A move last month by India’s Indian Oil Corp. (IOC) and its partner Oil India Ltd. (OIL) to acquire French energy firm Maurel & Prom’s (M&P) assets in the Republic of Congo (Brazzaville) has hit a stumbling block.
The state-owned combine had offered $1.5 billion, which was $66 million more than an existing offer from Italy’s Eni SPA, for the assets in the producing M’Boundi and Kouakouala oil fields and a few other exploration areas in the Congo.
In other recent company news:
- Offshore drilling contractor Hercules Offshore Inc. agreed to acquire its larger peer Todco in a $2.3 billion stock and cash transaction.
- KazMunaiGaz Exploration & Production JSC (KMG EP) is carrying out due diligence toward purchase of a 33% stake of PetroKazakhstan and also is assessing whether to acquire a 50% stake in Nations Energy, said KMG EP Chief Executive Askar Balzhanov in an interview.
- Elixir Petroleum Ltd., London, and Gawler Resources Ltd., Perth, last month agreed to merge their oil and gas E&P businesses in a stock deal.
- Gaz de France’s UK subsidiary GDF Britain Ltd. has acquired interest in 10 offshore licenses from CGC Veritas. Seven are in the North Sea area and three are west of the Shetland Islands on the UK continental shelf.
- DONG Energy has agreed to acquire ConocoPhillips Petroleum International Corp. Denmark for $300 million from Phillips Petroleum International Corp.
- Japan’s Itochu Corp. said it has obtained concessions in 15 natural gas fields in the Gulf of Mexico by acquiring properties belonging to Range Resources Corp.
- Veneco Inc. recently signed two separate agreements with two undisclosed companies to acquire properties in California and Texas for a combined net cost of $106 million.
- Five Perth-based companies have formed an alliance to collectively acquire oil and gas projects worldwide, and the group said it initially plans to focus on Africa.
- Kinder Morgan Energy Partners LP agreed to buy and operate Vancouver Wharves, a bulk marine terminal, from British Columbia Railway Co.
IOC, OIL setback
M&P owns 48.6% interest in M’Boundi oil field and 66% interest in Kouakouala A field. It was looking to sell these rights to Eni, along with 50% equity in Kouakouala B, C, and D blocks, and a 50% exploration interest in Kouilou.
IOC-OIL’s bid was placed through UK-based Burren Energy, which is M&P’s minority partner in the Congo assets and holds pre-emptive rights.
The Eni transaction fell through after Burren refused to waive its right of pre-emption to the stake. Burren has 31.5% equity in M’Boundi and a 25% interest in Kouakouala. It has been reported that the company wants to operate the Congo fields.
The tentative plan was that, by exercising its preemption right, Burren would acquire M&P’s interest in the fields and then resell most of it to IOC-OIL combine through a back-to-back agreement.
As per the proposal, Burren was expected to block the old agreement between M&P and Eni, which would have seen the stake transferred for a total consideration of $1.43 billion. However, Burren has now withdrawn from negotiations with IOC and OIL, and the Indian duo believe that the “chapter is closed.”
The oil fields have 1.4 billion bbl of OOIP and produce high-quality crude. Had the sale gone through, IOC-OIL would have added 17,000 b/d of oil production from the M’Boundi field in 2007. That figure was slated to increase to 28,000 b/d by 2010.
Hercules-Todco deal
The Hercules-Todco combined company will operate 33 jack up rigs, 27 barge rigs, 64 liftboats, 3 submersible rigs, 9 land rigs, and 1 platform rig. It will operate in 10 countries on five continents.
The boards of Todco and Hercules, both based in Houston, unanimously approved the transaction. Closing, expected in midyear, is subject to regulatory approvals and shareholders approval.
Upon completion, Todco shareholders will own 64% of the resulting company and Hercules will own 36%.
Terms call for Todco shareholders to receive 0.979 share of Hercules Offshore and $16/share in cash for each share of Todco stock.
KMG EP-PetroKazakhstan deal
KMG EP’s Balzhanov told OGJ last month these propositions are attractive because they have good fields and excellent internal efficiency. Acquiring additional assets would help KMG EP achieve significant growth and position itself as a national champion, he added. “We want to be the second biggest oil producer in Kazakhstan.” At present, it is third.
KMG EP wants to increase oil production by 50% and boost its reserves by 35-40%. In 2006, it produced 192,000 b/d of oil from assets in western Kazakhstan and holds 1.5 billion bbl of proved and probable reserves.
PetroKazakhstan, purchased by China National Petroleum Corp. in 2005 for $4.2 billion, produces 110,000 b/d of oil. Nations Energy, recently bought by China’s Citic Group for $1.9 billion, produces 45,000 b/d of oil. Karazhanbas oil field is the main asset of Nations Energy in Kazakhstan.
Balzhanov expects to submit an internal report to KMG EP’s board within the next couple of months about these possible acquisitions, he said.
In addition, KMG EP has offered its parent company, JSC National Co. KazMunaiGas, $1.07 billion for a 50% stake in National Kazgermunai LLP. KMG EP’s shareholders are to vote on that offer Apr. 12. Balzhanov said it was pursuing the deal because the company produces 60,000 b/d of oil from young fields and has a favorable tax regime. KMG EP will meet investors in Boston and New York to discuss the acquisition.
KMG EP also is in early talks with western majors about asset swaps so the company can diversity its portfolio, he added, but he declined to give details.
“With oil price increases and greater competition in the sector, we don’t want to be lost in the process,” Balzhanov said. “We want to integrate with the international oil industry and recognize that we must play the rules of the game. We have adopted standards and procedures used by western majors and adopted a code of corporate governance to be more transparent.”
