Kerr-McGee to sell UK assets worth over $ 210 mm

Apr 17, 2005 02:00 AM

Kerr-McGee, the US oil and gas giant, is poised to offload at least $ 210 mm of assets from its $ 1.7 bn UK portfolio, according to industry sources.
The Oklahoma-based company has announced plans to sell assets with "short life" reserves, mainly in the Gulf of Mexico and the North Sea, worth between $ 2 bn and $ 2.5 bn.

It has yet to reveal which of the 20 interests it owns in UK fields it will sell. Industry sources said Kerr-McGee will sell its non-core holdings including its stakes in Brae Area field in the North Sea, worth at least $ 120 mm, and in Wytch Farm, an on-shore field in England, worth around $ 30 mm. Sources expect it to sell its stake in the Scott Area field in the North Sea for $ 60 mm.
The assets are expected to attract strong interest from a number of smaller independent oil and gas operators, who are increasingly taking stakes in North Sea fields as the assets mature.

Kerr-McGee made the decision to dispose of some assets and to launch a $ 4 bn share buy-back scheme to appease Carl Icahn, the American corporate antagonist. Icahn launched a campaign against Kerr-McGee last year in an attempt to force it to sell its chemicals business, and repurchase shares worth as much as $ 10 bn.
Industry sources said Kerr-McGee would try to avoid selling stakes in its two major North Sea fields -- Quadrant 9 and Janice -- which make up the vast bulk of its estimated $ 1.7 bn UK portfolio. But the source said: "They may sell -- it depends how much money they need to raise".

A spokesperson for Kerr-McGee said: "We have not provided more details on the asset sales but you will note that we are planning to high-grade our oil and gas portfolio to longer life, less capital intensive properties.”
"We plan to sell shorter-life, high-production decline assets in several areas, including all of the shelf properties in the Gulf of Mexico, some properties in the UK sector of the North Sea, all properties in the Powder River Basin and selected assets in the US onshore southern division."

Rhodri Thomas, an analyst at Edinburgh-based oil and gas consultancy Wood Mackenzie, said independents would pick up any parts of the business Kerr-McGee decided to sell. He said: "There's plenty of people who will want to buy the assets - they should have no problems selling."
The North Sea represented 20 % of Kerr-McGee's reserves at the end of 2004, and around 25 % of its production volumes for that year.

Source: Scotsman
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