Pioneer Natural Resources Co. said it will sell Canadian subsidiary Pioneer Natural Resources Canada Inc. to Abu Dhabi National Energy Co. (TAQA) for $540 million cash in a deal expected to close by the end of the year.
In 2Q2007 Pioneer sold 54.2 MMcf/d of natural gas, 455 b/d of natural gas liquids and 292 b/d of oil from its Canadian properties. By contrast, the company sold 308.3 MMcf/d of natural gas, 17,685 b/d of natural gas liquids and 18,753 b/d of oil from its U.S. operations.
Dallas-based Pioneer expects to use the proceeds of the sale for general corporate purposes, including share repurchases, debt reduction and possibly additional bolt-on acquisitions in existing operating areas. The transaction is not expected to have a significant impact on fourth quarter after-tax earnings, the company said.
“We thank all of our Canadian employees for the value they have created for our shareholders since we acquired these assets 10 years ago. The sale of these assets now will allow us to effectively redeploy capital and enhance our financial flexibility,” said Pioneer CEO Scott D. Sheffield.
The sale was announced just four months after Pioneer said a new natural gas field in northern Alberta was producing at a gross rate of 18 MMcf/d from three wells (see NGI, April 9). Total gas resource potential from the Alberta prospect was estimated to be 50-80 Bcf.
Pioneer, a large independent oil and gas exploration and production company with operations in the U.S., South Africa and Tunisia, has been active in sales and acquisitions over the past 18 months. Last year, Pioneer sold some of its deepwater Gulf of Mexico assets to Marubeni Offshore Production (USA) Inc., a subsidiary of Marubeni Corp., for $1.3 billion (see NGI, April 3, 2006). The deal included Pioneer’s interests in three producing projects (Falcon Corridor, Devils Tower and Canyon Express), two potential development projects (Ozona Deep and Thunder Hawk) and 87 exploration blocks (see NGI, Feb. 27, 2006).
In July, Pioneer agreed to acquire an interest in approximately 30,000 net acres in the Raton Basin of southwestern Colorado for $205 million from Petrogulf Corp., and also made a regulatory filing for the initial public offering of units in a new master limited partnership (MLP) to hold its West Texas assets (see NGI, July 30). Pioneer has said it will spin off its Raton Basin properties to an MLP in 2008 (see NGI, April 30).
TAQA, which was founded in Abu Dhabi in 2005, is a global energy company with operations in power generation, desalination, renewables, upstream oil/gas, pipelines, gas storage and liquefied natural gas. TAQA subsidiaries provide more than 85% of the electricity and water in the Emirate of Abu Dhabi.
In May, Pogo Producing Co. sold Canadian subsidiary Northrock Resources Ltd. to TAQA for $2 billion in cash (see NGI, June 4). Northrock’s properties, which currently produce 29,000 boe/d, are located primarily in Alberta, Saskatchewan and the Northwest Territories. At year-end 2006 Northrock had 706 Bcfe of estimated proved reserves, with 51% of the output and 55% of the reserves in oil. When the Pogo acquisition was announced, TAQA CEO Peter E. Barker-Homek said his company viewed the Northrock deal “as a solid base for further investments and growth in Canada.”
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