Petro-Canada joins EnCana at Buzzard

North Sea discovery now 75% Canadian owned

Don Whiteley

Petroleum News Contributing Writer

Petro-Canada said May 25 that it will pay US$840 million to participate with EnCana Corp. in developing one of the North Sea’s biggest oil discoveries — the Buzzard field. The acquisition makes Buzzard a largely Canadian operation, with more than 75 percent controlled by the two large Canadian companies.

Petro-Canada said its interest will come through a purchase of Intrepid Energy North Sea Ltd., which owns 29.9 percent of the Buzzard oil field in the British sector of the North Sea. The Buzzard field, 100 kilometers northeast of Aberdeen, is expected to begin oil production by the end of 2006, with Petro-Canada’s share estimated at 60,000 barrels per day. Buzzard is the largest U.K. North Sea oil field discovered in over a decade.

Petro-Canada Chief Executive Officer Ron Brenneman said the Buzzard share is a “perfect fit” with the company’s international growth strategy.

“This is a value-adding transaction for Petro-Canada, consistent with our disciplined approach to investment,” Brenneman said. “The U.K. North Sea is an excellent place to do business, and we expect this asset to continue our history of profitable production in the region. We see technical and operational upside at Buzzard and we believe this field will continue the region’s track record of big fields getting even bigger over time.”

Brenneman said at a press conference that although his company’s preference is to be the operator of projects it’s involved in, Petro-Canada is prepared to make an exception with Buzzard.

“We saw the opportunity to acquire a sizable interest in a very, very high quality asset and in this case, the trade-off is not being operator and we’re quite comfortable with that,” he said, according to Canadian Press reports.

“We believe that EnCana is a very confident operator. We also believe that we have some experience that we can bring to bear with our own experience offshore of the East Coast and also in the U.K. North Sea, so I think we’ll make a pretty good combination as a partner in this venture.”

A privately owned company based in London, Intrepid has been selling off its North Sea assets. Talisman Energy Inc. paid Intrepid US$137.5 million to boost its ownership in its two major operating areas in the North Sea, adding 44 million barrels of proved and probable reserves.

EnCana remains the operator at Buzzard with a 43 percent stake, while Petro-Canada is number 2 with its nearly 30 percent share. Other partners include BG Group with 22 percent and Edinburgh Oil and Gas PLC with 5 percent.