Industry Briefs

Comstock adds to Eagle Ford acreage

Frisco, TX-based Comstock Resources Inc. has acquired Eagle Ford shale acreage in East Texas from Ursa Resources Group II LLC. Ursa, backed by private equity firm Denham Capital, holds over 40,000 net mineral acres under lease in Burleson, Bastrop, and Lee counties, TX. Comstock will acquire 70% of Ursa's interests in certain oil and gas properties in Burleson and Washington Counties, Texas for $66.5 million. The properties include one well producing 433 barrels of oil equivalent per day (boed) (227 boed, net to the interests being acquired) and approximately 32,000 gross acres (20,000 net) prospective for oil in the East Texas Eagle Ford shale. Comstock anticipates moving one operated rig to the properties in early 2014 and estimates that it will drill 10 operated wells on the acreage in 2014. The deal, valued by Global Hunter Securities analysts at roughly $2,700/net acre based on $50K/net flowing boe of production, "rounds out CRK's $120MM new venture leasehold program," the analysts noted following the announcement.

In a November 2013 corporate presentation, Comstock pointed to a $120 million budget for acreage acquisitions in oil plays as part of its effort to boost its 2013 production to comprise 20% oil. The company expects its Eagle Ford shale program to be the largest contributor to oil production growth in 2013 and 2014 with a plan to drill 76 (49.6) wells in the oil window of the play.

Talisman to sell portion of Montney position

Talisman Energy Inc. has agreed to sell part of its Montney acreage in northeast British Columbia to Progress Energy Canada Ltd. for a total cash consideration of US$1.4 billion (CDN$1.5 billion). The sale includes 75% (roughly 127,000 net acres) of Talisman's Montney position in the Farrell Creek and Cypress areas of British Columbia. As of October 1, 2013, Farrell Creek production was 65 MMcfe/d, which is expected to increase in the fourth quarter. Also, the transaction represents the sale of approximately CDN$800 million of remaining third party capital carry estimated at 2013 year end (CDN$870 million at effective date October 1, 2013). The sale brings the company closer to achieving the $2-$3 billion asset disposition target set in March and enables the company to strengthen its focus on the Edson-Duvernay producing and development assets. Proceeds are expected to help pay down debt and strengthen the company's balance sheet. Talisman retains its Groundbirch and Saturn assets including approximately 48,000 net acres of prospective Montney land. Jefferies LLC and Scotiabank acted as joint advisors to Talisman.

Black Ridge buys Williston Basin assets for $20.5M

Black Ridge Oil and Gas Inc., an exploration and production company focused on non-operated Bakken and Three Forks properties, has agreed to aquire certain producing oil and gas wells and development acreage in the Williston Basin from a private party for $20.5 million. Black Ridge will finance the acquisition with availability from its senior secured credit facility with Cadence Bank NA, its second-lien credit facility with Chambers Energy Management LP, and cash on hand. In conjunction with the closing of the transaction, Cadence has agreed to increase the company's borrowing base from $7.0 million to $18.0 million. Black Ridge expects the acquisition to close on or before Dec. 13.

Radiant completes credit facility, acquisition

Radiant Oil & Gas Inc. has completed the purchase of oil and gas properties in Louisiana and Mississippi for $19 million in a combination of cash and Radiant shares. Radiant also announced the closing of a $40,600,000 senior credit facility arranged by WoodRock & Co. In addition to funding the cash portion of the acquisition, proceeds from the credit facility will allow Radiant to develop multiple re-entry, work-over and drilling opportunities on acquired acreage throughout south Louisiana and Mississippi. The acquired properties contain over 80 wells. The Louisiana properties include over 39 wells and numerous leases in Catahoula, Concordia, La Salle and St. Mary's parishes. The Mississippi properties include over 41 wells and numerous leases in Adams, Amite, Franklin, and Wilkinson counties. The properties include up to 24 productive wells and up to 36 shut in wells that have been evaluated for work-over and behind-pipe opportunities. WoodRock & Co. acted as financial advisor to Radiant in both the arranging of the credit facility and in the purchasing of the acquired properties.

Diversified acquires NRG

Colorado-based Diversified Resources Inc. has acquired all the outstanding shares of Natural Resources Group Inc. (NRG), a privately held oil and gas exploration and production company with operations in Colorado's Denver-Julesburg and Raton basins. Diversified Resources issued 14,558,150 shares of common stock to the NRG shareholders, retired 2,680,033 shares, leaving a total of 17,128,117 shares outstanding after the transaction. NRG will operate as a wholly owned subsidiary of Diversified.

