Oil country hot line

September 1999 Vol. 220 No. 9
Hot Line

Largest offshore construction company

Global Industries signed a purchase agreement to acquire international offshore construction company ETPM, SA, currently owned by Group GTM, the construction affiliate of French utility Suez Lyonnaise des Eaux. ETPM offers turnkey services, including design, procurement, fabrication, installation and commissioning of offshore platforms and pipelines. The company will be combined with Global’s current operations to create a new international division. Global will pay Group GTM $265 million for ETPM’s outstanding stock, enter into a $25-million lease purchase plan for interests in two vessels and assume ETPM’s $2-million liabilities. The transaction should be completed in September.

Arthur Andersen releases E&P survey results

According to the 1999 edition of Arthur Andersen’s Global E&P Trends, worldwide capital spending for all oil and gas sectors increased in 1998, despite plunging prices that cut revenues by 24% and after-tax profits by 87%. Companies were forced to take more than $17 billion in write-downs. Worldwide exploration and development spending was up 5%, to $83 billion. U.S. spending remained flat, at just over $29 billion. Capital spending by U.S. majors declined 15% last year, but increased 22% in the rest of the world. In contrast, independents increased their capital expenditures in the U.S. by 7% in 1998, while cutting back 13% internationally.

Santa Fe Snyder acquires deepwater acreage

Santa Fe Snyder Corp. signed agreements to acquire working interests in four of Shell Deepwater Development’s Gulf of Mexico discoveries, as well as unexplored acreage on some adjacent blocks, in a $210-million transaction. Santa Fe Snyder estimates that the acquisition could add production of 11,500 boepd next year. The company will acquire portions of Shell’s working interests in the Macaroni field of the Auger basin in Garden Banks, and the Angus Complex located near Bullwinkle, Troika and Brutus fields in Green Canyon.

First oil pumped from Sakhalin field

In one of the first projects to be granted production-sharing status in Russia, the Sakhalin 2 oil project began producing oil last month. Marathon operates the $10-billion Sakhalin 2 field. The combined output of the Sakhalin 1, 2 and 3 projects is expected to reach 254.5 million bbl of oil and 2.3 Tcf of natural gas each year.

Service companies face low profits

Halliburton, Schlumberger and Smith International all showed profit losses in the second quarter of this year due to dwindling exploration spending. Halliburton’s second-quarter profits fell to $83 million, from $243 million one year ago. Schlumberger’s profits dropped to $127 million, about one-third of what they were in 1998. Smith International’s second-quarter revenues were $389.7 million, down 30% from the previous year. Most of Smith’s loss can be attributed to delays in closing a drilling fluids joint venture with Schlumberger, which increased its interest costs. Doug Rock, president of Smith, predicts a modest recovery during the second half of this year.

Mariner Energy receives royalty relief

The Minerals Management Service (MMS) granted royalty relief to Houston-based Mariner Energy for its deepwater Pluto, Gulf of Mexico exploitation project. By granting this relief, MMS has suspended royalty payments on the first 87.5 million boe produced from the field. Production drilling, flowline installation and control umbilical facilities at Pluto are underway. Mariner expects to see first oil in the fourth quarter of this year.

Pool, Nabors merger almost complete

The merger between Nabors Industries and Pool Energy Services has cleared regulatory hurdles and is expected to close at the end of this month. The merger was announced in January, and at press time, Nabors stock was up $0.25, to $22.88 per share. Under terms of the agreement, Pool shareholders will receive 1.025 shares of Nabors stock for each share held.

U.S., Canadian rig counts up

Baker Hughes reported continuing improvement in the number of rigs exploring for oil and gas in the U.S. During the week of August 6, the count rose by 14, to stand at 616. Land rigs rose 14, to 493, while rigs working offshore fell one unit, to 107. The number of rigs active in inland waters also rose one, to 16. Meanwhile, Canadian rigs were up 16, to 225 units.

Nippon Oil doubles stake in Chinese oil field

After receiving approval from the Chinese government and the China National Petroleum Corp., Nippon Oil Exploration has doubled its stake, to 20%, in the planned development of Ivanhoe’s Kongnan project at the Dagang oil field complex. Approximately 124 mi from Beijing, Dagang is the sixth-largest onshore oil field complex in China. The companies are preparing a preliminary, long-term development plan, including the drilling and reworking of 100 wells. Production is estimated at 36,000 bopd by the end of 2003.

Canadian independents buy BP Amoco unit

Canadian Natural Resources and Penn West Petroleum have teamed up to purchase BP Amoco Plc’s Canadian oil business unit in a C$1.6-billion deal. Canadian Natural will acquire the majority of the assets. BP Amoco put these up for sale in June of this year after deciding to concentrate on natural gas/gas liquids operations and chemical manufacturing in Canada. The oil business unit produces about 60,000 boepd. When the transaction is finalized, Canadian Natural — already one of the country’s biggest producers — will boost light and heavy oil output by more than 50%.