Centrica is buying Kerr-McGee's 4 North Sea oil fields |
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Tue, 09 Aug 2005 00:35
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LONDON: Windsor-based British gas and electricity supplier Centrica is buying the entire stakes of U.S. oil and gas producer Kerr-McGee in four North Sea fields for 318.6 million pounds. Centrica, which owns British Gas, said the deal is part of its overall plan to increase ownership of oil and gas operations so that it can contain future energy price hikes.
The oil fields are Andrew, Brae, Buckland and Skene. It is estimated that these fields account for nearly 1.1 billion therms of gas and 11 million barrels of oil. Post-deal, Centrica will have 6.6 per cent stake in Andrew (operated by BP), 8 per cent in Brae (operated by Marathon), and one third in Buckland and Skene (operated by Exxon Mobil).
Centrica's chief executive Roy Gardner said since the U.K is a net importer of gas, it is important for the company to be able to source gas from a wide and diverse range of options. The company had recently acquired a stake in the Canvey Island liquefied natural gas project.
Kerr-McGee, headquartered in Oklahoma, has also divested some other North Sea oil assets to A.P. Moeller Maersk for $2.95 billion. The North Sea assets constituted as much as 20 per cent of the company's oil reserves.
Centrica had revealed last year that it has earmarked 5 billion pounds for buy-outs of this nature. Said Gardner: "Today's acquisition underlines our commitment to capitalize on suitable opportunities within the North Sea as part of our wider international strategy to secure future supplies for our British Gas customers."
The company supplies some 60 per cent of Britain's domestic gas. It has 12 million customers.
The funds generated from the sale will help Kerr-McGee to buy back 29 per cent of its shares from financiers Carl C. Icahn and Barry Rosenstein. The company had a long-drawn legal battle with Icahn.
An early starter in the North Sea, the company's reserves there are said to be 242 million barrels. It has 1.2 billion barrels of oil-equivalent reserves, 50 per cent of which is in the U.S. and some in the Gulf of Mexico.
The company said it is intending to disinvest its Gulf of Mexico shelf properties and some other selected U.S. onshore properties.
The company's chief operating officer Dave Hager said, "Our remaining oil and gas property portfolio will be weighted toward longer-life, less capital-intensive properties, with a large inventory of repeatable low-risk development projects, while still providing high-potential exploration prospects for future per-share growth."
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