Plains Exploration & Production Co. (PXP)
Norwegian energy group Statoil on Monday said it would pay $700 million for rights to two U.S. Gulf of Mexico deepwater discoveries and one exploration prospect from U.S. oil company Plains Exploration & Production Co.
The deal strengthens Statoil's presence in the U.S. Gulf region, seen as a major growth area, as its core Norwegian fields mature. It also drove Plains Exploration shares up more than 8 percent.
Earlier this month Statoil, along with U.S. partners Chevron Corp. and Devon Energy Corp, announced a "record-setting" deepwater find at a Gulf of Mexico appraisal well located close to the Norwegian company's new assets.
"We like Statoil's strategy of building up a significant presence in this promising area, which may help create a basis for production growth after 2010," Arnstein Wigestrand, an analyst at SEB Enskilda in Oslo, said in a research note.
Statoil also bought rights of first negotiation for acquiring other Plains deepwater Gulf of Mexico assets.
"The next step will be to acquire operatorship in the Gulf of Mexico," Statoil Executive Vice President Peter Melbye told a conference call with analysts and journalists. "We believe the value creation potential is significant."
Plains Exploration Chief Executive Jim Flores declined to estimate reserves at the two fields and said the Houston company did not know how much the properties would have contributed to its revenues.
But Plains Exploration, which will use the proceeds to reduce debt and buy back stock under a $400 million repurchase program, said its share price had not reflected the reserves' value.
"On a financial and market basis, the ability to monetize these assets today and buy stock in (Plains) at such a severe discount, it's just way too compelling," Flores told a conference call.
Statoil officials say the state-controlled company is well placed to take advantage of Gulf of Mexico finds, with its deepwater expertise gained from its activities on the Norwegian Continental Shelf, where oil production is now peaking.
Statoil shares were up around 2.5 percent at 162 crowns in afternoon dealings in Norway, valuing the company at around $53 billion, compared with a 0.8 percent rise on the Dow Jones oil and gas index <.SXEP>.
Plains shares jumped $3.34, or 8.4 percent, to 43.20 on the New York Stock Exchange.
Standard & Poor's said the purchase would not alter its credit ratings on Statoil debt, but added that the buy would provide with medium- to long-term benefits to the company.
The transaction is scheduled to close in November. Existing leaseholders have preemption rights that must be exercised no later than 30 days after they have been notified of the sale.
100,000 BARRELS PER DAY
Statoil officials also declined to disclose the potential size of production from its acquisition, saying only that it would contribute to its target of 100,000 barrels of oil per day from the Gulf of Mexico after 2012.
Both companies hailed the deal as a possible opening to future sales of Plains' in Gulf properties under development.
The new assets are located in the Greater Tahiti area and include working interests of 17.5 percent in the Caesar discovery operated by Royal Dutch Shell Plc and 12.5 percent in the Chevron-operated Big Foot discovery.
Statoil will also gain a 12.5 percent stake in the Chevron-operated Big Foot North prospect.
The Caesar discovery is located between the Chevron-operated Tahiti and Tonga discoveries, in both of which Statoil has a 25 percent interest. Tahiti is under development and due to come on stream in 2008, Statoil said. Company officials said production at the Caesar discovery is expected to start in 2010 or 2011.
The Big Foot discovery lies in the Walker Ridge area close to the Jack and St Malo discoveries operated by Chevron.
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Norwegian energy group Statoil on Monday said it would pay $700 million for rights to two U.S. Gulf of Mexico deepwater discoveries and one exploration prospect from U.S. oil company Plains Exploration & Production Co.
The deal strengthens Statoil's presence in the U.S. Gulf region, seen as a major growth area, as its core Norwegian fields mature. It also drove Plains Exploration shares up more than 8 percent.
Earlier this month Statoil, along with U.S. partners Chevron Corp. and Devon Energy Corp, announced a "record-setting" deepwater find at a Gulf of Mexico appraisal well located close to the Norwegian company's new assets.
"We like Statoil's strategy of building up a significant presence in this promising area, which may help create a basis for production growth after 2010," Arnstein Wigestrand, an analyst at SEB Enskilda in Oslo, said in a research note.
Statoil also bought rights of first negotiation for acquiring other Plains deepwater Gulf of Mexico assets.
"The next step will be to acquire operatorship in the Gulf of Mexico," Statoil Executive Vice President Peter Melbye told a conference call with analysts and journalists. "We believe the value creation potential is significant."
Plains Exploration Chief Executive Jim Flores declined to estimate reserves at the two fields and said the Houston company did not know how much the properties would have contributed to its revenues.
But Plains Exploration, which will use the proceeds to reduce debt and buy back stock under a $400 million repurchase program, said its share price had not reflected the reserves' value.
"On a financial and market basis, the ability to monetize these assets today and buy stock in (Plains) at such a severe discount, it's just way too compelling," Flores told a conference call.
Statoil officials say the state-controlled company is well placed to take advantage of Gulf of Mexico finds, with its deepwater expertise gained from its activities on the Norwegian Continental Shelf, where oil production is now peaking.
Statoil shares were up around 2.5 percent at 162 crowns in afternoon dealings in Norway, valuing the company at around $53 billion, compared with a 0.8 percent rise on the Dow Jones oil and gas index <.SXEP>.
Plains shares jumped $3.34, or 8.4 percent, to 43.20 on the New York Stock Exchange.
Standard & Poor's said the purchase would not alter its credit ratings on Statoil debt, but added that the buy would provide with medium- to long-term benefits to the company.
The transaction is scheduled to close in November. Existing leaseholders have preemption rights that must be exercised no later than 30 days after they have been notified of the sale.
100,000 BARRELS PER DAY
Statoil officials also declined to disclose the potential size of production from its acquisition, saying only that it would contribute to its target of 100,000 barrels of oil per day from the Gulf of Mexico after 2012.
Both companies hailed the deal as a possible opening to future sales of Plains' in Gulf properties under development.
The new assets are located in the Greater Tahiti area and include working interests of 17.5 percent in the Caesar discovery operated by Royal Dutch Shell Plc
Statoil will also gain a 12.5 percent stake in the Chevron-operated Big Foot North prospect.
The Caesar discovery is located between the Chevron-operated Tahiti and Tonga discoveries, in both of which Statoil has a 25 percent interest. Tahiti is under development and due to come on stream in 2008, Statoil said. Company officials said production at the Caesar discovery is expected to start in 2010 or 2011.
The Big Foot discovery lies in the Walker Ridge area close to the Jack and St Malo discoveries operated by Chevron.
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