In recent weeks, two state-owned oil companies-Norway's Statoil AS and Uzbekistan's Uzbekneftegaz-have taken further moves toward their respective privatizations.
The Norwegian cross-party parliament committee wrestling with the partial privatization of Statoil and phased sale of the state's direct financial interest (SDFI) in the Norwegian Continental Shelf agreed earlier this month to recommend that as much as one third of Statoil and 21.5% of SDFI be put up for sale.
Meanwhile, the Uzbekistan government will announce details on the privatization of Uzbekneftegaz and its subsidiaries during a 1-day conference in Tashkent, May 16.
Elsewhere, merger and acquisition activity continues apace, but remains particularly strong among US and Canadian oil and gas firms:
- Talisman Energy Inc., Calgary, announced plans to acquire Petromet Resources Ltd., Calgary, for $806 million (Can.). It will pay $13.20 (Can.)/share for Petromet stock- about $731 million in cash-and assume debt of $75 million.
- Abraxas Petroleum Corp., San Antonio, intends to offer to buy the 51% of stock in Grey Wolf Exploration Inc., Calgary, that it does not already own.
Statoil's privatization
Representatives from Norway's chief political parties struck what was described as a "compromise" deal to recommend offering shares in Statoil to both retail and institutional investors on the Oslo and New York stock exchanges starting as early as June.
The committee, whose proposals still require formal ratification by Parlia- ment-likely to occur Apr. 26-also recommended the SDFI percentage to be offered to Norsk Hydro AS and foreign oil and gas companies be increased to 6.5% from 5%. Statoil will buy the remaining 15%.
Statoil said the deal-although falling far short of Statoil CEO Olav Fjell's initial vision of a fully privatized company with "caretaker" control of the SDFI-would allow the state oil and gas company the "full commercial freedom" it needs to become more competitive internationally.
Statoil also noted that the committee's recommendation does not preclude the state's sale of further tranches of Statoil shares in the future but does specify that the company keep its headquarters in Norway.
Hydro's Tor Steinum said earlier this month that the company sees "a number of positive suggestions" in the recommendations but remains concerned that the higher percentage of SDFI being made available to Hydro and foreign operators still means "a lack of balance for growth potential" for oil companies on the NCS.
Steinum said Hydro interpreted the 1.5% larger slice of SDFI being put up for sale as an "encouragement" to the company. However, he felt it does not offset what Hydro called the government's "inequita- ble treatment of Statoil and Hydro" when the white paper on the SDFI sale was published last December.
Steinum said Hydro is looking forward to the possibility that the government might put up further tranches of the SDFI for offer at a later date.
The 78.5% of the state's SDFI portfolio not sold immediately will be entrusted to a new state-owned limited company targeting "value creation" by managing the assets "at the account and risk of the state," with costs and revenues channeled through the government's budget.
Other recommendations, confirmed recently, included a plan for an independently managed gas transportation network based on a common ownership structure among NCS operators. The model-in which the state would have a 51% holding-is aimed at bringing Norway, a European Economic Area member, in line with the European Union directive on deregulation of the continental gas market.
The committee also called for greater streamlining of current asset ownership arrangements on the NCS-where, generally, a large number of partners share very small percentage stakes-in order to speed up the decisionmaking process while clearing the way for the development of more marginal fields.
Uzbekneftegaz privatization
The Uzbek government is in the process of an economic restructuring aimed at achieving economic growth of 4-5%/year. Uzbekneftegaz's privatization follows an Apr. 28, 2000, presidential decree regarding new investment legislation in the oil and gas industry.
On May 16, officials from Uzbeknefte- gaz, the State Property Committee, and the State Taxation Committee will make detailed presentations about the legal and fiscal framework of the privatization.
Uzbekistan produced an estimated 152,000 b/d of oil in 2000 (OGJ, Dec. 18, 2000, p. 122). Oil reserves are estimated at 594 million bbl, and natural gas reserves at 66.2 tcf.
Minister of Foreign Economic Relations E. Ganiev will outline alternative investment opportunities in Uzbekistan's oil and gas industry at the Tashkent conference.
Talisman-Petromet acquisition
Jim Buckee, Talisman's president and CEO, said, "Petromet's assets tie nicely into our rapidly growing West Edson region. We have been building on our existing land base near the Talisman-operated Edson gas plant over the past year with the acquisition of midstream assets, land purchases near Findley, and the recent addition of properties acquired from Benson Petroleum [Ltd., Calgary]."
With this acquisition, Talisman's Canadian gas production is expected to average more than 850 MMcfd in 2001 and 975 MMcfd in 2002.
Petromet has 291 bcf of proved gas reserves and 7 million bbl of hydrocarbon liquids, with an established proved reserves life index of 7.2 years. Petromet also holds the rights to 400,000 acres of land, mostly west of Edson, with 230 drilling locations identified.
Acquisition costs net of the value of land, seismic, and tax pools is $638 million, or $1.92/Mcfe, on a proved basis. The acquisition is expected to generate more than $250 million in cash flow this year.
Petromet's production for the rest of 2001 is estimated at 110 MMcfd of gas and 2,000 b/d of liquids. More than 90% of the asset value is concentrated in two properties at Bigstone and Wild River. Petromet's average working interest in its production is 85%. The acquisition is expected to be completed by late May. Petromet's board unanimously recommended acceptance of the offer.
Abraxas-Grey Wolf offer
Abraxas said it will offer 0.6 of a share of its common stock for each share of Grey Wolf common share.
Robert Watson, Abraxas chairman and CEO, said, "Bringing Grey Wolfellipsefully into Abraxas will further increase operating efficiencies and avoid duplication of public filing expenses."
Abraxas decided to make its offer directly to the Grey Wolf stockholders because a previous offer made by Abraxas to an independent committee of the Grey Wolf board has expired (OGJ Online, Mar. 8, 2001).