OGFJ100P company update

John S. Herold Inc., the trusted independent research firm, has once again provided OGFJ with updated production data for our periodic ranking of US-based private E&P companies. These rankings are based on operated production only within the United States.

This latest installment contains production volumes broken down into total gas production and total liquids production.

Making news this issue is No. 6 ranked Hunt Oil Co. The Dallas-based company’s subsidiary, Hunt Oil Co. of the Kurdistan Region, has agreed to begin oil exploration in Iraq. The company has signed a production contract with the Kurdistan Regional Government covering exploration activities.

Hunt Oil is partnering with Canada-based Impulse Energy Corp., a private company that invests in energy companies, on the project, in which Hunt will be the operator. Geological survey and seismic work will begin by the end of the year and plans to drill its first exploration well in 2008. Financial terms were not disclosed.

Standard & Poor’s Ratings Services recently lowered its corporate credit rating on Hunt Oil Co. to ‘BBB’ from ‘BBB+’. The outlook is negative.

“The downgrade reflects our assessment that the underperformance of Hunt’s core North American E&P business, coupled with escalation of construction costs associated with major liquefied natural gas projects, lessens the company’s ability to fund the LNG projects’ development without incurring meaningful additional net debt leverage,”said S&P’s credit analyst Ben Tsocanos.

S&P’s views Hunt’s conservative financial policies as partially offsetting upstream business characteristics that are weaker than those of similarly rated peers. The LNG projects carry considerable risk and may limit Hunt’s flexibility to invest in the E&P business and reverse declines in North American operations.

The ratings on Hunt reflect its satisfactory business risk profile as a small, privately-held independent E&P company with internationally diversified, short-lived developed reserves; its intermediate financial risk profile based on substantial financial resources; and its history of achieving favorable results in challenging international environments.

In other news, No. 99-ranked Texas American Resources Co. has appointed Troy Gieselman, who has served as VP of land, as its COO. Gieselman joined the company in 2001 and has over 15 years of experience in the oil and gas industry. He is a graduate of the University of Houston.

Occasionally we come across private companies not included on the list provided by John S. Herold. Although these companies are not ranked, (production data unknown) the information may still be useful to our readers. For this reason, we have added companies since our July issue. These additions are Antero Resources Corp., American Energy Partners Inc., Harding Co., Laredo Petroleum LLC, Madagascar Oil Ltd., Dorado Exploration Inc., Opal Resources, and Rimrock Energy LLC.

One of the new additions making headlines is Antero Resources Corp. The Denver-based privately-owned oil and gas exploration and production company has secured a $1 billion line-of-equity funding program led by Warburg Pincus. Joining Warburg Pincus are Yorktown Energy Partners VII LP, Lehman Brothers Merchant Banking Group, and the Antero management team (see alphabetical list).

The original corporation was focused on the Barnett shale and, in April 2005, was sold to XTO Energy Inc. for over $1 billion. The current Antero group is focused on developing properties in the Arkoma basin of Oklahoma and the Piceance basin of Colorado.

Antero currently operates 11 drilling rigs and has gross operated production of 34 MMcfd in the Arkoma basin Woodford shale play and 20 MMcfd in the Piceance basin. With over 120,000 net acres of leasehold, Antero has identified over 2,800 proved, probable and possible gross drilling locations and has acquired or is in the process of acquiring over 250 square miles of 3-D seismic data.

Boerne, Tex.-based American Energy Partners Inc. has also been added to the list. The management team includes Troy Eckard CEO, president; Donald Hambly, VP operations; and Brian Topper, CFO. The company has operations based in the Texas Gulf Coast.

Dallas-based Dorado Exploration Inc., which operates in East Texas, Louisiana, and Mississippi, and its executives, (Don Schmidt – president and chief executive, and Tim Wafford – COO) have also been included.

Another new addition is Madagascar Oil. While the private oil and gas company has holdings in Madagascar, the company is opening a new corporate head office in Houston. The company recently closed on a 24-month equity-linked development capital facility for $85 million with Credit Suisse. Proceeds will be used for ongoing exploration and appraisal operations in Madagascar. Jefferies International served as financial advisor on the transaction.

While new to OGFJ’s 100P listing, Dallas-based Harding Co. has been exploring for and producing oil and natural gas in the southwest US for more than 50 years.

