Company News: Statoil to acquire EnCana’s Gulf of Mexico assets

May 9, 2005
Staoil ASA has agreed to pay $2 billion for all of EnCana Corp.'s assets in the Gulf of Mexico, a decision that may be an attempt to counter declining reserves in the North Sea.

Staoil ASA has agreed to pay $2 billion for all of EnCana Corp.’s assets in the Gulf of Mexico, a decision that may be an attempt to counter declining reserves in the North Sea.

The transaction, scheduled to close by June 1, makes the gulf region Statoil’s new core area, and reports indicate that this allows the European company to take steps toward participating in upcoming Gulf of Mexico licensing rounds in 2006-07.

In other recent company news:

• Marathon Oil Corp. agreed to pay an additional $700 million in a modified agreement with Ashland Inc. to acquire Ashland’s 38% interest in Marathon Ashland Petroleum LLC (MAP) to satisfy tax-related concerns.

• Duke Energy Gas Transmission (DEGT) plans to acquire, for $62 million, natural gas storage and pipeline assets in southwest Virginia and the remaining 50% interest in Saltville Gas Storage LLC from AGL Resources, an Atlanta-based energy services holding company.

• Thunder Energy Inc., Mustang Resources Inc., and Forte Resources Inc. announced plans to merge and create a new oil and natural gas trust, two exploration and production companies, and a coalbed methane company.

Statoil’s gulf deal

The properties to be acquired by Statoil in the gulf consist of known discoveries and exploration acreage that are estimated to hold resources in excess of 500 million net boe, of which 334 million net boe are in known discoveries.

The assets, which currently are in the development and appraisal phases, may potentially boost Statoil’s oil and gas production by 30,000 net boe/d by 2008-09, and to more than 100,000 net boe/d by 2012.

The assets include an average 40% working interest in 239 gross blocks, covering 1.4 million acres. The key assets are six deepwater discoveries comprising separate 25% interests in one of the largest finds in the area-the Tahiti discovery-operated by ChevronTexaco Corp.; the nonoperated Tonga, Jack, Sturgis, and Sawtooth discoveries; and a 6.25% interest in the St. Malo discovery.

The Tahiti development, which at yearend had 41 million boe proved reserves, is scheduled to go on stream in 2008. Production tests are scheduled for Jack and St. Malo, both in the Walker Ridge area, with output expected in 2013. Sturgis, in the Atwater Valley area, will be appraised next year.

EnCana said proceeds from the sale would be directed toward debt reduction and the continuation of its share purchase program under which it currently may purchase as many as 20 million shares through October.


The total value of the Marathon-MAP deal, which includes other complementary Ashland businesses, is $3.7 billion. Marathon of Houston announced plans to buy all interest in MAP from Ashland of Covington, Ky., last year (OGJ Online, Mar. 19, 2004).

Both parties said that best efforts will be made to close the deal by the scheduled closing date of June 30. The deal’s termination date has been moved to Sept. 30 from June 30.

The revised terms call for an additional $600 million in Marathon stock distributable to Ashland shareholders and an additional $100 million in cash and accounts receivable from MAP.

Duke acquires pipeline

DEGT of Houston already owns 50% of Saltville Storage, which has a working gas capacity of 2 bcf. Closing is expected in the third quarter.

The acquisition will grow DEGT’s natural gas salt storage position in the mid-Atlantic area and lead to enhanced supply options for shippers on the facilities of subsidiary East Tennessee Natural Gas Pipeline.

Other assets acquired in the transaction include a developed salt cavern with a working gas capacity of 1 bcf and related facilities; a 77-mile, 8-in. gas pipeline known as the P-25 line; and the Early Grove storage field, which is a depleted gas reservoir with a working capacity of 1.5 bcf.

Canadian trust

The new trust will be called Thunder Trust. The two exploration companies will be called Thunder Explorco and Forte Explorco. The CBM company will be named Thunder CBMco.

Thunder Energy, Mustang Resources, and Forte Resources all are based in Calgary.

The reorganization is designed to enhance shareholder value by combining mature producing assets to create a more diversified production base, the companies said. The trust will have an estimated production base of 13,000 boe/d.

Shareholder meetings of Thunder, Mustang, and Forte tentatively are slated for June 30.