Industry Briefs

Stone Energy sells Rocky Mountain properties for $575M

Stone Energy has agreed to sell substantially all of its Rocky Mountain properties to Newfield Exploration for $575 million in cash. Additionally, Stone will maintain a 35% proportional working interest in several undeveloped plays in the Rocky Mountain region totaling about 60,000 net acres. Merrill Lynch Petrie Divestiture Advisors advised Stone on this transaction. The divested properties include Stone’s interests in the Pinedale Anticline, the Jonah field, the Williston basin, the Scott field, and several smaller producing areas. The sale also incorporated net undeveloped acreage of 550,000 acres. At year end 2006, estimated proved reserves associated with this divestiture totaled 182.4 bcfe, and for the first quarter of 2007 the production from the sale properties averaged nearly 40 MMcfe/d - resulting in transaction metrics of $3.15/Mcfe proved and $14,375/Mcfe/d. The transaction is expected to close by end of second quarter, subject to customary closing conditions and adjustments.

Cosco wins $195.3M in EPC contracts

Cosco Corp. (Singapore) Ltd.’s 51%-owned Cosco Shipyard Group (CSG) has secured an engineering, procurement, and construction (EPC) and 5 semi-submersible heavy lift vessel (HLV) conversion contracts totaling US$195.3 million. Cosco Nantong Shipyard, a subsidiary of CSG, has sealed the EPC contract from the Belgian shipping company, Exmar NV, to build a high standard accommodation barge valued at US$38.2 million. The new barge will accommodate about 360 personnel and will be deployed in exploration sites off the Western African coast. Exmar NV has secured the option for one additional barge. The barge is scheduled for delivery in the third quarter of 2008. CSG was also awarded 5 conversion projects totaling US$157.1 million from the Norwegian shipping company Front Line to convert 5 suezmax tankers into 5 semi-submersible HLVs. The semi-submersible HLVs are targeted for progressive deliveries before October 2008.

Stuart earns interest in Cooper/Eromanga

Stuart Petroleum Ltd. has reached an agreement with the participants of Cooper/Eromanga basin tenement PEL 100 in northern South Australia to earn a 50% participating interest in the tenement by drilling and evaluating one well. Stuart will operate its earn-in well and on completion of its interest-earning obligations, Stuart will become operator of the permit on behalf of the new PEL 100 Joint Venture-Stuart Petroleum Ltd. 50%, Sundance Energy Australia Ltd. 23.333%, Cooper Energy Ltd. 19.167%, Traditional Oil Exploration Ltd. 5%, and Liberty Petroleum Corp. 2.5%.

Bayou Bend Petroleum completes GoM acquisition

Bayou Bend Petroleum has closed the previously announced acquisition of the Gulf of Mexico assets from Pearl Exploration and Production Ltd. On January 18, 2007, the consideration stated buying 10 million common shares of Bayou Bend, which at the time had a deemed value of Cdn $1.20. The price has now appreciated to nearly Cdn $2.74, giving a current deal value of Cdn $27.4 million. Bayou Bend has acquired a 100% working interest in 5 Gulf of Mexico offshore exploration blocks, farm-in rights to acquire a 25% working interest in a sixth offshore block, and all physical data, work products and files and records associated with these blocks. The first well is expected to spud on the Mustang Island 736 prospect any day. It is planned to drill a minimum of 3 exploratory wells on the former Pearl blocks by the end of 2007. Bayou Bend is an oil and gas exploration and production company with a focus in the Gulf of Mexico shallow water shelf area.

Schlumberger acquires geomechanics firm

Schlumberger has acquired V.I.P.S., a UK-based reservoir geomechanics software and consulting company. The company’s office in Bracknell, UK, now becomes the Schlumberger Reservoir Geomechanics Center of Excellence under the direction of V.I.P.S. founder Nick Koutsabeloulis. The center will undertake high-tier projects and develop the reservoir-centric aspects of the geomechanics-related activities of Schlumberger. The company’s team of 8 mathematicians, scientists, and engineers remain at the center. The V.I.P.S Visage software is known for its Finite Element Method systems. The software solves stress equations and relates the rock stresses to reservoir properties, technology instrumental to the development of 3D and 4D mechanical earth models that predict the geomechanical behavior of the reservoir during production and injection. Schlumberger Information Solutions and the V.I.P.S. team will work to develop a link between Visage and ECLIPSE reservoir simulation software and other reservoir workflows.

