Schlumberger Ltd. and Baker Hughes Inc. have signed a memorandum of understanding to form a joint venture of the two companies' seismic units, to be called Western GECO.
Schlumberger and Baker Hughes said they would combine the seismic fleets, data processing assets, surveys, and other assets of Schlumberger's Geco-Prakla unit and Baker Hughes's Western Geophysical unit to form the venture. Terms of the agreement also call for Schlumberger to pay Baker Hughes $500 million in cash.
The Western GECO seismic venture would have pro forma 1999 revenues of about $1.5 billion. Schlumberger would hold a 70% interest in the venture, while Baker Hughes would own the remaining 30%. Gary Jones, current president of Western Geophysical, would head up the venture.
Creation of the venture should be finalized by the end of this year, subject to completion of a definitive agreement and regulatory and board approvals.
Meanwhile, Schlumberger Resource Management Services Inc. acquired all the assets of CellNet Data Systems Inc., a provider of telemetry services, for $235 million, including certain liabilities. Schlumberger said the deal was done through a prearranged Chapter 11 bankruptcy filing by CellNet in February. The acquisition closed May 16, following final approval May 5 of the US Bankruptcy Court in Delaware. CellNet is a leading provider of low-cost telemetry services that support the ability to transmit and receive data for the remote monitoring and control of utility metering devices.
The balance of this week's coverage of company news focuses on purchases and swaps of assets in the upstream, midstream, and downstream sectors of the petroleum industry. Further details on many of the items can be found via the search function on OGJ Online.
Talisman North Sea
Talisman Energy (UK) Ltd., a unit of Talisman Energy Inc., Calgary, acquired from Texaco Inc. interests in Tartan field and its satellites in the North Sea.
Talisman will acquire 100% interest in Blocks 14/20a and 15/16a of Tartan, as well as Block 14/20bF-1 of the related Highlander and Petronella subsea satellite fields, and serve as operator. The company also acquired interests in adjacent exploration acreage for an undisclosed amount.
Production from the three-field complex is expected to reach 11,000 b/d by midyear, with field abandonment forecast for 2008. Abandonment of Tartan and Petronella fields will probably be delayed, however, as reserves for both fields are expected to increase to more than 40 million bbl. The feasibility of developing the Lowlander discovery on Block 14/20a will also be assessed. Talisman also announced plans to develop Halley oil field.
Lundin S. China Sea
Lundin Oil AB, Stockholm, plans to sell part of its interest in Block PM-3 CAA in the jointly administered commercial arrangement area in the South China Sea between Malaysia and Viet Nam.
A select group of companies will be invited to bid for a minority interest, with the winner disclosed within 6 months.
In February, partners in Block PM-3 CAA signed a 20-year, 250 MMcfd gas supply agreement with Petronas and Petrovietnam (OGJ, Feb. 21, 2000, p. 34). First gas production is expected in second half 2003.
Operator Lundin holds 41.44% of the block through Lundin Malaysia Ltd., 26.44%, and Lundin Malaysia AB, 15%. Petronas Cariga* Sdn. Bhd. holds 46.06%, and Petrovietnam Exploration & Production holds 12.5%.
Anzoil Viet Nam
Anzoil NL, Perth, will reduce its interest in the Hanoi basin exploration permit in northern Viet Nam through an equity swap with its partner and largest shareholder, Maurel & Prom (M&P). Anzoil wants to shift its focus away from Viet Nam.
If approved, M&P will acquire 15% of the permit from Anzoil, bringing M&P's interest to 55%, while Anzoil will continue to hold 45%. M&P now holds 18.4% of Anzoil, or about 60.6 million shares; after this transaction, M&P will own 49.5 million shares.
Previously, M&P carried Anzoil through an $20.8 million drilling and testing program to earn a 40% interest in the Hanoi basin permit.
M&P and Anzoil have spent about $70 million over the past 6 years in exploring the basin. The D14-1 well is flowing commercially sustainable rates, says Anzoil. Several undrilled and follow-up prospects remain to be drilled on land and offshore in the basin.
Anzoil and M&P have agreed to apply for a 2-year extension to the Hanoi basin permit in exchange for the drilling of one well and a partial relinquishment of their acreage. M&P also will carry Anzoil through the development of a gas-fired power project for $10.65 million; M&P will hold an 80% interest and Anzoil 20%.
M&P will fund at least one new well on the permit; the JV seeks a third party for additional funding.
Other upstream
In other upstream deals:
- Itera International Energy LLC, Amersterdam, signed a letter of intent to buy a working interest in Kazakhstan Production License 1551 from American International Petroleum Corp., New York. The license area, in which AIPC holds 100%, includes the Shagryl-Shomyshty gas field. AIPC estimates the field's proved reserves at 604 bcf and proved and probable reserves at 963 bcf. AIPC intends to continue as operator of the license, while Itera provides marketing assistance and financial support.
