Acquisition of Spinnaker completed

December 13, 2005, 18:00 CET
Spinnaker Exploration Company on Tuesday adopted the merger agreement with Norsk Hydro ASA, approved by the Board of Directors of both companies in September.

A majority of the votes supported the merger. Hydro would later the same day complete the acquisition in an all-cash transaction for USD 2.45 billion.

Hydro will pay USD 65.50 per share in cash for all outstanding shares of Spinnaker Exploration. Hydro will also assume approximately USD 137 million in net interest-bearing debt.

High-quality development projects

Spinnaker Exploration Company is engaged in exploration, development and production of oil and gas, mainly in the Gulf of Mexico. It has about 80 employees in Houston, who will join Hydro’s Gulf of Mexico business unit.

Spinnaker’s portfolio contains a number of high-quality development projects. Total production is expected to reach about 50,000 barrels of oil equivalents (boe) per day by 2008. Spinnaker’s total production rate during the first half of 2005 was 22,845 boe per day. Expected total reserves are 129 million barrels of oil equivalents.

Spinnaker Explorations key Gulf of Mexico deepwater assets are:

  • Front Runner - 25.00% (oilfield in production)
  • Spiderman - 18.33% (gas field under development)
  • San Jacinto - 26.67% (gas field under development)
  • Q - 50.00% (gas field under development)
  • Thunder Hawk - 25.00% (oil discovery)

Spinnaker Exploration also produces oil and gas from 38 blocks on the shelf of the Gulf of Mexico. Spinnaker’s SEC reserve base as of June 30, 2005 was 62 million boe.

Spinnaker’s portfolio includes significant exploration acreage, comprising deepwater and deep-shelf prospects, as well as an extensive seismic database covering most of the Gulf of Mexico. It also contains interesting exploration positions in Nigeria.

Hydro is already involved in the Telemark and Lorien discoveries in the Gulf of Mexico. Combined with the assets of Spinnaker, Hydro expects to be a significant player in the Gulf of Mexico in the years to come.

Secured prices

As announced November 21, 2005, Hydro has entered into a price hedging program for the majority of Spinnaker Exploration’s expected oil and gas production for the period 2006 to 2008. Hydro has secured the crude oil price (West Texas Intermediate reference) between USD 45/boe and USD 71.45 boe for a total volume of 15.4 million boe for the three-year period at zero premium paid by Hydro. Additionally, Hydro has purchased natural gas put options with a strike price (Henry Hub reference) of USD 7.5 per mmbtu (million British thermal units) for a total volume of 121,050,491 mmbtu, equivalent to 20.5 million boe for the three-year period. The option premium per mmbtu is USD 0.78 and will be paid monthly during the hedging period. Effectively, Hydro has established a minimum price floor for the hedged gas volume of USD 6.72 per mmbtu.

Contact persons

  • Tor Steinum, Corporate Communications, cell phone +47 95083933
  • Kristin Brobakke, Corporate Communications, cell phone +47 91840681
  • Kama Holte Strand, Oil & Energy Communications, cell phone +47 91728838
  • Hydro/Spinnaker Exploration Company
    1200 Smith St., Ste. 800 Houston, TX 77002, USA
    Phone +1 713-759-1770, Fax +1 713-759-1773