US independents, taking advantage of increased cash flow from higher commodity prices-particularly sustained higher natural gas prices-continue a buying spree of some sought-after assets. Among the latest deals:
- Newfield Exploration Co., Houston, is acquiring Lariat Petroleum Inc. for $333 million, including the assumption of Lariat's debt.
- Texaco Inc. purchased coalbed methane (CBM) gas properties in the San Juan basin of southwestern Colorado and northwestern New Mexico for $121 million.
- Sid Richardson Gasoline Co., Fort Worth, has purchased Koch Industries Inc.'s natural gas gathering and processing assets in nine West Texas counties effective last Jan. 1. The price was not disclosed.
- Prize Energy Corp., Grapevine, Tex., agreed to buy US oil and gas properties from Apache Corp., Houston, for $65 million. The sale, which is effective Jan. 1, will close by Feb. 28.
- Anadarko Petroleum Corp., Houston, said it acquired Pinnacle Gas Treating Inc., a wholly owned subsidiary of Western Gas Resources Inc., Denver, for $38 million.
In other company news, the service and supply sector is active with acquisitions and divestitures as well. These deals include:
- Halliburton Co., Dallas, and its business unit Landmark Graphics Corp. signed a definitive deal to buy the global Petrobank data management business and related software from Norway's Petroleum Geo-Services (PGS) ASA for $179 million.
- Wilson Industries Inc., Houston, a subsidiary of Smith International Inc., is acquiring most of the assets of Van Leeuwen Pipe & Tube Corp., Houston, effective Jan. 31.
Newfield purchase
Newfield's acquisition of Lariat, a private, independent exploration and production company primarily focused in Oklahoma's Anadarko basin, is expected to close in mid-January.
As of June 30, 2000, Lariat had proved reserves of 256 bcfe. About 75% of Lariat's proved reserves are natural gas, and 90% are in Oklahoma.
Lariat shareholders would get $180 million, half in cash and half in Newfield common stock. The balance of the $333 million will go toward Lariat's debt and certain other obligations.
David Trice, Newfield president and chief executive officer, said, "During the past year, we've talked about adding a new focus area in another major US gas producing basin. We have emphasized that the best way for Newfield to accomplish this objective would be through the acquisition of an operating E&P company with strong management and quality assets."
Lariat Pres. and CEO Randy Foutch will continue in those positions. He said, "Lariat is pleased with the similarities between the two companies' business principles and cultures. These similarities, combined with Newfield's financial strength, will allow us to grow this new focus area for Newfield."
Lariat drilled nearly 100 wells last year-91 in Oklahoma and 7 in the Permian basin. Its production was 45 MMcfd of gas and 1,900 b/d of oil.
Newfield's reserves total more than 900 bcfe. It will continue to focus on the Gulf of Mexico, where 60% of its reserves are located.
Texaco CBM
Texaco bought the CBM properties from EnerVest Management Partners Ltd., Houston, and from GE Capital Oil & Gas. The purchase was effective Nov. 1, 2000.
The assets include proven reserves of 204 bcf, of which 53% are undeveloped. Net production is 21.5 MMcfd, with anticipated growth to 38 MMcfd within 3 years.
Alan Kleier, vice-president of Texaco Exploration & Production Inc.'s Central US business unit, said, "The assets acquired through the EnerVest San Juan purchase are highly complementary to our existing San Juan basin coalbed methane business. This acquisition will enable us to build value through additional drilling, workovers, and increased production, as well as capitalize on operating synergies with our existing properties."
Texaco operates San Juan basin wells near the acquired properties. Prior to the purchase, Texaco produced 104 MMcfd of gas in the area.
Richardson-Koch
The Koch facilities total nearly 1,000 miles of predominantly large-diameter gathering line and more than 180 MMcfd of processing capacity combined with 530 MMcfd of treating capacity in Loving, Reeves, Ward, Crane, Upton, Pecos, Crockett, Reagan, and Terrell counties.
