common stock.
Crosstex transaction
The agreement remains subject to regulatory approvals. Closing is expected in the fourth quarter.
The assets to be acquired include 2 bcfd of processing capacity, 66,000 b/d of fractionation capacity, 2.4 million bbl of underground storage, and 140 miles of liquids transport lines. They include:
• The Eunice 2.1 bcfd processing plant and 36,000 b/d fractionator, currently processing in excess of 850 MMcfd of gas.
• The 300 MMcfd Pelican processing plant, currently operating at capacity and being expanded to 600 MMcfd.
• The 300 MMcfd Sabine Pass processing plant, recently handling about 290 MMcfd.
• A 23.85% interest in the Blue Water gas processing plant, representing capacity net to the acquired interest of 186 MMcfd, of which about 40 MMcfd is in use.
• The 30,000 b/d Riverside fractionator and loading facility, which handles liquids from the Pelican and Blue Water plants and is connected to a 2.4 million bbl natural gas liquids storage facility at Napoleonville. ✦