Acclaim Energy Trust and Enerplus Resources Fund, two large Canadian income trusts, have snapped up ChevronTexaco Corp.’s Western Canadian exploration and production assets, including 13 producing fields with about 38,500 bbl/d of production, for US$800 million.

Some of the assets also will go to Paramount Resources, another Canadian trust, which announced a separate $138 million transaction for the oil and natural gas assets in the Kaybob area in central Alberta and in the Fort Liard area in the Northwest Territories and northeastern British Columbia.

The latest sale by San Ramon, CA-based company follows two massive divestitures last week. “We’re rationalizing our upstream portfolio to strengthen our competitive position by selling non-strategic assets and retaining those fields that represent long-term value for ChevronTexaco,” said Vice Chairman Peter Robertson. “Our strategy in North America is to streamline the portfolio to include approximately 400 core fields that account for the vast majority of current production and cash flows.”

The super major started its North American portfolio optimization program earlier this year, targeting for sale properties in 15 U.S. states and Canada (see Daily GPI, Feb. 2). Last week, it sold 150 onshore U.S. producing assets to Fort Worth-based independent XTO Energy Inc. for $1.1 billion (see Daily GPI, May 18). It also sold Alberta-based EnerPro Midstream Co., including five gas processing plants and gathering in the Western Canadian Sedimentary Basin, to KeySpan Facilities Income Fund for C$268.5 million.

Earlier this year, CEO Dave O’Reilly said the organization set a goal of cutting its development costs by $1 per barrel over the next 12 months. However, the move also is part of a long-term shift among the majors away from low-return legacy assets in North America toward mega-projects overseas. ChevronTexaco also is moving forward with a global gas strategy that includes targeting North American and Asian markets through expanded gas liquefaction and delivery operations.

This latest Canadian asset sale includes about one-third of ChevronTexaco’s Canadian operations. “These assets have played a significant role in our history in Canada for the past 65 years,” said Alex Archila, president of Chevron Canada Resources. “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.”

ChevronTexaco has found eager buyers among the Canadian income trusts, who are flush with cash right now because of $6-plus natural gas prices and $40 oil. Trusts use most of their cash flow to make regular payouts to unit holders, who get favorable tax treatment. The sector has been furiously scooping up assets.

Enerplus will spend US$340 million for its share of the mostly Alberta and Manitoba properties and Acclaim will pay US$316 million. The two trusts also will sell some Alberta, British Columbia and Northwest Territories assets to Paramount Resources for C$138 million. Enerplus’ share of the assets will add 11,500 boe/d of production, 54% of which is oil and natural gas liquids (NGL), and 33.4 million boe of proved reserves. Acclaim will get 17,000 boe/d, 7% of which is oil and liquids.

Paramount Resources snagged the properties that are located adjacent to or near its existing operations at Kaybob and Fort Liard. The acquired assets are currently producing 10,000 boe/d, including 40 MMcf/d of gas and 3,300 bbl/d of oil and NGLs. Paramount said the proved reserves total 47.2 Bcf of gas and 4.4 million bbls of oil and NGLs.

“Overall, these are high netback properties with considerable future development potential,” said Acclaim CEO J. Paul Charron. Acclaim said the deal is expected to be more than 25% and 30% accretive to cash flow per unit in 2004 and 2005.

Enerplus said it sees significant upside potential for both reserves and production. “The opportunities identified on the acquired properties will allow Enerplus to maintain and enhance production volumes through 2005 with minimal invested capital,” the company said. Enerplus said the deal would be 15% accretive to cash flow per trust unit in 2004 and should provide greater than 10% accretion through 2007.

ChevronTexaco plans to retain some of its big-ticket Canadian holdings, including a 20% stake in the C$5.7 billion Athabasca oil sands project, Mackenzie Delta gas, East Coast exploration including oil projects off Newfoundland such as Hibernia, and the company’s refining and marketing operations.

It said it expects to record a significant gain to income upon close of the latest sale, which is anticipated to occur at the end of the second quarter or during the third quarter of this year. The transaction is expected to close on June 30.

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