Gaz de France and Suez, following approval of their boards and shareholders, reported Sept. 3 a merger of equals set to become the largest gas transmission and distribution network operator in Europe, the number two storage and LNG terminal operator in Europe, and one of the three top utilities worldwide.
In other recent company news:
- Videocon Industries and Bharat Petro Resources Ltd.-a subsidiary of India’s Bharat Petroleum Corp. Ltd. (BPCL)-have entered into an agreement to purchase shares of Brazilian exploration EnCana Brasil Petroleo Ltda. (EBPL) from Canada’s EnCana Corp. and 749793 Alberta Ltd.
- Abu Dhabi National Energy Co. (ADNEC) has agreed to buy Pioneer Natural Resources Canada Inc. from Dallas independent Pioneer Natural Resources Co. for $540 million.
- BreitBurn Operating LP, Houston, signed a definitive agreement to acquire all properties held by Quicksilver Resources Inc., Fort Worth, in Michigan, Indiana, and Kentucky for $750 million in cash and 21.348 million common shares of BreitBurn Energy Partners LP.
- Centrica PLC has agreed to acquire Newfield Exploration Co.’s remaining interests in the UK North Sea for $486.4 million.
- A federal district judge in Dallas issued a temporary restraining order and asset freeze against two small oil and gas companies and a Los Angeles man in response to US Securities and Exchange Commission allegations of stock manipulation and fraud.
GDF-Suez merger
France’s Parliament has voted to privatize GDF, and France will hold a 35% stake in the merged Franco-Belgian group, to be called GDF SUEZ, which will have a combined stock market capitalization of €90 billon, revenues of €72 billion, a cash flow of €11.4 billion, and less than €13 billion in net debt.
Current Suez Chairman and Chief Executive Gerard Mestrallet will be chairman and chief executive, running the group jointly with GDF Chairman and Chief Executive Jean-Francois Cirelli as vice-chairman and president.
The merger should become operational by mid-2008.
The European Union Commission’s late 2006 approval requires Suez to divest its 57.25%-owned gas marketing subsidiary Distrigaz and its 57% stake in Belgium gas transport company Fluxys. Suez will divide Fluxys into three entities, keeping a majority stake only on the Zeebruggen methane terminal. Fluxys will operate the Zeebrugge hub.
Suez also will spin off 65% of its environmental division. GDF Suez will control it through a shareholder pact involving the remaining 35% to be negotiated.
GDF will relinquish its 25.5% stake in Belgium electric power company Societe Publique d’Electricite and will divest Cofatech Coriance, its district heating subsidiary.
Videocon-Bharat JV buy EBPL
Videocon and Bharat’s acquisition of EBPL is estimated at $425 million, of which $165 million would be paid immediately and the balance invested in exploration.
EBPL holds varying interests in 10 ultradeepwater exploration blocks in four concessions off Brazil, seven of which are operated by partner Petroleo Brasileiro SA (Petrobras). Anadarko Petroleum Corp. is the fourth partner in EBPL.
An EnCana spokesman said the company was exiting Brazil to concentrate on North American unconventional gas and integrated oil sands resources.
Indian companies have stepped up their pace of foreign acquisitions, striking deals valued at more than $16 billion through August of this year, up from $6.2 billion during the same period a year earlier, according to Dealogic.
Both Videocon and BPCL have been eyeing global oil equity. Although consumer business accounts for 90% of Videocon’s $3.68 billion, the oil business brings in more than half its profits, so the company is seeking to increase its interests in the oil business.
BPCL, focused on refining and marketing petroleum products, embarked on the acquisition of oil exploration assets to offset losses from selling petroleum products below cost. It will spend as much as $370 million on exploration over the next 3 years, targeting small development stakes and producing fields.
The refiner recently bought equity in three blocks in the North Sea in collaboration with Tata Petrodyne and has gathered stakes in 14 oil and gas blocks in India, West Africa, South America, and Australia since it began its oil equity drive.
ADNEC to buy PNRC
ADNEC previously announced plans to expand internationally, particularly in Canada.
In May ADNEC marked its entry into Canada by agreeing to buy Calgary-based Northrock Resources Ltd. for $2 billion from Pogo Producing Co. of Houston (OGJ, June 11, 2007, p. 32).
ADNEC, an energy investment company and global conglomerate, was formed 2 years ago. The Abu Dhabi government owns 51% of the company.
BreitBurn’s acquisition
BreitBurn’s purchase of Quicksilver’s assets includes more than 5,400 producing wells, related gas gathering and processing systems, and Quicksilver’s interests in 260,000 net undeveloped acres as of Dec. 31, 2006. Proved reserves are 539 bcf of gas equivalent, 94% gas.
The properties produced a net 75.4 MMcf of gas equivalent in the first half of 2007, or 38% of Quicksilver’s total production in the period.
Quicksilver said the deal will better prepare it to develop its large inventory in the Fort Worth basin and other areas.
Centrica’s UK deal
Newfield’s sale of its UK North Sea assets is expected to close in the fourth quarter pending UK government approvals. With the sale, Newfield effectively exits from the North Sea.
The sale includes an 85% interest in Grove field, which came on stream in April; an 80% interest in the undeveloped Seven Seas discovery; and an interest in about 200,000 net acres in the Southern Gas basin.
Newfield’s production guidance had accounted for this and other divestiture programs and remains 240-253 bcf of gas equivalent for 2007 and 215-230 bcf of gas equivalent for 2008.
SEC alleges stock fraud
US District Judge Barbara M.G. Lynn of the Northern District of Texas issued the order and freeze Sept. 12 against Terax Energy Inc. of Dallas, Westar Oil Inc. of Beverly Hills, Calif., and Mark Roy Anderson. SEC also ordered a 10-day suspension of Terax’s stock, which trades on the over-the-counter bulletin board.
In its complaint, SEC alleged that Anderson gained control of Terax in April. Soon after, the company issued several press releases, which the SEC said were false and misleading, regarding Terax’s oil and gas operations and the company’s stock price increase to as much as $4.88/share from 30¢/share.
SEC also alleged that Anderson conducted a fraudulent private placement of $1 million of Westar’s common stock and made false claims about its oil and gas operations and plans to exchange Westar stock for Terax stock.
SEC said it is seeking permanent injunctions against and civil fines from Terax, Westar, Anderson, as well as Linda Contreras, Anderson’s assistant, for violating registration provisions of the 1933 Securities Act. It also seeks disgorgement from Terax, Westar, Anderson and two relief defendants, which it said Anderson controls.