Industry Briefs

Feb. 1, 2007
Contact Exploration Inc. has approved brokered and non-brokered private placements totaling $5 million.

Contact Exploration arranges $5MM in financing

Contact Exploration Inc. has approved brokered and non-brokered private placements totaling $5 million. Acadian Securities Inc. of Halifax, Nova Scotia has been engaged as agent, on a best-efforts basis, to offer a brokered private placement totaling $2.5 million, which will consist of up to 2,173,913 flow-through common shares of Contact at a price of $1.15 per share. Acadian Securities Inc. has been granted a 20% over allotment option under the engagement agreement to sell up to an additional 20% of the number of flow-through shares. The corporation has also reserved an additional 20% over allotment option on the non-flow-through units. The proceeds from these private placements will be used to finance continuing exploration and development activities at Contact’s coal bed methane properties in Nova Scotia, and at its Stoney Creek property in New Brunswick, as well as for general corporate purposes. Contact Exploration Inc. is a junior exploration company with a focus on Canadian East Coast onshore exploration

Natural Resource Partners to acquire D.D. Shepard property for $110 million

Natural Resource Partners LP has signed a definitive agreement to acquire the D.D. Shepard property from a charitable organization for $110 million in cash. The partnership will fund the transaction through its credit facility. The D.D. Shepard property consists of nearly 25,000 acres of land containing in excess of 80 million tons of coal reserves. The property, located in Boone County, W. Va. adjacent to other NRP property, has both metallurgical and steam coal reserves, gas reserves, and surface and timber. The majority of the coal reserves are leased to Peabody Energy while the majority of the gas reserves are leased to Dominion Exploration and Production. NRP anticipates the property to generate $20 million in coal royalty revenues in 2007, based on approximately 5.5 million tons of production, and over $2 million in gas royalty and wheelage fees.

Investcorp to acquire Moody International

Investcorp, an asset management firm specializing in alternative investments, has agreed to acquire Moody International (Holdings) Ltd. from Close Brothers Private Equity for $311 million (including debt to be repaid at closing). Moody, headquartered in the UK, is a global provider of inspection services and outsourced personnel supply to the oil and gas, mining and construction sectors. Closing is in the first quarter of 2007.

Halliburton wins $73MM Pemex contract

Halliburton’s Production Optimization division has been awarded a contract valued at $73 million by Pemex to provide stimulation services in the Bay of Campeche, Mexico. The stimulation services to be supplied by Halliburton are acidizing, acid fracturing, water control, and nitrogen services. The work will be performed from the newly outfitted HOS Saylor stimulation vessel, which will join Halliburton’s Cape Hawke stimulation vessel in providing services to Pemex. The services are scheduled to commence in July 2007 and last two and one-half years.

Pengrowth Energy Trust to buy Canadian properties from ConocoPhillips

Pengrowth Corp., administrator of Pengrowth Energy Trust, has entered into a definitive agreement to acquire Canadian oil and natural gas producing properties and undeveloped lands through the acquisition of the shares of four subsidiaries of Burlington Resources Ltd., a subsidiary of ConocoPhillips, for a purchase price of $1.0375 billion, subject to customary adjustments. The acquisition will be supported by a committed senior bank facility fully underwritten by the Royal Bank of Canada. Pengrowth was advised by RBC Capital Markets and Scotia Waterous.

Canadian Oil Sands to acquire percentage in Syncrude Joint Venture

Canadian Oil Sands Trust’s wholly-owned subsidiary, Canadian Oil Sands Ltd. has agreed, subject to certain conditions, to purchase from Talisman Energy Inc. its 1.25% indirect interest in the Syncrude Joint Venture for approximately Cdn $475 million comprised of $237.5 million in cash and 8,189,655 Canadian Oil Sands Trust units.

The company will issue the equity to Talisman from treasury and will finance the cash portion through existing credit facilities. This results in the acquisition being financed with 50% debt and 50% equity. The transaction is expected to close on or before February 28, 2007. CIBC World Markets Inc. acted as financial advisor to Canadian Oil Sands.

Schlumberger acquires Reslink

Schlumberger has signed an agreement to acquire Reslink, the Norwegian-based supplier of advanced completion solutions offering engineering applications and products for sand management, zonal isolation, and intelligent well completions. With engineering and manufacturing centers in Algard, Norway, and Houston, Reslink AS specializes in the development of wire-wrapped sand screens for sandface completions and in-flow control devices.

Surge to acquire private oil sands company

Surge Global Energy Inc. agreed to acquire a private Alberta oil sands company in a cash-stock transaction valued at CAN$16 million. The name of the private company was not disclosed. The agreement calls for owners of the private company to receive $6.3 million in cash and $10 million in equity in Cold Flow Energy ULC, a wholly-owned subsidiary of Surge, based in San Diego, Calif. The oil sands company owns 30% interest in 86,400 acres in the Red Earth area of Alberta. The development involves 4 major contiguous blocks close to existing services and infrastructure.

Saipem wins $380MM in offshore contracts

Saipem has been awarded 3 new offshore drilling contracts, one in Egypt and two in Congo, for a total value of $380 million. The Egyptian contract has been assigned to Saipem by the Burullus Gas Co. and its shareholders BG Group, Petronas, and the Egyptian Natural Gas Holding Co. The contract will last 2 years and involves the charter of the semisubmersible, Scarabeo 6. Drilling operations will be executed off the coast of Egypt between the third quarter of 2007 and the third quarter of 2009. Scarabeo 6 is a third generation semi-submersible rig capable of operating in water depths of up to 780 meters and of drilling to depths of up to 7,500 meters.

Mariner sells interest in Cottonwood project

Mariner Energy Inc. completed the sale of its 20% working interest in the Cottonwood project in the Gulf of Mexico, to the project’s operator, Petrobras America Inc., for $31.8 million. