Norsk Hydro ASA, Norway's second-largest oil company, agreed to buy Spinnaker Exploration Co. of the U.S. for $2.45 billion to gain fields in the Gulf of Mexico as production from the North Sea declines.
Norsk Hydro will pay $2.45 billion in cash, or $65.50 a share, and assume $110 million in debt, Chief Executive Eivind Reiten said today at a press conference in Oslo. The price is 34 percent higher than Spinnaker's closing price last week.
The Oslo-based petroleum and light metals company said the deal had been approved by the boards of both companies and was expected to be completed in the fourth quarter, according to the AP.
"Following completion of the acquisition, Hydro expects annual international production growth in 2005-2008 of approximately 40 percent," the company said.
Hydro is following rivals including Norway's Statoil ASA in buying energy assets as soaring oil and gas prices lead to record profits and new fields become more difficult to find. With its 350 exploration leases, Spinnaker will make Hydro one of the top 10 license holders in the Gulf of Mexico, the company said.
Oil and gas companies including Chevron Corp., Total SA, Kerr- McGee Corp. and Premcor Inc. this year have announced takeovers valued at $99.8 billion, up from $90 billion in all of last year, according to data compiled by Bloomberg. In April, Statoil agreed to buy deep-water assets in the Gulf of Mexico from Canada's EnCana Corp. for $2 billion.
The acquisition of Spinnaker will increase Hydro's expected average annual international production growth from 2005 to 2008 to 40 percent, the company said. Hydro and Statoil are seeking new reserves abroad and in the Arctic to make up for dwindling oil production in the North Sea.
Spinnaker's output is planned to more than double to 50,000 barrels of oil equivalents daily by 2008 from 23,000 barrels now.