Fort Worth independent XTO Energy Inc. plans to acquire privately held Hunt Petroleum Corp. of Dallas and other associated entities for $4.186 billion in a cash-stock deal.
XTO’s acquisition follows close on the heels of another large acquisition. XTO last month agreed to acquire producing properties and undeveloped acreage in the Williston basin Bakken shale from privately held Headington Oil Co. LP, Dallas, for $1.85 billion in a cash-stock deal.
In other recent company news:
- The boards of Grey Wolf Inc. and Basic Energy Services Inc. have approved a definitive agreement to combine the two companies in a merger of equals. The estimated enterprise value of the combined company would be about $2.9 billion. The combined company name will be Grey Wolf Inc. and its corporate offices will be in Houston.
- Eni SPA plans to buy from Suez a 57.243% stake in natural gas distributor Distrigaz Sud AS for €2.7 billion.
- Ivanhoe Energy Inc. signed a preliminary agreement with an affiliate of Talisman Energy Inc. to acquire all of Talisman’s interests in three Athabasca oil sands leases.
- Talisman Energy Canada is selling its holdings in the leases for $105 million (Can.).
- Norwegian Energy Co. (Noreco) will acquire shares in Talisman Oil Denmark Ltd. from a wholly owned subsidiary of Talisman Energy Inc. for $83 million.
XTO acquisitions
Terms of XTO’s deal with Hunt Petroleum call for XTO to pay $2.6 billion in cash and 23.5 million shares of XTO common stock valued at $1.6 billion, or $67.50/share. Closing is expected by Sept. 3.
Engineers estimate Hunt’s proved reserves at 1.052 tcf of gas equivalent, with 62% being proved developed. Hunt’s production is 197 MMcfd of gas, 8,500 b/d of oil, and 2,300 b/d of natural gas liquids.
Of the reserves, 70% is in East Texas as well as central and northern Louisiana. Another 28% of the reserves, both onshore and offshore, are along the Gulf Coast in Texas, Louisiana, Mississippi, and Alabama.
XTO also is acquiring more than 300,000 net acres of potential in the North Sea and 15,000 net acres of leasehold in the Bakken shale region of North Dakota.
Total acreage for producing properties and undeveloped leasehold is 919,409 net acres.
Separately, XTO’s acquisition of the Bakken shale assets includes 352,000 net acres of Bakken shale leasehold in Montana and North Dakota. Headington is slated to receive $1.06 billion cash and 11.7 million shares of XTO stock valued at $67.35/share. The acquisition is scheduled to close on or before July 15.
Properties being acquired are in the Bar Trend and Nesson Anticline of the Bakken shale. Currently, the primary producing field is Elm Coulee in Montana. Out of the 352,000 net acres that XTO plans to acquire, 215,000 acres are undeveloped.
Estimated proved reserves on the properties are 68 million boe, of which 60% is proved developed reserves, said XTO Chairman and Chief Executive Officer Bob R. Simpson. XTO has “aggressively pursued” shale basins since 2004, Simpson said. Upon closing, the acquisition will add about 10,000 boe/d to XTO’s production base.
Production volumes are 88% oil, but the associated natural gas is btu-rich in composition, realizing a 30% premium to New York Mercantile Exchange pricing, XTO said.
XTO of Fort Worth plans horizontal drilling on what it describes as “the multizoned, overpressured, and complex basin.”
The US Geological Survey recently estimated 4.3 billion bbl of undiscovered, technically recoverable oil in the Bakken shale. The USGS estimate was similar to estimates from Continental Resources Inc., Enid, Okla.,(see map, OGJ, Apr. 24, 2008, p. 37).
Continental Resources has 490,000 acres in the Bakken, of which 125,000 acres is in Montana and the rest is in North Dakota.
EOG Resources currently has 12,000 b/d of production from its 320,000 acres in the Bakken.
