Nexen to buy EnCana unit for $2.1B
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by Peter Moreira
TheDeal.com
Updated 11:19 AM EST, Oct-29-2004
Calgary, Alberta-based oil and chemical company Nexen Inc. agreed Friday, Oct. 29, to buy a U.K.-based subsidiary of crosstown rival EnCana Corp. for $2.1 billion in cash to expand into the British sector of the North Sea.
The two Albertan oil giants said in statements that the deal, which they expect to close Dec. 1, will give Nexen the EnCana (U.K.) Ltd. stakes in the Buzzard, Scott and Telford fields in the North Sea and interests in about 740,000 undeveloped acres of exploratory blocks.
The Buzzard field is expected to reach peak production of about 80,000 barrels a day in 2007, while Scott and Telford now produce about 19,000 barrels of oil and gas per day, said the Nexen statement.
Nexen, formerly called Canadian Occidental Petroleum Ltd., said it would finance the deal with $600 million in cash on hand and bridge financing from a lender. It will eventually reduce the debt by cash flow, said Canada's fourth-largest oil explorer.
EnCana, North America's leading independent oil and gas explorer, said it also plans next year to sell interests in Ecuador and the Gulf of Mexico, so all of its production will be from onshore North American fields.
It said it plans to record an after-tax charge of more than $1 billion for the sale of its U.K. assets. It will pay no tax on the U.K. divesture and use the proceeds of all the disposals to reduce debt and buy back stock.
Deutsche Bank AG advised Nexen. |
