Penn West Energy Trust announced that it would buy fellow Canadian trust Canetic Resources Trust, Calgary. The combined company, to be called Penn West, will have production of 200,000 boe/d. The transaction is valued at about $3.6 billion (Can.).
In other recent company news:
- Separately, Canetic said it signed a preacquisition agreement under which it will make an offer to acquire Titan Exploration Ltd., Calgary, for $116 million.
- Colombian operators Pacific Stratus Energy and Petro Rubiales Energy plan to merge as Pacific Rubiales Energy Corp. in a deal worth $2.5 billion (Can.).
- Oranje-Nassau Groep BV subsidiary Oranje-Nassau Energie BV has agreed to acquire all of Devon Energy Corp.’s oil and gas interests off Gabon for $205.5 million.
- UK-based Centrica PLC subsidiary Direct Energy of Toronto agreed to buy Canadian oil and gas company Rockyview Energy Inc. for $113 million (Can.), including assumed debt.
- The European Commission has approved the acquisition of Romanian refiner and product distributor Rompetrol Group by KazMunaiGaz PKOP Investment NV.
- Chevron Corp. agreed to pay $30 million to settle charges that it violated the Foreign Corrupt Practices Act by allowing kickbacks to be paid to the Iraqi government during 2001-02, the US Securities and Exchange Commission said on Nov. 14.
- Cal Dive International Inc. and its parent, Helix Energy Solutions Group Inc., agreed to pay $2 million as part of a settlement to resolve alleged violations of a 2005 consent decree, the US Department of Justice said on Nov. 26.
Penn West to buy Canetic
Penn West and Canetic’s combined assets will include interests in Western Canada’s conventional oil and natural gas pools and also will include oil sands, coalbed methane, shale gas, and enhanced oil recovery projects.
Closing, subject to regulatory approvals, is expected during January. The combination is subject to approval of at least two thirds of Canetic unitholders.
Penn West unitholders will own 67% of the combined trust, and Canetic unitholders will own 33%.
Terms call for Canetic unitholders to receive 0.515 of a Penn West unit for each Canetic unit on a tax-deferred basis for Canadian and US tax purposes.
Canetic unitholders are scheduled to receive $15.84/unit for every Canetic unit based on the closing price of Penn West units on the Toronto Stock Exchange as of Oct. 30.
Canetic may buy Titan
Titan’s board agreed unanimously to support the offer. Materials were to be filed and provided to Titan shareholders by mid-November.
Canetic said it will acquire production of more than 1,800 b/d of oil equivalent, 63% oil, and a Canetic-estimated 7.3 million boe of proved and probable reserves.
Canetic also will assume a dominant position in a strategic Saskatchewan trend. The acquisition includes more than 49,000 gross acres in the Leitchville area of Southwest Saskatchewan near Canetic’s existing 45,100 gross acres in the Jurassic Lower Shaunavon trend, where Titan produces more than 900 boe/d.
Canetic said the Leitchville area is an emerging play with great development and long-term reserve addition potential.
The acquisition will expand Canetic’s position in the trend by more than one-third to 300 gross drilling locations.
The Lower Shaunavon trend contains large reservoirs with pay zones 4-16 m thick, relatively low permeability, and 22° gravity oil.
Development has been focused on the Upper Shaunavon for several years due to difficulty in producing from the Lower Shaunavon, Canetic said, but improvements the past year in drilling and completion techniques similar to those in the emerging Bakken play “have proved key to the potential ‘unlocking’ of significant reserves and production in the Lower Shaunavon trend,” Canetic said.
Canetic contemplates drilling four horizontal wells/sq mile at Leitchville.
The rest of Titan’s production is in northern Alberta and British Columbia.
Firms form Pacific Rubiales
The combined Pacific Rubiales will have production estimated at 30,000 boe/d in 2008, the largest independent acreage portfolio in Colombia, and several blocks in Peru.
The merger requires approval by two thirds of Pacific Stratus shareholders. A vote will be set for early 2008. Both boards approved the deal unanimously, but they have not yet signed a definitive agreement.
Petro Rubiales owns 100% of Meta Petroleum Ltd., a Colombian concern that operates Rubiales and Piriri oil fields in the Llanos basin. Pacific Stratus produces a net 1,900 b/d of oil and has working interests in the Caguan, Dindal, Rio Seco, Puli B, La Creciente, Moriche, Guama, and Arauca blocks in Colombia and Blocks 135, 137, and 138 in Peru.
Devon divests Gabon assets
Oranje-Nassau Energie’s acquisition, subject to approvals, is expected to close by yearend. Devon said it does not expect to incur any taxes on this transaction.
The assets being acquired includes an 18.8% interest in the Kowe block, which contains the Tchatamba oil field complex with three producing fields operated by Marathon Oil Corp. These fields are expected to add 3,750 b/d of oil to Oranje-Nassau’s net production of about 14,500 boe/d at yearend.
The other assets are a 50% interest in the Agali exploration block operated by Anadarko Petroleum Corp. and an option to earn a 53% interest in a portion of the Gryphon Marin exploration block, operated by Forest Oil Corp.
The Gabon properties are a part of Devon Energy’s West African divestiture package announced early this year.
Devon Pres. John Richels said, “Negotiations are also under way with potential buyers of the other properties in the West African divestiture package. We now expect to complete the balance of the transactions during the first half of 2008.”