Grey Wolf-Basic Energy
The new Grey Wolf will be led by management teams from both companies. Thomas P. Richards, current Grey Wolf chairman, president, and chief executive, will serve as Grey Wolf’s chairman after the merger. Basic Energy’s Ken Huseman will be chief executive officer. David Crowley from Grey Wolf will serve as president and chief operating officer. Alan Krenek from Basic Energy will be executive vice-president and chief financial officer.
The merger creates a more diverse energy services company with expanded growth opportunities through enhanced scale, broader geographic reach, balanced commodity exposure, and expansion of service offerings, the companies said.
The transaction is expected to close in the third quarter.
Eni-Distrigaz Sud deal
Suez also will acquire from Eni a number of assets as required by the European Commission to obtain acceptance of the forthcoming Suez-Gaz de France merger. The deal is the result of a 6-month auction between different European gas players, including Germany’s E.On AG and France’s nuclear power giant Electricite de France (EDF).
Eni said its share in Distrigas would provide access to a strategic geographic position because of its interconnections with the Centre-North European transit gas networks. Once the acquisition has closed, Eni will tender the remaining shares of Distrigas at the same conditions.
Paolo Scaroni, Eni’s chief executive, said his company would become “by far the largest” gas supplier in Europe with just over a 22% share of the market.
The final price Eni would pay for Distrigas would depend on the sale price of Distrigas’s natural gas transit subsidiary to Fluxys, a Suez subsidiary, as demanded by the European Commission.
Suez signed agreements with Eni to strengthen their gas and electricity relationship in Italy and the UK as part of its interest sale in Distrigas. Suez will gain Rome’s gas distribution network for €1.1 billion and 1,100 Mw of virtual power production capacity in Italy for €1.2 billion.
Suez will also purchase exploration and production assets in the UK, the Gulf of Mexico, Egypt, and Indonesia, for €273 million.
It will buy 4 billion cu m/year of natural gas in Italy for 20 years from Eni, about half the needs of the future GDF Suez group in Italy. Eni has the option to deliver 2.5 billion cu m/year for 11 years and a 20-year LNG contract to supply 900 million cu m/year in natural gas equivalent in the Gulf of Mexico.
Ivanhoe buys Athabasca leases
Ivanhoe envisions the first commercial application of its proprietary heavy oil upgrading technology, HTL, in an integrated heavy-oil project on the leases being acquired.
Sproule Associates Ltd. estimates that two of the three leases contain 294 million bbl of contingent bitumen resources (with low and high estimates of 216 million and 394 million bbl, respectively) out of 752 million bbl of discovered original oil in place.
Ivanhoe’s HTL heavy-oil project is planned for Lease 10 near Fort McMurray, Alta. Lease 10 is the principal block being acquired, Ivanhoe said. Sproule estimates contingent bitumen resources on Lease 10 could produce 30,000-50,000 b/d of oil.
Talisman will retain back-in rights of up to 20% in all of the acquired leases for 3 years, and it also has first-offer rights to acquire any participation interests in heavy oil projects in Alberta that Ivanhoe wishes to sell in that period, excluding the acquired leases.
In addition, Ivanhoe and Talisman plan to sign an HTL data monitoring agreement allowing Talisman to monitor the effectiveness of Ivanhoe’s HTL technology.
Last year, Ivanhoe completed an Athabasca bitumen test run at its commercial demonstration plant in Bakersfield, Calif., using HTL (OGJ, June 29, 2007, Newsletter).
The test was carried out as outlined in a 2000 technology agreement with ConocoPhillips Canada, which provided Ivanhoe with the Athabasca bitumen. Ivanhoe is using information derived from the test to design and develop commercial projects in Western Canada (OGJ, Mar. 27, 2006, Newsletter).
Noreco-Talisman Oil Denmark
Talisman’s interests in the North Sea off Denmark include 30% of License 6/95, which contains Siri field. Talisman’s production from Siri field for 2007 averaged 2,600 boe/d.
The sale, subject to approval by the Denmark government, is expected to be completed later in the year.
Talisman Pres. and Chief Executive Officer John Manzoni said the company will “resize” its North Sea assets.