Oxy to divest Lyondell holdings

Occidental Petroleum Corp. plans to sell off its 8.3% holdings in Lyondell Chemical Co. Out of its 21 million Lyondell shares, Oxy already sold nearly 7 million to a single purchaser in a private transaction for more than $32/share. Oxy also entered into a total return swap agreement regarding its remaining 14 million shares. This agreement will enable the company to realize a similar market price for future sales of such shares. Although Oxy intends to dispose of such shares on the open market during the next few months, the company noted that it has no obligation to do so. Assuming its remaining 14 million shares are sold on this basis, including the receipts from the completed sale, Oxy anticipates aggregate net after-tax proceeds of $520 million and a net gain of $200 million.

Oilexco taps Merrill Lynch joint broker, financial advisor

Oilexco Inc. has appointed Merrill Lynch International as joint corporate broker and financial adviser to work alongside Canaccord Adams Ltd. This comes ahead of the company’s planned move from its listing on the AIM to the main market of the London Stock Exchange in mid-2007. Oilexco is an oil and gas exploration and production company active in the UK.

Dynegy seeks increase in credit facility

Dynegy Inc.’s indirect wholly-owned subsidiary, Dynegy Holdings Inc. (DHI), will seek to increase the size of its $1.32 billion senior secured credit facility by up to an additional $650 million. The incremental financing will facilitate the refinancing of existing project debt as part of the company’s ongoing optimization of its capital structure. The increase in DHI’s credit facility capacity will replace the existing credit facility capacity assumed in connection with Dynegy’s acquisition in April 2007 of certain power generation assets from the LS Power Group. The revolving credit portion will mature in April 2012 and the term letter of credit portion will mature in April 2013. The credit facility will continue to be available for general corporate purposes and to support activities of certain subsidiaries of Dynegy and DHI. The lead arrangers are J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. Dynegy Inc. produces and sells electric energy, capacity, and ancillary services in key US markets.

Halliburton opens Russian training center

Halliburton has opened a new training center in Tyumen, Russia, in cooperation with the Tyumen State Oil and Gas University. Designed to further develop the professional and technical skills of the company’s employees in the Europe Eurasia region, the training center is Halliburton’s 12th worldwide and the first in Russia. The center is equipped with 3 classrooms, a laboratory, and videoconferencing equipment.

Saudi Aramco signs offshore contract with J. Ray McDermott

Saudi Aramco signed a lump-sum turn-key contract with J. Ray McDermott for the engineering, procurement, fabrication, transportation, installation and hookup of offshore platforms for the 900,000 bpd Manifa oilfield development project. The Manifa offshore facilities consist of 13 new platforms and modifications to 26 existing offshore observation well platforms. The new facilities support the structures required for the 6 oil production deck modules that are designed to accommodate equipment required for the electric submersible pumps and 7 new water injection platforms. The Manifa project completion is slated for mid-year, 2011.

Subsea 7 wins two contracts worth $340M

Subsea 7 has been awarded two contracts by Norsk Hydro for work in the North Sea with a combined value over $340 million. The first is an engineering, procurement, installation and commissioning (EPIC) contract valued at $280 million for work on the Vega and Vega South fields. The second is an EPIC contract worth nearly $61 million for the Troll O2 field. The Vega contract comprises the engineering, fabrication and installation of one 14’ and two 12’ rigid flowlines, totaling 51 kilometers, from Vega Sor to Vega to the Gjoa platform. The scope also includes the engineering, fabrication, and installation of 3 umbilicals and 3 MEG lines, totaling 51km each, and the protection of all flowlines and umbilicals on the seabed. The Vega field is located 45 km north of the Troll field and 60 km east of Gullfaks, in about 380 m depth. The Troll West field is located some 70 kilometers northwest of Bergen city. The water depth is about 320 meters.

TGS acquires PDS

TGS-NOPEC Geophysical Co. concluded the acquisition of Parallel Data Systems Inc. (PDS). Final consideration included $56.4 million in cash and 608,865 shares of TGS, all of which have restrictions on when they can be sold. No new shares were issued related to the transaction. The transaction increases existing TGS processing capacity and provides an extensive array of new imaging technologies. PDS will continue to provide proprietary imaging services to external customers and play a role in the processing of TGS’ own surveys. TGS expects the PDS acquisition to generate close to $15 million in net revenues for contract imaging services between now and the end of 2007. TGS-NOPEC Geophysical Co. is a global provider of multi-client geoscientific data, associated products and services to the oil and gas industry.

