As I've said before, many big oil companies have a little conundrum to deal with -- their reserves are shrinking, and production growth is under considerable stress. Well, just because Norway's Norsk Hydro (NYSE:NHY) is not one of the true titans of the oil world, that doesn't mean it is immune from the very same problem.

So what do you do when you're an oil company facing declining fields? You go shopping. And Norsk Hydro has done precisely that, announcing a $2.6 billion deal to acquire Houston-based Spinnaker Exploration (NYSE:SKE) for $65.50 per share in cash. That price is a hefty premium (more than 34%) to Spinnaker's Friday close.

Assuming that the deal goes through, Norsk Hydro will be buying a company with substantial operations in the Gulf of Mexico and some nascent opportunities off the coast of West Africa -- in particular, Nigeria. In addition to those properties already producing oil and gas, Spinnaker has a trove of seismic data that could lead to future discoveries.

It seems pretty clear that Norsk Hydro is optimistic about Spinnaker's ability to boost production in the future. In fact, the company believes that the acquisition will increase annual international production by 40% from 2005 to 2008. While Spinnaker currently produces about 23,000 barrels of oil equivalent per day, Norsk looks for this figure to more than double by 2008, though that will still be a small fraction of Norsk's production volume of about 575,000 barrels of oil equivalent per day.

Frankly, I'm a bit surprised at the price tag involved. Looking at proven reserves of about 62 million barrels of oil equivalent, Norsk Hydro seems to be paying more than $41 per barrel for Spinnaker -- a sharp premium to the price tags for recent deals like PetroKazahkstan (NYSE:PKZ) and Chevron's (NYSE:CVX) purchase of Unocal. I realize that Norsk Hydro is up against the probability that the North Sea is now on the decline, but that seems like an awfully steep price to pay unless Spinnaker's seismic data point to some major new opportunities that haven't been accounted for yet.

For those who held Spinnaker and are getting a nice chunk of cash in return, congratulations. Should this prove to be the beginning of a trend in terms of pricing for deals in the oil sector, there will be many investors in other independent oil companies licking their chops in the months and quarters to come.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).