The company’s affiliate, Cinco County Barnett Shale LLC, has partnered with Metroplex Barnett Shale LLC, (a wholly-owned subsidiary of Exxon Mobil Corp.) for Barnett shale gas development in the eight county area of Tarrant, Johnson, Ellis, Dallas, Denton, Collin, Navarro and Hill.

The new venture company, DDJET Ltd. LLP, was formed effective December 20, 2006 and provides for the efficient production and gas marketing of Barnett Shale gas through an extensive existing pipeline network.

Going forward, Harding Co. (as Harding Energy Partners LLC) will continue to be responsible for certain activities including lease acquisition and permitting. Metroplex Barnett Shale LLC is assuming responsibilities as general partner and operator.

Harding Co. has also entered into an agreement with Dallas Baptist University (DBU), which could possibly be sitting atop the eastern edge of the Barnett Shale.

DBU has agreed to natural gas exploration with Harding through written guarantees to protect against noise, safety, and environmental concerns. Two sites for drilling have been selected and approved, one on the most northern section of the main campus between DBU and Mountain Creek Lake, and another across Keist Boulevard to the south of the main campus.

In the thriving energy business, new companies are continuously formed. One such company is Houston-based Opal Resources LLC. The company has recently received an equity commitment from an affiliate of Goldman, Sachs & Co. Opal will focus on the acquisition, development, and exploration of oil and gas reserves primarily located in onshore basins in Texas, New Mexico, Oklahoma, and Louisiana.

The company was formed in July 2007 by Myra Dria, who serves as CEO, and Rick Lester, the CFO.

Another newly-formed company is Tulsa, Okla.-based Laredo Petroleum. The company has inked $300 million line-of-equity financing deal with Warburg Pincus. Funding, which may be increased to $500 million subject investor agreement, will be provided to pursue the acquisition, exploration, and development of properties in the Mid-Continent region. In addition to the equity funding provided by Warburg Pincus, Laredo has arranged a $300 million revolving credit facility with commercial banks.

The final addition to the list is newly-created Rimrock Energy LLC. The Denver-based company was formed in July 2007 by Terrell Dobkins, Sanford McCormick, and Wallace Wilson. The company recently received a $250 million equity commitment from Bear Stearns Merchant Banking and Natural Gas Partners. The company is focused on onshore unconventional resources in North America, including shale gas, tight gas, and coal-bed methane.

As always, OGFJ welcomes feedback regarding the lists, and changes will be made as necessary. Dallas-based Verado Energy Inc. has been updated to reflect a management change. Michael W. Slater is now listed as president and CEO.

Due to the consolidation of operations, Jetta was inadvertently left out of July’s issue. The company has transitioned from Jetta Production Co. Inc. to Jetta Operating Co. Inc. Since the company’s last mention (April 2007), there have been changes to the management team (see alphabetical list for more details).

Additionally, according to a company spokesperson at No. 2 Merit Energy, production has increased since the July listing. Total BOE has jumped from 29.5 MMboe to over 36.3 MMboe. Management changes have also taken place since the last update. Previous VP Don Spence has retired and Porter Trimble is now the company’s executive VP. William Gayden, who was previously listed as chairman and CEO has been removed from the list per Merit Energy. Robert Matejek is still listed as president. The company has also more than doubled its well count from 6,043 to 12,656.

While the total BOE numbers have not changed much since the July 2007 issue, it may be of interest to compare the individual gas and liquids production numbers from the April 2006 issue (the last listing that showed production values broken down into gas and liquids).

From that particular listing, the top 10 company with the biggest gain was No. 4 Samson Lone Star LP. The company grew its gas production from 94,130,662 Mcf to 115,293,115 Mcf. The company’s total number increased during that time from 1,894 to 2,055.

The company that took the biggest hit in terms of production was No. 1 Aera Energy LLC. The company’s liquids production dropped from 79,090,702 to 68,976,282. No. 8 Walter Oil & Gas Corp.’s gas production also fell during this period. The company was previously listed at 90,740,593 Mcf gas production, and has now dropped to 56,976,810 Mcf; this despite a slight increase in the company’s total number of wells from 336 to 359.

Click here for a .pdf file of the 2006 Total production ranked by BOE - privately held E&P companies

OGFJ and John S. Herold will continue to update the information as new production figures become available. Future issues of OGFJ will present news and relevant information regarding individual companies.