EQT VI acquires Aker well intervention business

EQT VI is set to acquire Aker Solutions ASA's Well Intervention Services business for an enterprise value of NOK 4 billion (US$658 million). The Well Intervention Services business is a market leader in the North Sea and one of three major players in the global wireline tractor market. As part of the transaction, Jørgen Peter Rasmussen has been appointed president and CEO. Rasmussen is an oil industry veteran who previously served as president and CEO of Archer Ltd. and spent more than 25 years in management positions with Schlumberger. Øyvind Eriksen, CEO of Aker ASA and executive chairman of Aker Solutions ASA, will take the position as board member of the company.

The transaction is expected to be completed around the end of 2013.

LongueVue Capital sells Blue Dot Energy Services

In Q3 2013, private equity company LongueVue Capital sold its portfolio company, Blue Dot Energy Services to BEA Logistics Services LLC for approximately $75 million. Headquartered in Bridgeport, West Virginia, Blue Dot provides a broad array of oilfield services to E&P companies and drillers operating in the Marcellus Shale and the Utica Shale. LongueVue Capital is based in New Orleans with additional offices in New York and Salt Lake City. Simmons & Company International served as exclusive financial advisor to Blue Dot on the transaction.

Oceaneering International to expand in Virginia

Oceaneering International is reportedly expanding its presence in the Chesapeake, Virginia, area, and the company plans to create approximately 70 jobs while retaining more than 460 employees. The company will consolidate its engineering, manufacturing, and administrative operations at a new 150,000-square-foot facility to be developed by Armada Hoffler Properties, which will invest about $25 million to accommodate the expansion. Oceaneering's marine services division in Chesapeake focuses on submarines, deep submergence systems, and air cushion landing craft.

Riverstone invests in Liberty Resources II LLC

Liberty Resources II LLC, a newly-formed, Denver-based oil and gas company, has received a $350 million commitment, including $300 million from funds managed by energy private equity firm Riverstone Holdings LLC , $50 million from Oakmont Corp. and additional amounts from the company's management team. The Riverstone commitment comprises $200 million from Riverstone Global Energy and Power Fund V (Fund V) and $100 million from Riverstone Energy Limited (REL). Riverstone and Liberty II management previously partnered successfully in Liberty Resources LLC (Liberty), an oil and gas company focused on the Bakken Shale of North Dakota. The majority of Liberty's assets were sold to Kodiak Oil & Gas in July 2013 for approximately $680 million. Liberty II is led by chairman and CEO Chris Wright, president Mark Pearson, CFO Paul Vitek and other former senior executives of Liberty. Among other potential areas of focus, Liberty II will likely concentrate its efforts in the DJ Basin, the Powder River Basin and the Permian Basin.

EIA forecasts oil prices for 2014

In its "Short-Term Energy Outlook," the US Energy Information Administration forecast that prices for crude and oil-based fuels will continue to fall through the end of the year and will average lower in 2014.

The EIA lowered its projection for the average price of regular gasoline for the fourth quarter of 2013, cutting it by 10 cents to $3.24 per gallon Since the beginning of September, the weekly national average price of gasoline has dropped by more than 40 cents. For the year, EIA expects gasoline to average $3.50 per gallon, down 13 cents from last year's average. The agency expects it to fall further in 2014, averaging $3.39. The price cuts come as US oil production soars. In October, the country produced more crude than it imported, for the first time since February 1995. The EIA forecasts that US oil production will jump by 1 million barrels per day next year, reaching 8.5 million barrels per day. As the US pumps more oil, the EIA forecasts that the crude oil prices will decline. West Texas Intermediate crude, the US benchmark, will drop from an average of $97.74 per barrel this year to $95 per barrel in 2013. Brent crude, the international benchmark, is projected to fall from $108.01 to $103. As a result, the EIA predicts that the WTI-to-Brent discount, which reached an average of $20 per barrel in February, will narrow to $8 in 2014. Natural gas prices, however, are projected to rise. The Henry Hub spot price, the US natural gas benchmark, is forecast to rise from $3.68 per million British thermal units this year to $3.84 per million British thermal units next year.

IOS completes acquisition of ODS International assets

Integral Oilfield Solutions (IOS) has acquired the assets of ODS International (ODS). Mark Provine, former CEO of Total Instrumentation & Controls LP (TIC), will serve as CEO of IOS and will oversee the transition from ODS to IOS and IOS' expansion plans. Integral Oilfield Solutions is focused on providing engineered equipment and critical services to the offshore drilling industry. IOS, based in Houston, is a partnership between OFS Energy Fund (financial sponsor) and Mark Provine (CEO) which initially acquired the assets of ODS International.

