Norsk Hydro to Acquire Spinnaker Exploration for $2.45 Billion
The acquisition of US-based Spinnaker Exploration will significantly raise Hydro's international oil and gas production. Following completion of the acquisition, Hydro expects annual international production growth in 2005-2008 of approximately 40 percent. The transaction is expected to be earnings and cashflow accretive to Hydro.
Under the terms of the agreement, approved by the Board of Directors of both companies, Hydro will pay US$ 65.50 per share in cash for all outstanding common shares and options of Spinnaker Exploration. In addition to the total purchase price for the shares of approximately US$ 2.45 billion, Hydro will assume approximately US$ 110 million in net interest-bearing debt. The acquisition is subject to approval by Spinnaker Exploration shareholders, and compliance with notification provisions of US antitrust laws and other customary regulatory approvals.
The transaction is expected to be completed in the fourth quarter of 2005.
"The acquisition is an important breakthrough in Hydro's international growth strategy," said Eivind Reiten, Hydro President and Chief Executive Officer. "The transaction will unlock new growth and value-creation opportunities for our shareholders. We believe that the deepwater potential in the Gulf of Mexico is considerable. Hydro's industry-leading expertise in deepwater exploration and production, combined with Spinnaker's unique skills and acreage position in the region, will enable us to develop these prospects profitably in a stable and attractive fiscal environment. I'm looking forward to integrating Spinnaker Exploration's assets and world-class exploration and management team into Hydro's operations."
Spinnaker Exploration is an independent Houston-based energy company engaged in exploration, development and production of oil and gas, mainly in the Gulf of Mexico. It has about 80 employees in Houston, Texas, with an exceptional record - it has drilled 176 wells in the region with a 60 percent success rate. Spinnaker has an extensive seismic database covering most of the Gulf of Mexico and a portfolio with significant exploration acreage - both deepwater and deep-shelf prospects. It also has exploration positions in Nigeria.
Spinnaker Exploration's portfolio contains a number of high-quality development projects. The total production is expected to reach about 50,000 barrels of oil equivalent per day (boed) by 2008. Spinnaker's current production is about 23,000 boed, and expected total reserves are 129 million barrels.
Spinnaker Exploration's key Gulf of Mexico deepwater assets are:
- Front Runner - 25.00 % (oilfield in production)
- Eastern Gulf Spiderman -18.33% (gas field under development)
- San Jacinto - 26.67 % (gas field under development)
- Q - 50.00 % (gas field under development)
- Thunder Hawk - 25.00 % (oil discovery)
Spinnaker Exploration also produces oil and gas from 38 blocks on the shelf of the Gulf of Mexico. Spinnaker Exploration's current SEC reserve base is 62 million boe.
Hydro is already involved in the Telemark and Lorien discoveries in the Gulf of Mexico. Combined with Spinnaker Exploration's assets, Hydro will be a significant player in developing the Gulf of Mexico in the years to come.
Hurricane Katrina has had a minor impact on Spinnaker Exploration's operations. Spinnaker Exploration is presently producing at approximately 90% of its pre-Katrina rate.
Strategic benefits of the transaction:
- Contributes significant acreage for exploration
- Improves upstream margins through significantly higher volumes in a favorable fiscal regime
- Contributes interest in the Thunder Hawk discovery in the Gulf of Mexico and promising satellite prospects
- Positions Hydro to leverage its technical expertise and capitalize on its deepwater competence
- International diversification, with Gulf presence and expanded West Africa exposure through entry into Nigerian deepwater acreage
Norwegian-based Hydro is a leading international oil and gas group, currently producing around 575,000 boed. The Fortune 500 company, which employs about 35,000 in nearly 40 countries, is also the world's third-largest aluminum producer.
Hydro expects to fund the acquisition with cash on hand. It plans to hedge near-term oil and gas production from Spinnaker Exploration to secure short-term cashflow from producing assets.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- UK Oil Regulator Publishes New Emissions Reduction Plan
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- PetroChina Posts Higher Annual Profit on Higher Production
- McDermott Settles Reficar Dispute
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- UK Grid Operator Receives Aid to Advance Rural Decarbonization
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call