Oil and gas assets get shuffled
As oil prices once again reach record levels worldwide, deals in the oil industry continue on, as the advantages of consolidating market power in this sector grow. And the money involves even in smaller deals is now substantial. Here are a few recent ones, most among mid-size companies and all happening in April.
Petrohawk to buy KCS
US oil form Petrohawk energy announced it will buy out US rival KCS Energy for $1.6 billion. Both companies are headquartered in Houston, and both own natural gas properties (and, to a lesser extent, oil fields) in Texas and Louisiana. The deal was announced as a simple cost-saver, as both companies use the same resources in digging and maintaining wells, often in neighboring fields.
Petrohawk is an up and comer. It has made several smaller acquisitions in the past few years and has grown to a revenue stream of $3 billion plus.
Chinese buy interest in Nigeria
Chinese state-backed overseas oil company Cnooc Ltd. recently closed its acquisition of a 45% stake in Nigerian oil exploration leases from South Atlantic Petroleum Ltd. (Sapetro) of Lagos. The eventual cost was $3.7 billion.
A Washington Post article ("Cnooc Buys Oil Interest In Nigeria", 1 /10/06) sums up the motivation:
For Cnooc, Nigeria represents its first significant venture in Africa, which has emerged as a central piece of China's global energy quest. China imports about 40 percent of its crude oil, with more than half coming from countries in the Middle East. But growing concern about instability in the region -- a fact underscored by the U.S.-led war in Iraq, once a centerpiece of China's oil aims -- has prompted Beijing to seek out sources in other parts of the world.
With prices ever higher, China is scrambling far afield to assure delivery for its increasing energy needs.
Apache to buy Gulf oil fields
In a $1.3 billion deal, US-based Apache Corp. announced it is buying BP PLC's remaining oil and natural-gas fields in the Gulf of Mexico. This signals a retreat by BP, an industry leader, from some of its hurricane-hit Gulf holdings. In fact, BP sold Apache other Gulf and North Sea underwater reserves in 2003, for $1.3 billion.
Apache has been an eager acquirer in recent years. In 2004 it acquired a number of US and Canadian fields from Exxon Mobil for $347 million and bought a number of Gulf of Mexico wells from Anadarko Petroleum for $525 million.
Apache, an experienced Gulf operator, is buying while that area is no longer in favor with bigger companies. In fact, the company had eight of its 241 oil rigs in the Gulf destroyed by Hurricane Katrina. The company seems to looking to specialize in high-risk holdings. It has become the #2 producer on the Gulf's continental shelf, after Chevron. As the company notes in an online white paper,
Apache's experience allowed it to hone its approach to the Shelf at a time when the majors' interest first began to wane presented further opportunity.
Schlumberger buys partner's stake in seismic mapping firm
Schlumberger Ltd., the #1 oil exploration company the world, bought out its partner's minority interests in WesternGeco, a seismic data mapping company. In the $2.4 billion deal, Schlumberger buys the 30% stake held by its biggest rival, exploration company Baker Hughes Inc.
A major reason Schlumberger made the deal was because of the recent rise and exploration activity, motivated by the ever higher price per barrel of oil.
Other significant April deals (less than a billion deals)
Venoco Inc, a US-based oil producer, announced it will buy TexCal Energy LLC for $456 million. Both companies have oil fields in the California Sacramento Valley area. TexCal also has holdings in Texas.
Pogo Producing Co., a US oil production company, announced it will acquire private Latigo Petroleum Inc., for $750 million. Both companies have oil holdings mostly in Texas.
