ChevronTexaco sells Western Canadian assets

Global energy giant ChevronTexaco is the latest international energy company to exit Western Canada's conventional oil and gas industry, selling non-core assets to two Calgary energy trusts for about $ 800 mm.
In a deal, Enerplus Resources Fund and Acclaim Energy Trust will band together to buy ChevronTexaco's 13 producing oil and gas fields in western Canada in a deal worth nearly C$ 1.1 bn.

Then in a separate transaction, the two trusts will hive off $ 189 mm worth of former ChevronTexaco lands in the Fort Liard area in the Northwest Territories and northeast British Columbia to Calgary-based Paramount Resources.
"These assets have played a significant role in our history in Canada for the past 65 years," Chevron Canada president Alex Archila said. "While they have been a profitable part of our portfolio for many years, the combination of current market conditions and the size of the assets relative to our portfolio makes this an ideal time for a divestiture."

The company said the sale will allow it to focus on "new growth areas in Canada" which include a minority stake in the $ 5.7 bn Athabasca oilsands project, natural gas holdings in the Mackenzie Delta region of the Northwest Territories and exploration off Canada's East Coast.
ChevronTexaco's sale follows a trend set over the past year where larger international companies sell their more mature producing lands in Western Canada in order to focus on large new projects or internationally. Last August, Houston-based producer Marathon Oil sold its mature western Canadian assets to Husky Energy for about C$ 783 mm.

Earlier this year, Arkansas-based Murphy Oil sold oil and gas assets in the Western Canadian sedimentary basin for $ 830 mm to the Pengrowth Energy Trust and Canadian Natural Resources. Energy analyst Wilf Gobert at Calgary-based Peters & Co. said the dispositions are a combination of the maturity of the oil and gas basin, combined with good market conditions for a sale.
"The natural gas industry stopped growing acouple years ago and may or may not get back," he said. "That's been a huge watershed, I would say, that despite enormous record cash flows and enormous record activity, that industry gas production has not been able to grow."

Gobert also the major oil companies are "extremely oriented to a return on capital employed," leading to a desire to get out of what they view as high-cost properties. This means higher costs to operate as well as higher costs to replace the reserves.
Earlier, Chevron Canada also sold EnerPro Midstream -- which owns several natural gas and oil facilities throughout Alberta and a natural gas liquids fractionation plant at Fort Saskatchewan -- to KeySpan Facilities Income Fund for about $ 190 mm.

Chevron Canada hinted last fall that it was looking into selling some of its older Canadian assets as the burgeoning energy trust sector in the Canadian oilpatch has pushed up asset prices to record levels.
"We are excited to have secured these high-quality, legacy assets which are extremely complementary to our current properties in central, western and northern Alberta, and provides us with a position in long-life, high-quality production in western Manitoba," Acclaim president and CEO Paul Charron said.

Under the deal, Acclaim will spend nearly $ 437 mm to acquire production of about 17,000 bpd of oil equivalent increasing Acclaim's overall production to more than 42,000 bpd. The deal will also increase Acclaim's total proved reserves to nearly 100 mm boe.
Enerplus will spend $ 466 mm to acquire about 11,500 barrels of conventional crude oil and natural gas producing properties, weighted 54 % to crude oil and natural gas liquids and 46 % to natural gas. Approximately 19.3 mm barrels of proved reserves and 33.4 mm barrels of probable reserves are being added to Enerplus reserves.

For Paramount, the acquisition gives the company major new operations near its largest core area and will add about 10,000 bpd of oil, natural gas and liquids production to the company.
ChevronTexaco, based in San Ramon, California, was formed from the merger of Chevron and Texaco a few years ago and has grown into the second-largest US-based energy company and fifth largest in the world, with more than 50,000 employees.