Elixir-Gawler merge
Elixier will be the continuing company, and its headquarters will be in Perth with an office in London, the companies said in a news release. The value of the overall transaction was not finalized.
Elixir shareholders will represent 52% of the resulting company, and Gawler shareholders, the remaining 48%.
The merged group will combine Gawler’s Gulf of Mexico production with Elixir’s North Sea exploration.
The combined company will include Gawler’s 30% working interest in the High Island A268 oil and gas development project in shallow water off Texas. The project is scheduled to come on stream in September at gross rates of 20 MMcfd.
Elixir’s exploration assets are interests in nine UK North Sea exploration licenses comprising nine blocks or partial blocks.
GDF Britain buys blocks
GDF Britain’s transferred licenses include a 15% stake in an appraisal well operated by Maersk Oil that is planned for the second quarter on the Ockley discovery on Block 30/01d and a 30% stake in an appraisal well operated by Venture Production Co. on the Milburn discovery on Block 22/22c, to be drilled later this year.
The other assets include a 10% stake in the Handcross prospect on Block 204/19c, which lies west of the Shetlands, plus 10% in each of 204/14c and 204/15 in the same area.
Three other assets were 100% acquired in the 23rd Round: Blocks 20/05b, 22/05c, and 20/04f. In the 24th Round, 100% of 29/04g also was acquired.
DONG Energy’s Danish assets
With the acquisition, DONG Energy will assume control of ConocoPhillips’s equity in three Danish licenses-Hejre, Hejre Extension, and Svane, all of which ConocoPhillips Denmark currently operates.
Following the acquisition, DONG Energy will operate all three licenses and will own 50% of the Hejre license. ConocoPhillips currently holds a 30% share of Hejre, and DONG Energy, 20%.
DONG Energy estimates the ConocoPhillips Denmark 30% share in the Hejre license represents 35-40 million boe, of which 2.5-3 billion cu m is gas.
Equity amounts and reserves estimates were not identified for the Hejre Extension and Svane licenses, which DONG Energy said include “discoveries and further exploration potential.”
Range divests GOM fields
Separately from Itochu’s purchase of the GOM fields, Range Resources said it had sold its Gulf of Mexico properties, which includes its interests in 37 platforms in 11-240 ft of water, for $155 million.
At yearend 2006, Range estimated that the properties contained proved reserves of 40 bcf of gas equivalent. It characterized the division’s wells as having “high initial rates and relatively short reserve lives.”
Veneco buys fields
In one agreement, Veneco will acquire West Montalvo field in Ventura County, Calif. The field, discovered in 1951, has 243 million bbl of oil in place, with only 10% recovered. It is within 5 miles of Veneco’s Hastings field.
Veneco Pres. Bill Schneider said the field has seen limited capital in the last decade. In addition to the fee leasehold, the field includes a largely undeveloped offshore portion under lease from the State of California that is easily reachable from onshore locations.
The other agreement covers the acquisition of several Texas Gulf Coast fields, including Manvel field in Brazoria County, which is similar to Veneco’s Hastings field.
Since acquiring Hastings last year, Schneider said, Veneco has completed over 100 workovers in the field, increased production by more than 35%, and added 3 MMboe to proved reserves. “We see the same type of potential in the Manvel field,” he added, “particularly since both produce from Frio sands and are very similar geologically.”
Veneco initially plans to return idle wells to production, enhance the lift systems, and upgrade the facilities. This work is expected to yield results similar to that in Hastings field of increased daily production and proved reserves.
Schneider said studies may prove Manvel to be a good candidate for CO2 flooding.
The properties being acquired have an estimated combined total proved reserves of 9.7 million boe and proved plus unproved conventional reserves of 14.7 MMboe as of Dec. 31, 2006. Conventional reserves do not include reserves from tertiary recovery methods. There are 75 wells on the properties, and the two acquisitions should add over 500 boe/d to Veneco’s average net production this year.
Perth alliance formed
Conceived by Baraka Petroleum Ltd., the Perth-based alliance of companies also includes Beach Petroleum Ltd. of Adelaide, Arc Energy Ltd., Adelphi Energy Ltd., and Advanced Well Technologies Pty. Ltd., all of Perth.
They signed a memorandum of understanding to pool resources in seeking, evaluating, and acquiring projects.
A spokesman from Baraka said the alliance’s creation will allow member companies to jointly acquire projects of a magnitude that probably would not be possible for any of them acting alone. They will be looking at projects in the $20-100 million range.
Baraka’s general manager, Mark Fenton, who originated the idea, says it will “allow the companies concerned to punch well above their weight.”
He said it also reduces the overall risk and pools complementary resources to ensure the most-efficient use of each company’s financial and human resources.
The companies have signed confidentiality and noncompete agreement as well as a joint evaluation agreement.
Unlike a joint venture, no company is obligated to take part in all or any of the opportunities that are brought to the table. The alliance will be flexible, enabling a sharing of costs through the various stages of a project, and companies can elect to discontinue participation at various agreed-on points in a project.
Projects to be contemplated include production, rejuvenation, development, near-field exploration, and frontier exploration.
The alliance will start immediately, initially evaluating prospects in Africa where Baraka already is a key player in Mauritania and Mali.
KMEP to buy terminal
Terms and value of KMEP’s transaction were withheld pending closing, which is expected in the second quarter, a KMEP spokesman said.
Vancouver Wharves involves five vessel berths on a 139-acre site. Terminal assets include rail infrastructure, dry bulk and liquid storage, and material handling systems.