Industry Briefs
El Paso plans $875M buyout of Peoples Energy
El Paso Exploration & Production Co., a subsidiary of Houston-based El Paso Corp., plans to acquire Peoples Energy Production Co. for $875 million. Peoples, which is a unit of Integrys Energy Group, owns an estimated 305 bcf of gas equivalent of proved reserves and owns 72 MMcfd of production. The assets involve properties in Arkansas, Louisiana, Texas, and Mississippi. El Paso will finance much of the acquisition with proceeds from its divestiture program covering 220-270 bcf, or 10% of total reserves. Integrys said the sale fit into its strategy to sell noncore assets.
Copano to acquire Cantera Natural Gas from Metalmark for $675M
Copano Energy LLC has signed a definitive purchase agreement to acquire Denver-based Cantera Natural Gas LLC from Metalmark Capital for $675 million. The purchase price consists of $562.5 million in cash, subject to closing adjustments, and 3,245,817 Class D units to be issued at closing. A portion of the cash consideration will be provided through Copano’s $335 million private placement of equity, which will be completed at the closing of the transaction, in addition to the $112.5 million of equity placed with the seller. The balance of the cash consideration will be provided through underwritten debt financing. Copano anticipates closing in the fourth quarter of 2007, subject to customary closing conditions. Morgan Stanley & Co. Inc. served as financial advisor to Copano and provided a fairness opinion to Copano’s board of directors. Bank of America NA provided a commitment for a new $550 million senior revolving credit facility. Citigroup Global Markets Inc. acted as Copano’s agent for the private placement of equity. Vinson & Elkins LLP represented Copano in the transaction and the related equity and debt financings. Standard & Poor’s Rating Services said that its ratings on Copano Energy would not immediately be affected by the acquisition announcement. Cantera consists primarily of a 51% managing member interest in Bighorn Gas Gathering LLC (not rated) and a 37.04% managing member interest in Fort Union Gas Gathering LLC (not rated). Although the transaction increases Copano’s debt leverage from a debt to EBITDA perspective, it also expands the company’s geographic footprint into the Rocky Mountain region and increases its proportion of fixed-fee contracts.
FLEX LNG to undertake $170M private placement
FLEX LNG intends to undertake a private placement of up to $170 million of new equity to finance the second yard installment for the company’s first two floating LNG producers. The proceeds will also allow the company to grow the fleet. Existing shareholders hold warrants which, if exercised in full, will raise $50 million. The company has engaged Pareto Securities ASA and SEB Enskilda ASA as joint lead managers in the possible private placement, and Arctic Securities ASA as co-manager.
Compton to sell Worsley for $270M
Compton Petroleum Corp. has entered into a purchase and sale agreement with Birchcliff Energy Ltd. for the sale of its conventional light oil assets at Worsley in the Peace River Arch area of Alberta for $270 million. Current production from the property is roughly 3,500 boe/d, including 4.8 MMcf/d of associated natural gas. Reserves at Worsley are estimated to be near 11.3 million boe proved and 15.1 million boe on a proved and probable basis. The sale price equates to $77,143 per boe/d of production and $23.89/boe of proved reserves and $17.88/boe of proved plus probable reserves. The company is also in the process of divesting its oil and natural gas properties at Cecil, also in the Peace River Arch area of Alberta. The Worsley property represents nearly two thirds of the value of the combined Cecil/Worsley properties. Proceeds from the sale will reduce the company’s syndicated senior debt and provide additional financial resources to continue the development natural gas resource plays
CGGVeritas wins $250M in contracts
CGGVeritas has secured numerous multi-year contracts representing $250 million in new business for exclusive marine and land acquisition surveys along with pre-financing commitments for future wide-azimuth multi-client programs in the Gulf of Mexico. In the Middle East, CGGVeritas has been selected to acquire a large 3D offshore seismic survey located in the Gulf. The vessel CGGVeritas Orion will be mobilized for this survey and will commence acquisition during the fourth quarter of 2007. Work on this project is expected to have an18 month duration with an option for an additional year extension. In land acquisition, CGGVeritas has been awarded multiple contracts in the North American Arctic region where the HPVA technology for high resolution acquisition will be introduced during the next two winter seasons.
TriStar, Real Resources complete merger
The plan of arrangement between TriStar Oil & Gas and Real Resources has been completed, forming a new intermediate, growth-focused exploration and development company which continues under the name TriStar. Each shareholder of TriStar received 0.4762 of a new TriStar share for each share of TriStar held and shareholders of Real continued to hold one share of new TriStar for each share of Real held. New TriStar will continue to trade on the TSX. The new company will continue to be led by the TriStar management team including Brett Herman, president and CEO; Jason Zabinsky, VP, finance and CFO; Graham Kidd, VP, engineering; Eric Strachan, VP, exploration and Jeremy Wallis, VP, land.
Kodiak Energy sets up C$13.5 million financing
Kodiak Energy has entered into an agreement with Research Capital Corp. to act as lead agent and sole-bookrunner, on a best-efforts agency basis for a private placement offering of close to C$13,500,000. The offering shall consist of nearly C$6,750,000 in common shares of Kodiak and roughly C$6,750,000 in common shares of Kodiak issued on a “flow-through” basis. Research Capital has been granted an option to increase the size of the offering by up to C$3,500,000 in common shares, exercisable at any time up to and including the closing of the offering. Proceeds will be used by Kodiak towards the continued exploration of its oil and gas properties. Kodiak Energy is a publicly-traded oil and gas exploration and development company.