- Dominion Exploration & Production Inc. (formerly CNG Producing Co.) agreed to buy a 30% working interest in the Devils Tower discovery in the Gulf of Mexico from Mariner Energy Inc. The transaction brings Dominion's holding in Mississippi Canyon Block 773 to 60% from 30% and reduces Mariner's interest to 20% from 50%. An appraisal well is planned for this quarter, and another in the fourth quarter. After drilling the first appraisal well, Dominion will become operator of the block.
- Le Norman Partners LLC agreed to buy Houston-based Bargo Energy Co.'s Ardmore basin producing oil and gas properties in Oklahoma for $31.9 million. Bargo will use proceeds to pay down debt.
- Magnum Hunter Resources Inc., Irving, Tex., agreed to form a limited partnership with GE Capital Structured Finance Group's (SFG) oil and gas unit. Through a partnership with Mallard Hunter LP, Magnum Hunter and an SFG affiliate will acquire oil and natural gas reserves from two of Magnum Hunter's subsidiaries. Magnum Hunter assigned about 20 bcfe of producing reserves, 60% oil and 40% gas, to the partnership, effective June 1, in exchange for a $23 million cash payment with a 35% reversionary interest upon predetermined partnership payout. Magnum Hunter's wholly operated subsidiary, Gruy Petroleum Management Co., will remain operator of the properties sold to the partnership.
- Aries Resources LLC sold its nonoperating interests in more than 260 wells to two undisclosed parties for a total of $45 million. The properties are located in Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Montana, and Ohio. Separately, Aries acquired interests in 15 fields for about $28.9 million. The company said the transaction gave it 13.8 million boe of reserves in the Permian basin, East Texas, and the Midcontinent.
Colombian pipeline
TransCanada PipeLines Ltd., Calgary, agreed to sell its 17.5% interest in Colombia's Oleoducto Central SA (OCENSA) and its 50% interest in CIT Colombiana SA (CITCOL) for $117 million (US) to Calgary-based Enbridge Inc.
The OCENSA consortium owns and operates an 800-km crude oil pipeline from Colombia's Cuisana and Cupiagua oil fields to the Caribbean port of Cove
The sale is set to close by third quarter 2000, pending final consents and regulatory approvals. In addition, Enbridge is working to close acquisition of a 45% interest in the Jose, Venezuela, crude oil storage and tanker-loading terminal.
Upon closing, Enbridge will be sole operator of the OCENSA line and could have, subject to third-party rights, an equity interest of as much as 35% in the pipeline. Other OCENSA owners are state firm Empresa Colombiana de Petroleos (25%), BP Colombia Pipelines Ltd. (15.2%), Total Pipeline Colombia SA (15.2%), and Triton Pipeline Colombia Inc. (9.6%).
CMS Australia
CMS Energy Corp., Dearborn, Mich., is reviewing its Western Australian pipeline investments as well as other assets.
The pipeline assets include the Parmelia pipeline between Dongara gas field and Perth that CMS bought from West Australian Petroleum Pty. Ltd. in 1997 for around $120 million (Aus.) and a 45% interest in the $450 million (Aus.) Goldfields gas transmission pipeline extending from Onslow to Kambalda through the Pilbara iron ore and Yilgarn gold producing regions.
CMS has already withdrawn from bidding for Western Australia's $1 billion (Aus.) gas pipeline utility AlintaGas, and in February said it plans to sell its half share of the $4.8 billion (Aus.) Loy Yang power generation station in Victoria.
Shell downstream
Royal Dutch/Shell continues to shed downstream assets.
Petroplus International NV, Amsterdam, completed its acquisition of Shell's Cressier refinery and associated assets in Switzerland. The deal will double Petroplus's refining capacity, increase marketing volumes, and add up to 875,000 cu m of nonrefinery storage capacity.
Announced in December 1999, the deal will give Petroplus the 68,000 b/d Cressier refinery, Shell's wholesale commercial sales operations in Switzerland, storage depots in that country, and Shell's share in the pipelines that supply the refinery. Petroplus is acquiring the assets from Shell for about $131 million, or 15% of the estimated replacement value.
Shell Switzerland is retaining its motor gasoline retail, aviation fuel, and LPG marketing operations. Petroplus has entered into long-term contracts for the supply of these products to Shell.
Meanwhile, Shell is in the final stages of talks aimed at selling its remaining LPG assets in China.
Shell has seven LPG businesses in China involving a total investment of $70 million. The facilities, which include LPG storage tanks and bottling plants, are largely operated by joint ventures of Shell and Chinese firms in coastal cities.
By the end of March, the company had sold five of them. Shell expects to conclude the sale of the last two facilities as early as the third quarter.
After the LPG divestitures are completed, Shell will focus its China's downstream operations on producing and selling lubricants and bitumen and establishing a retail fuel network in major Chinese cities.
