On Sept 19, Norsk Hydro ASA, the 2nd largest petroleum company in Norway announced it will buy U.S.-based oil and gas company Spinnaker Exploration Co. for $2.45 billion. Hydro hopes to obtain the right to exploit oil in the Gulf of Mexico through the deal.

It is reported that Hydro will complete the acquisition with cash. In the meantime, Hydro agreed to assume Spinnaker's debt of $ 110 million. The buying price of $2.45 billion is 34 percent higher than Spinnaker's market value.

"We believe that the deepwater potential in the Gulf of Mexico is considerable," said Hydro President Eivind Reiten. He said the deal is a breakthrough in the company's global strategies.

An analyst in Oslo said, "It's a fairly high price, but due to the substantial upside potential, it may be worth it."

Over 30 years' exploitation has led to sharp decrease in the oil reserve at the North Sea. Hydro and its rival Statoil ASA have been looking for new oil sources. In this April, Statoil ASA acquired Encana Corp.'s $2 billion Gulf of Mexico assets.

Hydro said the deal will raise its productive capacity by 40 percent from 2005 to 2008. By 2008, Spinnaker's output will reach 50,000 barrels per day, two times higher than its current output.

High profit brought by high oil price has triggered more mergers in the oil and natural gas industry. It is becoming harder and harder for buyers to find a new exploitation field. Companies including Chevron, TotalSA, Kerr-McGee and Premcor have begun massive mergers. Statistics show the aggregate value of mergers by the above-mentioned companies has reached $ 99.8 billion, an increase of $ 90 billion than 2004.

By People's Daily Online