• ChevronTexaco (NYSE: CVX) has its eye on Unocal (NYSE: UCL), according to the Wall Street Journal. Unocal shares rose 10% on the news. "Strategically, the fit is good," says Deutsche Bank analyst Paul Sankey. "In terms of M&A strategy, the move looks weak, given that Unocal has been seen as a takeout candidate for arguably five years, and ChevronTexaco has had the financial firepower for a move for at least six months, and may have been triggered into a move by the CNOOC appetite, similar to Eni's failed bid for Enterprise Oil catalyzing Shell to pay handsomely." He adds that ChevronTexaco has growth issues. "Overall we are positive from an asset-fit perspective, but concerned about any price less than $60 [for Unocal]." Sankey had a Hold rating on the stock and price target of $65. • The National Oilwell and Varco International merger has been cleared for consummation. The U.S. Department of Justice decided to not challenge the deal and to not require any asset sales despite the combined company's estimated 50% to 60% share of the drilling rig-equipment market. "The combination comes at the beginning of a new rig-building and rig-upgrade equipment upcycle, in our view," says W. Kevin Wood, an analyst with Susquehanna Financial Group. He rates National Oilwell's shares Continued Net Neutral. Any downside? "The bear case for NOI is that management is now focused on merger integration versus core operations in the current upcycle," Wood says. • Petro-Canada, Calgary, (NYSE: PCZ) plans to become a partner in the Fort Hills oil-sands mining project, owned by UTS Energy Corp. Petro-Canada will assume a 60% interest and become operator of the project. Petro-Canada will also fund 75% of UTS' share of the next C$1 billion of development capital, or C$300 million. "This partnership builds on Petro-Canada's oil-sands experience and adds the next leg of our growth strategy," says Ron Brenneman, Petro-Canada president and chief executive officer. "Oil-sands mining, integrated with upgrading, offers decades of substantial production with solid returns. The Fort Hills project offers a high-quality mining lease that has already achieved regulatory approval and that can be brought onstream by the end of the decade." UTS is currently the owner of a block of oil-sands leases north of Fort McMurray, Alberta, and plans to develop 2.8 billion bbl. of bitumen resource. Current plans include an initial mining development producing 50,000 bbl. per day. • Nexen Inc. (NYSE: NXY) plans to raise C$1.5 billion through the sale of noncore assets in 2005. "We have retained financial advisors to advise us on market conditions and alternative structures for maximizing the value of our chemicals assets and certain Canadian conventional assets," the company reports. • NAL Oil and Gas Trust, (Toronto: NAE) has completed the purchase of Addison Energy Inc., the Calgary-based subsidiary of Exco Resources Inc., Dallas, for C$553.3 million, which will be financed through an equity issuance and the trust's revolving credit. Through this acquisition, NAL has gained production of 7,700 BOE per day (62% gas) from the assets, the majority of which are in central Alberta in NAL's existing core areas of Sylvan Lake/Medicine River and Joffre. Approximately 90% of the properties are operated, with an average working interest of 87%. Proved and probable reserves associated with the properties total some 29.1 million BOE, with a reserve life of 10.6 years. Numerous low-risk development opportunities exist, in addition to coalbed-methane potential in Horseshoe Canyon and the Nevis/Lacombe area. Waterous & Co. was advisor to Addison. • Dominion (NYSE: D) has agreed to a $424.4-million volumetric production payment (VPP) with UBS Investment Bank. Dominion will receive cash for a fixed-term overriding royalty interest in more than 2,900 producing gas wells in Utah, New Mexico, Alabama, West Virginia and Michigan. UBS will receive 76.4 billion cu. ft. of gas during the next four years, delivered at an initial rate in excess of 67 million cu. ft. per day, declining to approximately 43 million per day at the end of the four-year term. Total 2005 volume will be 19.8 billion cu. ft. This is Dominion's third VPP deal since 2003. • BreitBurn Energy LP, the U.S.-based subsidiary of Provident Energy Trust, Calgary, (Toronto: PVE; Amex: PVX) has closed the C$95.8-million acquisition of U.S.-based Nautilus Resources LLC. Funding was provided by a bought-deal financing. The acquired operations are in the Big Horn and Wind River basins of Wyoming. Current production is approximately 2,300 BOE per day (99% oil). The properties have been on production for 60 to 90 years with 150 active producing wells and 24 active water-injection wells. The acquisition includes 10.6 million bbl. of proved producing reserves, 17.1 million bbl. of total proved reserves and 20.1 million bbl. of proved-plus-probable reserves. • KCS Resources Inc., a subsidiary of KCS Energy Inc., Houston, (NYSE: KCS) plans to acquire a package of properties in its North Louisiana-East Texas core area for $94.7 million. The properties have current production of 7 million cu. ft. of gas equivalent per day and net proved reserves of 48 billion cu. ft. of gas equivalent, two-thirds of which are undeveloped. "This acquisition includes acreage adjacent to one of our existing key areas and will allow us to expand the drilling program which has been so successful for KCS," says William N. Hahne, president and chief operating officer. "Our staff has identified 185 drilling locations associated with these properties for which no proved reserves have been assigned."