COMPANY NEWS: MidAmerican agrees to acuire PacifiCorp

June 6, 2005
International energy firm Scottish Power PLC has agreed to sell its US utility PacifiCorp to MidAmerican Energy Holdings Co., Des Moines, for $9.4 billion, including $5.1 billion in cash and the assumption of $4.3 billion in net debt and preferred stock.

International energy firm Scottish Power PLC has agreed to sell its US utility PacifiCorp to MidAmerican Energy Holdings Co., Des Moines, for $9.4 billion, including $5.1 billion in cash and the assumption of $4.3 billion in net debt and preferred stock.

In other recent company news:

  • Occidental Petroleum Corp. has acquired from ExxonMobil Corp. an interest in oil and gas production in the West Texas Permian basin for $972 million.
  • Kerr-McGee Angola Ltd. has signed an agreement with Angola’s national oil company Sonangol to take a 25% contract interest in Block 10 off Angola.
  • Sterling Resources Ltd. has signed an agreement to farm out to Lundin Petroleum AB subsidiary Lundin Heather Ltd. a 40% interest in Blocks 210/25b, 210/29, and 210/30 in the UK North Sea.
  • Pexcon Inc., an oil and gas exploration and development company in Pompano, Fla., has signed a letter of intent to acquire Tekoil & Gas Corp., a private technology company based in Orlando.
  • Pakistan’s Privatization Commission has received 14 expressions of interest from international investors for a 51% equity stake with management control in Pakistan Petroleum Ltd. (PPL).
  • StarPoint Energy Trust agreed to pay $326 million for conventional oil and gas assets from EnCana Corp. Both companies are based in Calgary.
  • Unocal Corp. said it will seek proposals from qualified prospective buyers for its Northrock subsidiary’s exploration and production assets in western Canada.
  • Total SA has purchased an additional 6.5% interest in the Surmont leases of the Athabasca oil sands area, 60 km southeast of Fort McMurray, Alta.
  • Maui General Store Inc. has signed a letter of intent with Omni Oil & Gas Inc., Dallas, to negotiate the terms of an agreement under which Maui General will acquire a 100% working interest in a 20-well natural gas drilling project in the Barnett Shale area in the Fort Worth basin in Texas.
  • Southern Petroleum Pte. Ltd., Singapore, plans to acquire 100% interest in the Bula oil tenement on Seram Island in eastern Indonesia from Lion Energy Ltd., North Adelaide, South Australia. Closing is set for June 30.


MidAmerica’s acquisition will require regulatory approval from each of the six states in which PacifiCorp operates, action that is expected to take at least a year.

PacifiCorp will continue to operate under its current names and to be headquartered in Portland, Ore. It will operate as Pacific Power in Oregon, Wyoming, Washington, and northern California, and as Utah Power in Utah and Idaho.

Oxy deal

Oxy’s oil and gas production purchase is primarily from Salt Creek, Sharon Ridge, and Dollarhide fields. Oxy said it expects to sell portions of the assets that do not fit its Permian portfolio.

The interests-along with production from another Permian transaction still being negotiated and two smaller Permian acquisitions completed in the first quarter-are expected to increase Oxy’s total proved reserves by at least 130 million boe, net of the asset sales.

Kerr-McGee in Angola

The deepwater block is operated by Devon Energy Corp., which holds a 35% contract interest. Sonangol and affiliates hold the remaining 40%.

The block, extending from the coast off Lobito to a point 30 miles offshore, covers 1.2 million acres in water as deep as 3,300 ft.

The partners anticipate drilling one or two wells on Block 10 prospects identified in 3D seismic data in the second half of this year.

Sterling’s farmout

Lundin, operator of nearby Heather oil field and platform, will earn its interest in the blocks by paying 61.54% of the first £10 million dry hole costs of a well to test an Upper Jurassic zone and will become operator.

Sterling plans to farm out an additional 10-12.5% interest in the blocks prior to drilling.

Pexcon-Tekoil & Gas

Pexcon said the acquisition will enable it to acquire and rehabilitate small to medium-sized oil and gas fields and marginal wells.

Pexcon will change its name to Tekoil & Gas Corp. when the transaction closes in July.

Bids for PPL stake

Companies submitting expressions of interest for control in PPL included BG Group, BP Pakistan Exploration & Production Inc., China National Oil & Gas Exploration & Development, ZhenHua Oil Co. Ltd., Centurion Energy International Inc., Dewan Salman Fiber Ltd. & Associates, International Sovereign Energy Corp., Kuwait Foreign Petroleum Exploration Co., MOL Hungarian Oil & Gas PLC, OMV Exploration & Production, Orient Petroleum Inc., and Tysons Oil & Energy.

PPL had proved plus probable reserves of 6.9 tcf of gas and 15 million bbl of oil and natural gas liquids as of July 1, 2004. PPL produced averages of 942 MMcfd of gas and 1,697 b/d of oil and NGLs in fiscal 2004.


StarPoint’s acquisition, expected to close by June 30, includes properties in central and southern Alberta producing about 6,400 b/d of oil equivalent after royalties. The production is about 86% oil and gas liquids. EnCana plans to reduce debt with the sale proceeds.

Since the start of 2004 and including this divestiture, EnCana has sold 84,000 b/d of oil equivalent conventional production, generating $6 billion.

Unocal sale

Unocal’s properties, which would not include the company’s midstream and storage assets, are in British Columbia, Alberta, and Saskatchewan.

Production from these properties in the first quarter of 2005 averaged 36,900 b/d of oil equivalent, including 100 MMcfd of natural gas and 20,000 b/d of oil and natural gas liquids. The average net production after royalties in the same period was 29,600 b/d.

Total boosts Surmont stake

Total’s transaction increases its stake in the Surmont leases to 50%.

The Surmont oil sands project, which uses steam-assisted gravity drainage, is to start Phase I production in 2006. Production is expected to reach 27,000 b/d of bitumen.

Alberta authorities have approved Phase II, which involves expanding plateau production to 100,000 b/d by 2012.

Maui General projects

Maui General also will acquire an interest in the 124-well Tuscaloosa Red River Bull Bayou sand unit in Lafayette, La., and in the 400-acre China South oil field near Beaumont, Tex. The Red River Bull project has recovered 25 million bbl of oil before being shut in.

The agreement obligates Maui General to secure locations and operators for drilling in the largest natural gas repository in the region, as well as working wells and drilling zones in well-known crude oil production areas.

Southern Petroleum deal

The 35-sq-km Bula Block has 100 wells producing a combined 500 b/d of oil. It has produced more than 19 million bbl of since 1896. Oil quality is similar to that from giant Duri field on Sumatra.

Several productive zones behind pipe are yet to be perforated and are expected to increase production two-fold from current levels, Lion Energy said.

The sale excludes Lion Energy’s interest in Oseil oil field.