The purchases were made from Koch Midstream Services Co. LLC and Koch Midstream Services Co. LP. Those firms will continue to own and operate gas processing, treating, and gathering facilities in East Texas.
Richardson said the acquisition enables it to expand its operations in the Permian basin. In December 1998, the company bought KN Energy Co. facilities in the basin, followed by a June 1999 purchase of Western Gas Resources Inc. assets.
Prize purchase
Prize said that 59% of the Apache properties are in the Permian basin of East Texas, 15% are in onshore South Texas and Louisiana, and 26% in the Midcontinent area of western Oklahoma and the Texas Panhandle.
The company said the Apache assets have proved reserves of 8.5 million bbl of oil and 23.6 bcf of gas. Production is 1,900 b/d and 6.5 MMcfd.
Philip Smith, Prize chairman and CEO, said, "The acquisition of the Apache properties continues Prize's acquisition strategy of specializing in acquisitions that complement the company's existing asset base and that offer excellent opportunities to enhance oil and gas production through exploitation activities.
"As part of our acquisition strategy, over the next 12 months, the company intends to divest $25-35 million of nonstrategic oil and gas properties from our existing asset base and this recent acquisition."
Lon Kile, president and chief operating officer, said, "We are very excited about what the Apache acquisition brings to the table in development opportunities for Prize, specifically Hugh Fitzsimons field in South Texas. The company believes the unbooked oil and gas reserves associated with this property offers significant gas development potential, which will be exploited over the next 2 years."
Anadarko acquisition
Pinnacle owns and operates a natural gas pipeline and treating plant serving East Texas, where Anadarko is developing the Bossier sand gas play. Anadarko is running 33 drilling rigs in the Bossier, making it the most actively drilled play in North America.
Anadarko will continue to operate the assets under the Pinnacle name and employ Pinnacle's staff of 16 people.
John Seitz, Anadarko president and CEO, said, "This acquisition will give us increased flexibility in how we ship and market our Bossier gas, as well as improve the service we can offer to other shippers. The Pinnacle pipeline tracks the Bossier trend through four East Texas counties. As gas volumes in the area continue to grow, we'll be able to expand the system right along with it."
The 500 MMcfd gas pipeline runs from Franklin to Bethel through Freestone, Anderson, Leon, and Robertson counties. It consists of 60 miles of large-diameter pipe, 40 miles of small-diameter laterals and spurs, and a 60-mile fuel redelivery system. The 300 MMcfd treating plant at Bethel removes carbon dioxide and hydrogen sulfide from the gas.
Anadarko is shipping 275 MMcfd through the Pinnacle pipeline and Bethel plant. It plans to expand capacity at Bethel.
Halliburton, PGS deal
As part of its deal with Halliburton, PGS also will enter into a strategic data management and distribution alliance agreement-subject to "various regulatory, board, and other approvals and the finalization of certain ancillary agreements"-with the company through its Landmark unit. "This business alliance will allow additional outlets for PGS to deliver its technology, services, and information to the marketplace through the established network already functioning at Halliburton via Landmark," said Reidar Michaelsen, PGS CEO.
Michaelsen said the sale was another step in his company's program to sell noncore assets. Last month, PGS sold its shares in Spinnaker Exploration Co. for $150 million.
Wilson's purchase
Wilson's purchase price for Van Leeuwen's assets was not disclosed. Van Leeuwen provides pipe, valves, and fittings to new construction and maintenance, repair, and operating (MRO) projects. It operates in eight states and employs 300 people. In fiscal 2000, Van Leeuwen's US revenues were $190 million. Wilson provides pipe, valves, fittings, industrial supplies, and other MRO products to the energy, refining, petrochemical, and power generation markets.
Executives of the two companies said the combined company will explore opportunities for cooperation in Europe, the Middle East, and Asia and feature an expanded line of products and services.
