Invest-Oil—an affiliate company acting in the interest of Russian oil firms Siberian Oil Co. (Sibneft) and Tyumen Oil Co. (TNK)—has bid for and won a 74.95% equity stake in OAO Slavneft for $1.86 billion. Slavneft is Russia's ninth largest oil producer, the companies said in a joint statement.
In other recent company news:
Dearborn, Mich.-based CMS Energy Corp. has reached an agreement to sell its interstate natural gas pipeline unit, CMS Panhandle Cos., and that business unit's accompanying subsidiaries, to Southern Union Panhandle for $1.828 billion.
Gas de France said it will acquire Lingen, Germany-based Preussag Energie GMBH, an affiliate of TUI AG, for nearly one billion euros. TUI said it is selling the unit to refocus on its tourist business.
Dallas-based Holly Corp. has signed a definitive agreement with ConocoPhillips to acquire the major's 25,000 b/d Woods Cross refinery near Salt Lake City and related assets for $25 million.
Slavneft deal
TNK and Sibneft were among three bidders for the stake in Slavneft. The third firm, Chinese state oil firm Chinese National Petroleum Corp. (CNPC), was allegedly "shut out" of the bidding process by Russia's Duma, which had fought last month to pass a declaration urging the Cabinet to prevent any foreign oil company from winning the auction, the Moscow Times reported Dec. 16. "Specifically, lawmakers said companies in which a foreign government has more than a 25% stake should be declared ineligible to bid," the Times reported Russian news agency Interfax as saying.
The Federal Property Fund, which conducted the auction, had set a minimum price of $1.7 billion for the nearly 75% interest in Slavneft, said Tyler Dann, Banc of America Securities LLC analyst, in a Nov. 20 research note. "Slavneft is one of two remaining state-owned oil companies and accounts for roughly 5% of total Russian production," Dann said.
Interfax Dec. 19 reported TNK Vice-Pres. Oleg Surkov as saying that either TNK or Sibneft—but not both firms—would hold the Slavneft shares. "Slav- neft's performance will not be affected, whichever company does hold the shares," Surkov told the news agency.
Current Slavneft management will continue to run the company, Interfax reported Sibneft Pres. Yevgeny Shvidler as saying. "Sibneft and TNK at an extraordinary shareholders' meeting will put forward their representatives for the board of directors," he added.
CMS pipeline divestiture
Based on the agreement, Southern Union Panhandle—a newly formed entity owned by Southern Union Co. and AIG Highstar Capital LP—will pay $662 million in cash and assume $1.166 billion in debt.
Separately, CMS Energy reported that it will sell the wholesale natural gas trading book of its CMS Marketing, Services & Trading unit to Sempra Energy Trading, the wholesale commodity trading unit of Sempra Energy. CMS Energy, beleaguered by debt, said it will apply the proceeds from its pipeline unit's sale to reducing this debt, which had been decreased by $860 million last year alone.
CMS Energy's Panhandle unit includes CMS Panhandle Eastern Pipe Line Co., CMS Trunkline Gas Co., CMS Trunkline LNG Co. (which operates an LNG terminal complex at Lake Charles, La.), and CMS Sea Robin Pipeline Co.
GdF acquisition
The assets being acquired by GdF include hydrocarbon reserves located in Germany's North West basin estimated at some 25 billion cu m of natural gas and 50 million bbl of oil. Preussag Energie's plateau production currently hovers at 1.4 billion cu m (bcm)/year of gas and 4 million bbl/year of oil. GdF's purchase raises its own production of natural gas by nearly 50% to 4.6 bcm/year.
The acquired Preussag Energie assets also include an 11% stake in gas transportation and marketing company Erdgas Münster, which owns a 2,000 km network in the northwestern part of Germany; a 50% stake in the Reitbrook underground storage facility near Hamburg; a 33% stake in the Schmidhausen storage facility near Munich; and 100% of the Fronhofen storage facility near Stuttgart. GdF's full share of gas storage capacity being acquired totals close to 300 million cu m. In addition, GdF also will assume operation of the Lehrte storage facility near Hanover.
Holly's refinery acquisition
In addition to the plant, Holly will acquire certain pipelines and transportation assets that support the refinery as well as 25 retail stations in Utah and Wyoming. In addition, Holly inked a 10-year license—which could possibly be extended sometime in the future—to market fuels under the Phillips brand name in Utah, Wyoming, Idaho, and Montana.
Holly said Woods Cross has operated at close to its capacity for the last 3 years, during which time the plant and its retail assets have averaged $20 million/year in earnings less interest, taxes, and depreciation.
"The refinery is well maintained, well staffed, and is currently meeting (US Environmental Protection Agency)-mandated cleaner burning gasoline requirements through January 2009," said Matthew P. Clifton, Holly president.
Clifton added that the company's capital expenditures to bring the Wood Cross plant into compliance with EPA's June 2006 low-sulfur diesel fuel requirements are "relatively modest" and would "offer potential opportunities for improved profitability."
