Following the closing, Endeavour will hold the approximately 76 percent interest in OER previously held by Lundin Petroleum B.V. Endeavour intends to offer to purchase the remaining minority interests in OER, which includes interests held by OER management, for a combination of Endeavour common stock and cash. OER management has endorsed the acquisition as a means to establish the combined entity as a leading independent E&P company in the Norwegian sector.
"This acquisition is a significant step toward our goal to build an independent energy company strategically focused in the North Sea region," said William L. Transier and John N. Seitz, co-chief executive officers upon the announcement. "With the acquisition of OER, our company now has a production base from which to expand our exploration efforts and an experienced Norwegian technical and commercial team to accelerate our business strategy in Norway. We also expect to finance a portion of the purchase to ensure that we retain proper balance sheet leverage."
OER's asset base includes the following:
Current production from OER net interests in the Brage and Njord fields is approximately 2,000 barrels of oil per day (BOPD). OER's proved reserves as of Jan. 1, 2004 have been estimated at 2.8 million barrels of oil equivalent (boe) by an independent reserve consultant. According to the same firm, the properties have an additional probable reserve potential of 4.1 million boe.
Last month, Endeavour was awarded nine production licenses covering 18 blocks off the coast of the United Kingdom in the North Sea. In Norway, the Ministry of Petroleum and Energy also notified the company of its pre-qualification as a licensee in that country's Continental Shelf.
In early 2004, Endeavour became a publicly traded U.S. independent exploration company focused on taking advantage of an industry transition that is occurring in the North Sea similar to what occurred in the Gulf of Mexico in the 1980s. Major integrated energy companies continue restructuring their portfolios away from operating in mature producing areas. This shift creates financial and development opportunities for smaller, niche players with the technical capabilities to profitably exploit the remaining reserves.
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