Pioneer Natural Resources Co. has closed the sale of Canadian subsidiary Pioneer Natural Resources Canada Inc. to Abu Dhabi National Energy Co. (TAQA) for $540 million cash, the Dallas-based company said Tuesday.
Pioneer expects to record a gain on the sale in excess of $85 million and to pay little or no income tax related to the sale. The company said financial guidance and estimated 2007 all-in finding and development costs provided during its recent 4Q2007 presentation remain unchanged.
Pioneer reported net proved reserves from its Canadian operations of 31.1 MMboe at the end of 2006. Net production from Canadian operations averaged approximately 8,600 boe/d during the third quarter. 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.
Pioneer will use proceeds from the divestiture and cash it expects to receive in connection with the initial public offering (IPO) of limited partnership interests by a subsidiary to fund three previously announced acquisitions of oil and gas properties in its onshore U.S. growth areas. In July Pioneer said it had agreed to acquire an interest in approximately 30,000 net acres in the Raton Basin of southwestern Colorado for $205 million from Petrogulf Corp. (see Daily GPI, July 31). Two other acquisitions — a $150 million deal for an interest in approximately 74,000 gross acres in the Barnett Shale and a $90 million deal for approximately 44,000 gross acres in the Spraberry field in West Texas — were announced in early November (see Daily GPI, Nov. 7). All three deals are expected to close before the end of the year.
“The Raton, Spraberry and Barnett Shale acquisitions increase our inventory of proved drilling locations to fuel future production growth and provide many additional low-risk step-out drilling opportunities with the potential to significantly increase proved reserves,” said Pioneer CEO Scott Sheffield.
Pioneer has said it will spin off its Raton Basin properties to a master limited partnership in 2008 (see Daily GPI, April 24). Subsidiary Pioneer Southwest Energy Partners LP made a regulatory filing for its IPO offering of common units in a master limited partnership to hold exploration and production assets in West Texas in July (see Daily GPI, July 27). At the time the company said it anticipated offering 12,500,000 common units representing a 44.4% limited partner interest in Pioneer Southwest Energy; assuming an IPO price of $20/unit and that underwriters do not exercise their over-allotment option, estimated gross proceeds from the offering would be $250 million.
The sale of Pioneer’s Canadian assets was announced in August, 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 Daily GPI, Aug. 24, April 4). Total gas resource potential from the Alberta prospect was estimated to be 50-80 Bcf.
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.
CEO Peter Barker-Homek has said TAQA “has a vision to build a global blue chip company by investing in energy companies across the value chain, from wellhead to burnertip,” with an emphasis on Canadian properties. That vision materialized this year through the Pioneer deal and two other major acquisitions. In May TAQA North Ltd., formerly Northrock Resources Ltd., was renamed after TAQA bought it from Pogo Producing Co. for $2 billion in cash (see Daily GPI, May 30). The Calgary-based oil and gas exploration company has operations in Alberta, British Columbia, 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.
In September two of TAQA’s Canadian subsidiaries, TAQA North Ltd. and 1350849 Alberta Ltd., agreed to acquire Calgary-based PrimeWest Energy Trust for approximately $5 billion (see Daily GPI, Sept. 25). PrimeWest said last week that the Court of Queen’s Bench of Alberta has granted a final order approving the acquisition and PrimeWest stockholders have voted in favor of the deal. The transaction will provide TAQA with an additional 285,000 bbl of proved plus probable reserves, production in excess of 61,000 boe/d and more than 1.1 million acres of strategic undeveloped land.
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