Oil & gas news

SHELL IN $1.8BN US OIL DEAL

(BBC, March 26) - Oil giant Shell has agreed to pay $1.8bn (Ј1.3bn) for Pennzoil-Quaker State, the biggest US motor oil company.

The Anglo-Dutch company plans to keep Pennzoil-Quaker States raft of brands, but will be cutting 15% of the firm's staff, about 1,230 people, to eliminate duplications.

The deal is the latest in a wave of mergers and acquisitions in the energy industry, which started last year.

Two weeks ago, Conoco and Phillips Petroleum approved a proposed $15.6bn merger, a move that should eventually create the third-biggest US oil firm.

Pricey purchase

Shell has paid a generous price for Pennzoil.

The firm has offered $22 per share for the US company, and will assume $1.1bn of its debts.

The offer represents a premium of more than 40% over the company's existing share price.

The deal has been approved by Houston-based Pennzoil-Quaker's board and is expected to complete in the second half of this year.

In return, Shell hopes to squeeze annual cost savings of about $140m by 2004.

Jump to the top

The deal will catapult Shell into the leading position in the US lubricants and motor oil market.

Pennzoil-Quaker State is the United States' biggest producer of motor oil, including the Pennzoil and Quaker State brands, and has more than 2,150 Jiffy Lube oil change service stations across the country.

Shell's subsidiary Shell Oil Products US, formerly called Equilon, operates a refining and marketing venture called Motiva with Exxon Mobil and Saudi Aramco.

Its lubricants division employs only 800 staff, compared with some 7,400 at Pennzoil-Quaker State. Royal Dutch/Shell Group is the third-largest petroleum company in the world. Exxon Mobil and BP are the first and second largest, respectively.

Eni MULLS 'FAIR' PRICE FOR ENTERPRISE OIL

(BBC, March 25) - The head of Italian oil and gas group Eni has said the company would pay a small premium to buy Britain's Enterprise Oil, but added he is not interested in a hostile takeover.

"The current price plus a small premium would be the right value," chief executive Vittorio Mincato told the Wall Street Journal Europe.

Enterprise shares, which shot up about 35% in January on bid speculation, were barely changed on Monday morning at about 620p.

Analyst expect a bid by Eni would value the company at about Ј3.86bn, including the group's Ј840m debt.

Mr Mincato said Enterprise's management may ask for 700p a share "but that's not the right price and I'm not ready to pay it".

Eni, the world's sixth largest energy company, declined to say whether it has made an offer after the interview was published but it confirmed that Enterprise was on a short list of bid targets.

Acquisition trail

Enterprise rejected a takeover bid in January, which was rumored to have been from Eni. "It is not useful to negotiate with a management which has said it is not interested in seeking buyers," said Mr. Mincato, adding he was not interested in a hostile bid and would not pay a large premium. If Enterprise receives a higher offer, "I will call (chairman Graham Ahearne) to congratulate him," Mr. Mincato said.

Since 1999, Eni has bought two other independent UK oil companies - British-Borneo and Lasmo - and has said it has more cash to spend on acquisitions.

Mr Mincato's three-year term as chief executive expires at end-May.

JVs PRODUCE HALF OF ONSHORE OIL

(AssA-Irada, March 25) - Joint ventures in Azerbaijan produced over 119,570 tons of oil, over 47% of all crude produced onshore, in the first two months of 2002.

These joint ventures had a long road to cover before they reached agreement on developing SOCAR fields on a parity basis.

Five out of the six joint ventures are currently operating, including Garasu operation company, Anshad Petrol, Azgeroil joint venture, Shirvan oil joint venture and Salyan Oil Ltd.

All the enterprises, excluding Azgeroil, increased production to 2001, as Garasu fulfilled the plan by 103.2%, Anshad Petrol by 109.2 %, Shirvanoil - 102.4 %, and Salyanoil Ltd - 122,4 %. Azgeroil decreased the output with 92.6% available.

The actual production volume by joint ventures in the two months of the year was as follows: Salyanoil-over - 49638 tons, Shirvanoil - 34595, Garasu-21210, Anshad Petrol - 7254, Azgeroil - 6872. However, Garasu and Shirvanoil failed the plan targets with a shortage of 550 tons in January and 4024 tons in February.