Oranje-Nassau said it will continue to actively pursue other opportunities to grow its asset base both in Western Europe, as well as in Africa and the Far East. The company currently produces oil and gas from blocks off the Netherlands and the UK.
Direct Energy buys Rockyview
Direct Energy’s acquisition, subject to shareholder and regulatory approvals, is expected to close in January.
Rockyview owns conventional oil and gas assets and coalbed methane assets in central Alberta, western Alberta, and the Peace River Arch. It produces 2,700 boe/d, of which 97% is gas.
Direct Energy owns and operates about 3,000 gas wells in Alberta and three gas-fired electric power plants in Texas.
EC okays Rompetrol purchase
KMG signed an equity acquisition contract with Rompetrol Holding SA (Switzerland) for Rompetrol in August. The commission’s investigation found that the transaction would not impede competition in the European Economic Area (EEA).
KMG produces crude oil and natural gas in Kazakhstan, Russia, and Azerbaijan, the commission said. KMG has a single refinery in Kazakhstan and sells petroleum products mainly in Kazakhstan, Russia, and China. It sells no products in the EU. It is also active in the transport of crude oil and natural gas by pipeline and ships.
Rompetrol, Amsterdam, is a private refiner and distributor with minor exploration and production and oil service operations. Its refining subsidiary Rompetrol Rafinare operates the 96,000 b/d Petromidia refinery north of Navodari on the Black Sea and the 10,000 b/d Vega refinery at Ploiesti, both in Romania.
The company also operates a chain of more than 600 service stations in Romania, France, Bulgaria, Albania, Georgia, and Ukraine.
The commission found that the two parties’ activities in Europe are complementary. “KMG sells no crude oil or refined petroleum products in the EU, and Rompetrol sells refined products but has no production of crude oil or natural gas,” it said.
Chevron settles bribe charges
Chevron’s kickback payments allegedly occurred in connection with 78 million bbl of oil purchased under the United Nations’ Oil-for-Food program from Apr.17, 2001, through May 6, 2002.
The charges were the fifth action by the agency against a company for allegedly paying kickbacks under the program, which was in effect during 1996-2003 to help Iraqis cope with sanctions imposed after Saddam Hussein’s 1990 invasion of Kuwait.
“Despite all cargoes purchased by Chevron having all appropriate US government and United Nations approvals, the settlement recognizes that certain third-party merchants from which Chevron purchased Iraqi crude oil paid illegal surcharges to the government of Iraq,” Chevron said in a Nov. 14 statement.
SEC said in its complaint that third parties under contract to Chevron paid about $20 million directly to Iraqi-controlled bank accounts in Jordan and Lebanon, bypassing the Oil-for-Food escrow account. It said Chevron knew, or should have known, that third parties were using parts of the premiums they received from the company’s oil purchases to pay illegal surcharges to Iraq.
Chevron learned of surcharge demands by Iraq’s State Oil Marketing Organization in January 2001 and adopted a company-wide policy prohibiting such payments, according to the complaint filed in US District Court for the Southern District of New York. The policy required traders to obtain prior written approval for proposed Iraqi oil purchases and charged management with reviewing each proposed Iraqi oil deal.
The company said it previously ceased purchases under the Oil-for-Food program in 2000 when rumors surfaced that third-party suppliers were paying illegal surcharges. “From the very beginning, Chevron intended to comply fully with the trade sanctions then in force against Iraq and with the requirements of the Oil-for-Food program,” Chevron said.
It said the US government advised the company that one former Chevron crude trader participated in transactions where he knew or should have known that surcharges were to be paid by the third party merchants from which Chevron bought the crude. “There are no allegations that Chevron paid surcharges, and the trader is no longer affiliated with Chevron,” the company said in its statement.
SEC, however, alleged that Chevron failed to devise and maintain a system of internal accounting controls to detect and prevent such illicit payments. The company’s accounting for its Oil-for-Food transactions failed to properly record the true nature of its payments to third parties, SEC said.
Chevron, which cooperated in this investigation, neither admitted nor denied the charges in the settlement. Other investigations of the Oil-for-Food program are continuing, according to SEC.
Cal Dive settles charges
Cal Dive International Inc. and its parent, Helix Energy Solutions Group Inc., agreed to pay $2 million as part of a settlement to resolve alleged violations of a 2005 consent decree, the US Department of Justice said on Nov. 26.
DOJ said the Houston marine contractor violated provisions of a decree mandated when the company acquired assets from Stolt Offshore Inc. and S&H Diving LLC. It required the sale of two saturation diving vessels and another, separate saturation diving system.
Saturation diving services in the Gulf of Mexico are used for subsea construction projects; for inspection, maintenance, and repair services; and for recovery and salvage after offshore structures are damaged by weather or accident, according to DOJ. By living in air-tight chambers aboard diving vessels in which the air pressure equals pressure at the subsea work site, saturation divers can work for longer periods and in deeper water than surface divers, it said.
It said Cal Dive and Stolt were two of only three major saturation diving service providers in the Gulf, and the transaction eliminated Stolt as a competitor and would have given Cal Dive more than half of the capacity in the market.
Cal Dive failed to sell the vessels and diving system promptly and continued to use the Seaway Defender vessel, profiting from cleanup work following Hurricanes Katrina and Rita, according to DOJ. Ultimately, a court-appointed trustee sold the assets after the company failed to do so within the period specified by the consent decree, it said.
The $2 million payment represents profits gained as a result of not selling the assets and reimbursement to DOJ for investigation costs, the federal department said.