Bregal partners forms Aqua Terra

Private investment firm Bregal Partners has formed Aqua Terra Water Management LP to serve as an acquisition and organic growth platform providing water management and disposal services to onshore oilfield customers in North America. Aqua Terra has made its first investment through the acquisition of Four Winds Energy Services Ltd., an independent operator of Class 1b and Class II water disposal facilities in Alberta, Canada. Terms of the transaction were not disclosed. Canaccord Genuity served as financial advisor to Bregal Partners, and Dechert LLP and Stikeman Elliott LLP served as legal advisors.

TriOil shareholders approve orlen acquisition

Shareholders of Calgary, Alberta-based TriOil Resources Ltd. have approved the proposed acquisition of TriOil by ORLEN Upstream sp. z o.o. through a wholly-owned subsidiary registered in the Netherlands, ORLEN Upstream International B.V. Under the arrangement, holders of common shares will receive $2.85 in cash per common share held. The arrangement was approved by approximately 95% of the votes cast by TriOil Shareholders present or represented by proxy at the special meeting held November 12. The completion of the arrangement remains subject to approval by the Court of Queen's Bench of Alberta and the satisfaction of other usual and customary conditions.

Deep Down receives orders totaling $3.7 million

Deep Down Inc. has received orders for steel tube flying leads and associated services in the Gulf of Mexico and West Africa. The first order is for 14 steel flying leads and ancillary equipment. Delivery is scheduled for deployment in over 5,300 feet of water in the Gulf of Mexico in 2Q14. The second order is a long-term contract to supply flying lead installation support equipment and personnel; equipment and personnel will be mobilized in West Africa within the first few weeks of 2014 through the end of the third quarter of 2014.

New Source acquires MCE

New Source Energy Partners LP has acquired MCE LP and its general partner MCE GP LLC. MCE is an oilfield services company that specializes in increasing efficiencies and safety in drilling and completion processes. It was acquired from its previous owners, which includes Kristian Kos, for $43.6 million in total initial consideration, to be paid in $3.8 million in cash and 1,847,265 New Source common units, valued using a volume weighted average trading price for the period between August 21, 2013, and November 11, 2013, of $21.55 per common unit.

Petrotech enters into JV with Rolling Hills Oil and Gas

PetroTech Oil and Gas Inc. has entered into a joint venture with Rolling Hills Oil and Gas LLC of North Dakota to obtain financing for two 20,000-foot completion and workover rigs. The JV calls for Rolling Hills to arrange funding from one of its equipment lines, and PTOG will then contract the two rigs with one of the major producers in North Dakota, such as Halcón Resources Corp. and Continental Resources. Once put into production, the two rigs will bring in $40,000 per day at 24 days per month.

ConocoPhillips Completes Algeria business unit sale

ConocoPhillips has completed the transaction with Pertamina for the sale of its Algeria business unit for a total sales price of $1.75 billion, which resulted in proceeds of $1.65 billion, including customary adjustments. The company's divestiture proceeds from 2012 through third-quarter 2013, plus this sale and the recently completed Kashagan sale, have totaled approximately $12.4 billion.

Valerus wins contract for Marcellus shale facilities

Valerus has been awarded a contract from Pittsburgh-based EQT Corp. to provide 15,000 hp of compression for two compression stations in southwest Pennsylvania. Valerus will assemble the large horsepower components in its Smithfield, Pennsylvania, facility beginning in November. Compression and other mission-critical equipment will be deployed in the Marcellus and Utica shale fields, leveraging Valerus and other local companies. Local hiring in the Valerus facility is expected to increase.

WPX Energy to form mLP

WPX Energy Inc. intends to form a master limited partnership (MLP) in the first half of 2014 and to offer to the public common units representing limited partner units in the MLP, which will hold working interests in mature, producing natural gas properties located in the Piceance Basin in Colorado. The MLP, to be called WPX Energy Partners LP, expects to file a registration statement with the US Securities and Exchange Commission in early 2014 for an initial public offering of the common units. WPX Energy expects to sell interests in the MLP in the initial public offering. Proceeds from the offering are expected to be used to fund ongoing operations, repay debt under the company's revolving credit facility and for general corporate purposes.

Jones acquires assets in Anadarko Basin

Jones Energy Inc. has agreed to purchase producing and undeveloped oil and gas assets in the Anadarko Basin for $195 million from a privately held company. The assets include approximately 26,000 net acres in the Cleveland, Tonkawa, and Marmaton plays in the Texas Panhandle and in western Oklahoma. The acquisition adds proved reserves of 14.3 MMboe and current net production of 3,400 boe/d, of which 54% is liquids. The assets will bring Jones's total number of identified Cleveland drilling locations to over 680 and add drilling locations in the Tonkawa and Marmaton plays. Jones will test in the Tonkawa play in 1H14. The company plans to add two rigs to accelerate its development program, bringing its total rig count from 10 to 12 rigs in 2014.