Trans Energy executes joint venture with Republic

Trans Energy Inc. has executed a joint venture agreement with an affiliate of Republic Energy Inc., for development of deep shale reserves in northern West Virginia. The two companies will conduct seismic data gathering, drilling, coring, and completion and production operations jointly in Wetzel County, W. Va. to develop natural gas reserves from the Marcellus, Rhinestreet, and other Devonian shale members at similar depths. The joint venture applies to Wetzel County only, but can be extended to additional areas if both parties desire. The companies will each take 50% working interest positions in wells drilled. The first well together will be spud in July in Wetzel County. Republic Energy Inc. is a privately-owned oil and gas company focused on the acquisition and development of low to medium risk oil and gas prospects. St. Mary’s W. Va.-based Trans Energy Inc. is an oil and gas exploration and development company in the Appalachian basin.

Icahn Management buys stake in Anadarko

Icahn Management LP now has a 0.7% stake in Anadarko. The company, affiliated with investor Carl Icahn, recently purchased nearly 3.1 million shares in Anadarko Petroleum Corp.

SembCorp Marine wins $88M in conversion contracts

Jurong Shipyard, a wholly-owned subsidiary of SembCorp Marine, has secured two conversion contracts worth a total of US$88 million. The first involves the conversion of the 188,697-dwt tanker, the S.T. Polar Alaska, into a Floating Production Storage and Offloading (FPSO) vessel for Aker Contracting FP AS. To be renamed FPSO Aker Smart 1 upon completion in 1Q 2008. On completion, FPSO Aker Smart 1 will be chartered to Reliance Industries Ltd. for deployment in the MA D6 field on the east coast of India. The second contract involves the conversion and life extension of the 9,589-GT Scientific Research Vessel, Joides Resolution, into an IODP (Integrated Ocean Drilling Program) Scientific Ocean Drilling Vessel (SODV) for Overseas Drilling Ltd. It is scheduled for completion in the fourth quarter of 2007.

Williams sells most power assets; eliminates $2.4B imputed debt

Williams has entered into a definitive agreement to sell substantially all of its power assets to Bear Energy LP, a unit of The Bear Stearns Companies Inc. The agreement encompasses Williams’ 7,500-megawatt portfolio of power contracts and certain other assets. Closing is expected within the next 6 months. Williams will continue to market natural gas and manage relevant transportation and storage in support of its E&P and midstream businesses. The $512 base purchase price will be reduced by expected net portfolio cash flows from the April 1 valuation date through the transaction closing date. The company expects to divest remaining power assets (worth roughly $50 million) this year and exit the power business. Williams expects the absence of Power’s results to reduce its recurring earnings adjusted to eliminate mark-to-market effects, somewhat offsetting the benefits of its exit from the business. The transaction is subject standard conditions and approvals. Merrill Lynch & Co. is acting as financial adviser in the sale. Lehman Brothers and Citibank also have acted as advisers. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas.

DTE Energy to sell Antrim gas properties

DTE Energy has agreed to sell its Michigan Antrim shale gas exploration and production properties to Atlas Energy Resources LLC for $1.225 billion of gross proceeds. The Antrim properties will continue to be operated by the existing management team located in Traverse City, Mich. “This is a strong first step in executing the plan for our non-utility businesses announced last fall,” said Gerard M. Anderson, DTE Energy president and COO. DTE’s board has authorized up to a $1.55 billion common share repurchase program, increased from the previous $700 million. J.P. Morgan Securities Inc. acted as exclusive financial advisor to DTE Energy on this transaction. DTE Energy is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Atlas Energy Resources LLC is an energy company focused on the development and production of natural gas and, to a lesser extent, oil, principally in the Appalachian Basin.