Roc Oil completes debt refinancing
ROC Oil’s refinancing of its existing 12 month bridge loan facility has been completed with the execution of a new $200 million four-year loan facility with the Commonwealth Bank of Australia, Societe Generale, and BOS International (Australia) Ltd. The remaining $167.5 million of the original bridge loan facility which was established last year to fund the US $275 million acquisition of ROC’s interest in the Zhao Dong Project, in the Bohai Bay, will be repaid in full from the initial drawdown under the new loan facility.
Imperial terminates Apollo acquisition
Evansville, Ind.-based Imperial Petroleum has terminated the acquisition of certain oil ad gas assets from Apollo Resources International Inc. and subsidiaries. Jeffrey T. Wilson, president of Imperial, said, “Apollo was not able to provide clear title to the assets that were the subject of the purchase agreement and has not been able to overcome the legal issues from its creditors in order to close the sale, so we have decided to move on.” Imperial, through its subsidiaries and affiliates, is active in crude oil and natural gas production and the biofuels business.
Endeavor to acquire Holloman Petroleum
Endeavor Energy Corp. signed an agreement to acquire Holloman Petroleum Pty. Ltd., a privately-held Australian-based company, for roughly 18,600,000 shares of Endeavor’s common stock. Holloman Petroleum Pty. Ltd. is a majority owned subsidiary of Houston-based Holloman Corp., a developer of gas plants, pipelines, and other infrastructure throughout the US. When completed, it is expected that Hollom’s assets will consist of three oil and gas permits issued by the Australian Government. The permits cover roughly 1,698,355 million acres of land in the Cooper basin and 492,235 acres offshore in the Gippsland basin and Barrow sub-basin. Holloman will be the operator for all exploration and development on the areas, and, as the largest shareholder of Holloman Petroleum, will own nearly 21% of Endeavor’s shares.
Aurora refinances; borrowing capacity increases to $120M
Aurora Oil & Gas Corp. has entered into a new $50 million second lien term loan. The proceeds were used to pay off all outstanding amounts of the company’s project financing line provided by TCW, which has now been terminated. Members of the Term Loan syndicate, arranged by BNP Paribas, include Laminar Direct Capital LP, a member of the DE Shaw group, CIT, Energy Components, and BNP Paribas. The company agreed to the amendment and restatement of its existing senior secured credit facility with BNP Paribas, allowing the existing borrowing base under this senior line to be increased to $70 million. The combined senior secured and second lien facilities provide $120 million of available borrowing capacity. At this time, roughly $31 million of available borrowing capacity is remaining. Total potential credit capacity may increase up to $170 million under the existing agreements, based upon sufficient growth in the company’s proved reserves, production, and cash flow to support those debt levels. The company also entered into a three-year interest rate swap to hedge its exposure to floating interest rate risk on its term loan debt. This hedge transaction on $50 million will yield an effective interest rate of 11.86% through August 23, 2010.
Atlas Copco launches application report series
Atlas Copco Drilling Solutions is publishing a series of application reports focusing on drilling sites throughout the world where the Atlas Copco RD20 drilling rigs are being used. The two- to four-page reports in the Atlas Copco Application Report Series summarize the advantages of the RD20 truck-mounted rotary, deep-hole drill used in coal-bed methane and natural gas drilling production. The first three reports in the series document the use of a RD20 rig in the Appalachian Mountains by three different companies -- Mountain Ridge Drilling, Barbourville, Ky., Crudewell Drilling, Albany, Ky., and Noah Horn Well Drilling, Versant, Va. The reports include site photography and comments from the drilling company president or site supervisor.Atlas Copco Drilling Solutions is in the process of publishing additional reports in the series featuring various drill sites throughout the world.
YPFB, Gazprom begin E&P partnership talks
Bolivia’s state hydrocarbons company YPFB and Russian oil and gas firm Gazprom have begun talks to create a joint E&P company. The partnership would be the third hydrocarbons company created in Bolivia under President Evo Morales’ new energy policy following the creation of YPFB Refinacion and YPFB Petroandina. The Gazprom initiative would perform E&P in the Aguarague, Inau Tiasia and Inigawi areas in Chuquisaca, Tarija y Santa Cruz departments.
CB&I to acquire Lummus Global
CB&I has entered into a definitive agreement to acquire the Lummus Global business from ABB for $950 million on a debt and cash free basis, subject to adjustments at closing. Lummus Global provides process technologies used in the oil and gas and petrochemical industries, and is a global EPC contractor. The combined company will be able to provide clients a full range of complementary services across the entire hydrocarbon value chain, from proprietary technology to engineering, procurement, fabrication, construction and final commissioning. The acquisition will be funded using a combination of cash and debt, with a possible subsequent issuance of common stock following the closing.
Apache signs agreement to explore Texas acreage
Apache Corp. has signed a multi-year agreement with EV Energy Partners LP and institutional partnerships managed by EnerVest Ltd., to explore for oil and gas in deeper formations across 400,000 acres in Central and East Texas. Apache agreed to explore for new reserves below the base of the Austin Chalk formation and will be operator. EVEP and EnerVest will contribute the acreage. Apache is a large oil and gas independent with operations in the US, Canada, the UK North Sea, Egypt, Australia, and Argentina. EVEP is a Houston-based publicly traded MLP engaged in acquiring, producing, and developing oil and gas properties. EnerVest acquires, develops, and operates oil and gas fields on behalf of institutional investors. EnerVest is also the general partner of EVEP.