January 1999
News & Resources

Oil country hot line

January 1999 Vol. 220 No. 1  Hot Line  Exxon, Mobil wed in record merger In the biggest merger in history, Exxon and Mobil will become one company, Exxon Mobil Corp. The $76.6-billion deal to c

January 1999 Vol. 220 No. 1 
Hot Line 

Exxon, Mobil wed in record merger

In the biggest merger in history, Exxon and Mobil will become one company, Exxon Mobil Corp. The $76.6-billion deal to combine the two companies will create the largest publicly traded company. Exxon shareholders will own 70% of the company, and Mobil shareholders will hold 30%. Combined net revenue is $203 billion. Net income is $11.8 billion. Both brands will be retained for retail fuel sales. However, streamlining the combined assets of the two companies is expected to eliminate about 9,000 jobs. The deal should close by mid-1999. Worldwide headquarters will be in Irving, Texas, with upstream and chemical headquarters in Houston and downstream headquarters in Fairfax, Virginia. Meanwhile, Mobil has completed an exchange in which it received onshore exploration and producing properties in California from ARCO. In exchange, ARCO received Mobil’s interest in certain shelf operations in the Central and Western Gulf of Mexico. Mobil’s new assets were immediately transferred to Aera Energy L.L.C., Mobil’s joint venture with Shell Oil.

Total buys PetroFina with stock swap

France’s Total will acquire PetroFina in a two-stage stock swap valued at $13.1 billion, forming the sixth largest oil company. The firm also becomes France’s leading oil company, overtaking Elf Aquitaine. Total officials said the merger could boost operating income by about $354 million within three years. The deal combines Total’s many upstream assets with PetroFina’s downstream position. There are currently no plans to close any of the nine refineries in Europe. But investment to meet 2005 environmental standards could be better allocated.

Seagull and Ocean Energy combine

Seagull Energy and Ocean Energy are combining into the 10th largest independent E&P company, named Ocean Energy Inc. It will be based in Houston, with market capitalization of $1.8 billion and proved reserves of about 500 million bbl of oil. Seagull will assume Ocean Energy’s $1.25 billion of debt. While Wall Street analysts say that Ocean’s debt will drown Seagull, the firm noted that 70% of its output is natural gas, for which prices have been stronger. Ocean Energy President and CEO James Flores and Seagull President and CEO James Hackett said the company would have better access to capital markets and would have a capital expense budget of at least $500 million during 1999. Hackett projected that the merged companies will see a 5% boost in production in 1999 and 10% in 2000. Combined output is currently 80,000 bopd and 622 MMcfgd, with reserves of 500 million bbl of oil equivalent.

Texaco and BG discover gas in Trinidad

Texaco and British Gas’ Starfish-1X tested 16.2 MMcfgd from 501 ft of net gas pay. Nearby Dolphin field infrastructure will be utilized to transport produced gas to the National Gas Co. of Trinidad under a 20-year contract. The well is 7.5 mi northwest of Dolphin field, in 427 ft of water, on Blocks E and 5A in the East Coast Marine area. This is the second discovery this year by the Texaco/BG venture and BG’s fifth consecutive successful well in Trinidad.

Gazprom, Lukoil become partners

Gazprom and LUKoil formed an alliance that may alter Russian policy. Cooperation between the world’s largest gas company and Russia’s biggest oil firm will give the firms greater influence over officials, resulting in a more powerful bargaining position on issues with the government. Since Gazprom pays one-fourth of all Russia’s taxes, and LUKoil is also a major tax contributor, their alliance will make them worthy opponents if the government should decide to introduce new taxes on oil or gas exports.

Yemeni pipeline targeted again

Tribesmen set off yet another explosion in Yemen’s main oil export pipeline. The explosion was located near Serwah in Marib province, about 105 mi east of Sanaa. The line was leaking about 1,500 bopd, according to an Oil Ministry official, and would take several days to repair. This was the 16th explosion since late June in the pipeline leading from Marib to the Red Sea port of Ras Isa. The tribesmen are rebelling against the government’s raising of prices for fuel and other goods as part of economic reforms. They also have been demanding compensation for repeated flooding.

Statoil pulls up stakes in Thailand

As part of Statoil’s strategy to focus on "major countries," the Norwegian state-owned oil firm sold its 10% working interest in Thailand’s giant Bongkot gas field. The share is said to be worth about $200 million, and was sold to PTT Exploration & Production and the Thai units of Total and British Gas. Statoil will cease all operations in Thailand and focus on such countries as Angola, Britain and Nigeria. PTTEP, the state-owned Petroleum Authority of Thailand, said it would acquire 44.45% of the Statoil unit, giving it an additional 4.45% stake in the field. The balance of Thai shares would be split between Total and BG.

GHP to merge with Profco

GHP Exploration and Profco Resources will combine via a stock exchange. The new company will be named TransAtlantic Petroleum Corp. The combined firm will have operations in Texas, Gulf of Mexico, Nigeria, Egypt and Tunisia. Profco has a 30% working interest in a 215,000-acre offshore concession in Nigeria. The Ejulebe prospect, with its estimated 15 million bbl of recoverable oil, was discovered from the small part (about 15,000 acres) of the tract that has been evaluated to date. Profco, and post-merger TransAtlantic, will be repaid for the $23-million development costs, beginning in January 1999 and continuing through 2001. Those funds will be used to begin drilling its Egyptian concession this year. Meanwhile, the firm’s Nigerian 200,000-acre concession has considerable 3-D seismic data in hand, and four high-priority prospects already identified (each with 20-to-100-million bbl potential). WO

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