Leor Energy invests in Navasota; expands holdings in Deep Bossier

Houston-based Leor Energy has made a substantial equity investment in Navasota Resources Ltd. LLP. This follows Navasota Resources’ recent acquisition of undeveloped leasehold interests covering more than 9,000 net acres in East Texas from Gastar Exploration Ltd. Leor currently has 8 rigs running in the Deep Bossier and a 3-D shoot is currently underway across its Robertson County acreage position. Leor expects to receive initial 3-D data deliveries during the third quarter of 2007. Leor Energy is a fast-growing privately-held oil and gas exploration and production company in North America.

Houlihan Lokey acquires Baxter Energy Partners

Houlihan Lokey, an international investment bank, has acquired Baxter Energy Partners LLC, a New York-based, energy M&A advisory boutique. As part of the acquisition, Scott Baxter, founder and managing partner of Baxter Energy Partners, has joined Houlihan Lokey as a managing director in corporate finance. Baxter will head global energy investment banking for the firm and will focus on companies engaged in oil and gas exploration and production, transportation, service, refining and marketing. Baxter holds an MBA from the University of Chicago Graduate School of Business and has a BS from Weber State University. Houlihan Lokey provides a wide range of services, including mergers and acquisitions, financing, financial opinions and advisory services, and financial restructuring.

NASDAQ and OMX form new company

The NASDAQ Stock Market Inc. and OMX AB have agreed to combine the two companies. The new group will be called The NASDAQ OMX Group. The combination will be made through a cash and stock tender offer by NASDAQ for all outstanding shares in OMX. The consideration offered is equivalent to 0.502 new NASDAQ shares plus SEK94.3 in cash for each OMX share. Based on NASDAQ’s closing price on 23 May, 2007, the offer values OMX at SEK208.1 per share, equivalent to SEK25.1 billion ($3.7 billion). The relative values of the companies under the terms and based on NASDAQ’s closing share price as of 23 May, 2007 are 58% NASDAQ and 42% OMX. The pro forma market capitalization of The NASDAQ OMX Group will be about $7.1 billion, of which NASDAQ shareholders will own nearly 72% and OMX shareholders will hold roughly 28%. Robert Greifeld will serve as CEO and Magnus Bocker will serve as president. The board will consist of 15 members, including 9 representatives from NASDAQ, 5 representatives from OMX, and the CEO.

Storm to acquire Peace River Arch acreage

Storm Exploration Inc. has entered into an agreement to acquire a partner’s working interest at the Parkland property within the Peace River Arch core area. Consideration for the acquisition is made up of a cash payment of $25.5 million plus working interest in 6 producing oil wells at Red Earth. This transaction will be financed through Storm’s credit facility. Acquired production at Parkland is approximately 465 boe/d from 16 producing gas wells with associated proved plus probable reserves of 1,068 Mboe (based on the 2006 year end reserve evaluation adjusted for production from January 1 to April 30, 2007). The price includes an allocation of $1.9 million for 5,675 net acres of undeveloped land and $4.9 million for 250 km2 of 3-D seismic. The transaction adds 692 Mboe of proved plus probable reserves (net of the Red Earth disposition) at a cost of $27.02 per boe after deducting land and seismic value. The transaction increases Storm’s working interest to 100% from 75% in the company’s inventory of 27 drilling locations.

Samson completes tender offer for PYR shares

Tulsa-based Samson Investment Co. has completed its tender offer for all of the outstanding shares of PYR Energy Corp. common stock for $1.30 per share in cash. Samson Acquisition Corp., a wholly-owned Samson subsidiary, has accepted all of the tendered shares for payment. Following purchase of the tender shares, Acquisition Corp. will own in excess of 75% of the outstanding PYR common stock. PYR, Samson, and Acquisition Corp. entered into a definitive merger agreement on April 23, 2007, under which Acquisition Corp. agreed to acquire all of the outstanding shares of PYR common stock for $1.30 per share in cash. Samson intends to complete the acquisition of PYR through a merger of Acquisition Corp. into PYR, in which all PYR shares not tendered into Samson’s offer (other than shares held by Samson or any of its subsidiaries) will be converted into the right to receive $1.30 per share. Weil, Gotshal & Manges LLP and Hogan & Hartson LLP are acting as legal counsel to Samson. Innisfree M&A Inc. is acting as information agent. Wells Fargo N.A. is acting as depositary. Samson Investment Co. is a large privately held corporation engaged in oil and gas exploration, acquisition, and production operations in 18 states in the US, Canada, and the North Sea.