Company News: Cal Dive International to buy Remington Oil & Gas

Feb. 20, 2006
Cal Dive International Inc., a Houston marine contractor with interests in oil and gas production, agreed to buy Remington Oil & Gas Corp.

Cal Dive International Inc., a Houston marine contractor with interests in oil and gas production, agreed to buy Remington Oil & Gas Corp. last month for $1.4 billion in cash and stock. Closing, expected during the second quarter, remains subject to approval by regulators and Remington shareholders.

Other recent company acquisitions include:

• Noble Energy Inc. has agreed to buy United States Exploration Inc., a privately held company in Billings, Mont., for $411 million.

• West Siberian Resources Ltd., Stockholm, is to pay $140 million to acquire a company that produces oil in Russia’s Volga-Ural region.

• W&T Offshore Inc. agreed to buy all of Kerr-McGee Corp.’s interests in oil and natural gas properties on the Gulf of Mexico’s Outer Continental Shelf for $1.34 billion in cash, subject to certain adjustments.

• The board of Brazil’s state-owned Petroleo Brasileiro SA (Petrobras) has approved an agreement with Astra Oil Trading NV to acquire 50% interest in the 100,000 b/d Pasadena Refinery System Inc. (PRSI) refinery in Pasadena, Tex.

• XTO Energy Inc., Fort Worth, will buy gas producing properties in East Texas and northeastern Mississippi from Total E&P USA Inc. for $300 million.

Cal Dive-Remington

Remington’s board unanimously supports the transaction. Terms call for Remington shareholders to receive $27 in cash and 0.436 share of Cal Dive stock for each Remington share.

Cal Dive Chairman and Chief Executive Officer Owen Kratz said, “Access to both deepwater hydrocarbon prospects and the available means to exploit them, as an operator, should lead to the continuation of our differentiated long-term earnings growth.”

Remington estimated its 2005 proved reserves at 270-285 bcf of gas-equivalent. The company expects 2006 production to total 45-49 bcf of gas-equivalent. It produces from the Gulf of Mexico and onshore Gulf Coast.

Currently, 10 fields remain shut in because of hurricane-related damage to third-party pipelines. The Dallas oil company expects most production to be restored by the end of the first quarter.

Remington approved a 2006 capital budget of $293 million. The 2006 program assumes drilling of 26 offshore exploratory wells and 2 onshore exploratory wells for $146 million. Two of the 26 wells are in the deepwater Gulf of Mexico. Development capital of $39 million will provide for platform and pipeline installations on recent discoveries, along with development drilling on existing fields. Remington allocated $73 million for development expenditures and $35 million for seismic acquisitions, workovers, and lease acquisitions.

Noble-US Exploration

Noble’s acquisition of United States Exploration will expand its operations in Wattenberg oil and gas field in Colorado, Wyoming, and Nebraska. Noble holds 218,000 acres in the field and will gain 65,000 net acres in the Denver-Julesberg basin in the transaction.

United States Exploration’s proved reserves are estimated at 248 bcf of gas equivalent, 41% proved developed and 55% gas. The company owns an interest in 512 active wells. Most of its acreage allows for increasing drilling density to 20-acre spacing.


Closing of West Siberian Resources’s acquisition is set for this month.

Being acquired is ZAO Saneco, which averaged 5,714 b/d of oil production in 2005. It holds four production licenses and three exploration licenses.

The purchase will bring West Siberian Resources’s 3P reserves to 259.3 million bbl under Society of Petroleum Engineers classification.

Consulting engineers, however, have not yet estimated potential reserves or resources in numerous structures on Saneco’s exploration licenses or in the NBNK license in Timan-Pechora. Western Siberian Resources estimates these recoverable volumes at 83 million bbl for the Saneco licenses and 64.8 million bbl at NBNK based on interpretation of seismic data.

Saneco discovered the substantial Boshevskaya and Kovalevskaya fields in the past 3 months.

West Siberian Resources operates production and licenses in the Tomsk area of Western Siberia and the Timan-Pechora area.

W&T’s GOM deal

W&T Offshore also will assume the abandonment liabilities, which Kerr-McGee listed at $135 million as of yearend 2005. The transaction, subject to regulatory approval, is expected to close during the first half.

Kerr-McGee expects net aftertax cash proceeds of $925 million. The sale involves about 500 wells and 100 fields.

Properties involved in the sale are typically in less than 1,000 ft of water and span from near Corpus Christi, Tex., to Mobile, Ala.

Net production from the divestiture properties, which remains restricted as a result of Hurricanes Katrina and Rita, is 25,000 boe/d, representing 10% of the company’s overall production.

Petrobras acquires refinery

Petrobras will disburse $370 million for PRSI. The initial business plan calls for joint operation, trading, and commercial management of the facility. The PRSI refinery, formerly owned by Crown Central Petroleum Corp., is being upgraded to meet federal fuel standards.

Petrobras wants to upgrade the refinery to enable it within 4 years to handle about 70,000 b/d of heavy oil, including crude from its giant offshore Marlim field in the Campos basin.

Petrobras owns 11 of 13 refineries in Brazil. Its Brazilian refineries were built to process light oil, while most of the 1.8 million b/d of crude Brazil produces is heavy. During 2005 Petrobras refined an average of 1.758 million b/d of oil, about 94% of Brazil’s consumption. Petrobras exports heavy crude from Marlim field and imports light oil. The country’s fuel supply is supplemented by fuel ethanol, which under government mandate must be blended to a 25% concentration in gasoline.

XTO buys fields

XTO’s acquisition, which leaves Total E&P with US properties only in the Gulf of Mexico, is expected to close Feb. 28 and be retroactive to Jan. 1.

The properties, with 120 bcf of estimated proved reserves, 60% proved developed and 95% gas, produce 15 MMcfd of gas.

The acquired reserves are 75% in the Sabine uplift in Carthage field, where XTO operates, and in Bethany field, new to the company. Maben field, in Oktibbeha County, Miss., “offers potential to increase productivity through different stimulation techniques, uphole recompletions, and new horizontal well targets,” XTO said.