Surgutneftegas and MOL in $2.7 billion deal

Oil and gas transactions slowed to a tepid pace during the 30-day period between May 16 and June 15. The largest deal was an international transaction announced on May 24 involving Russian oil major Surgutneftegas and Hungarian oil and gas company MOL.

Hungary is expected to pay 1.88 billion euros (about US$2.7 billion) to buy back Surgutneftegas's 21.1% stake in the Hungarian energy company. The Russian company had acquired the stake in MOL from Austrian oil company OMV A.G. for 1.4 billion euros (about US$2.02 billion) in March 2009. MOL considered Surgutneftegas to be a financial investor only and denied any other type of cooperation with the Russian company. Surgutneftegas has close ties to the Russian government and Vladimir Putin, and many Hungarians believed the 2009 acquisition amounted to unnecessary involvement by Moscow in Hungarian affairs.

Funds to purchase the stake will come from a loan taken out from the International Monetary Fund, and the transaction must be approved by the Hungarian parliament. The deal is expected to close by September 1.

In a deal announced May 17, BP said it would sell its interests in the Wytch Farm, Wareham, Beacon, and Kimmeridge fields in the North Sea to Perenco UK Ltd. for up to US$610 million in cash. The price includes US$55 million contingent on Perenco's future development of the Beacon field and on oil prices in 2011 to 2013.

Other shareholders in the fields include London-based Premier Oil plc, A.P. Moeller-Maersk A/S, Talisman Energy Inc., and a unit of Sumitomo Corp.

The sale is part of BP's previously announced plan to divest up to $30 billion in assets by the end of 2011 to help pay for financial damages for the 2010 Macondo well blowout and oil spill in the Gulf of Mexico. Before this announcement, BP had already announced sales agreements totaling around $25 billion.

The UK's Tullow Oil plc was the purchaser in two separate transactions. On May 24, the company said it had entered into an agreement to acquire Nuon Exploration and Production for 300 million euros (about US$432 million) from the Vattenfall Group. The acquisition will enhance Tullow's North Sea business by adding a portfolio of licenses that include over 30 producing fields, numerous development and exploration opportunities, and ownership of key infrastructure. The portfolio will increase Tullow's North Sea gas production to about 23,000 boe/d and add reserves and resources of about 28 MMboe.

In a second deal announced on May 26, Tullow said it will acquire the interests of EO Group Ltd., consisting of its entire interests offshore Ghana, for a combined share and cash consideration of US$305 million. The acquisition will increase Tullow's interest in the West Cape Three Points license offshore Ghana by 3.5% to 26.4% and increase the company's interest in the Jubilee oil field, which Tullow operates, by 1.75% to 36.5%.

In US transactions, Linc Energy's subsidiary, Linc Gulf Coast Petroleum Inc., has acquired 14 producing oil fields from ERG Resources LLC for US$236 million. The fields are located in Texas and Lousiana and produce about 3,300 barrels of oil per day. All of the fields are 100% operated by ERG Resources, which holds 100% of the working interest in most of the fields.

Linc Energy is also acquiring 85.5% interest in Renaissance Umiat LLC, which owns a 100% working interest in the Umiat project in Alaska, for $50 million. Closing is set for July 6.

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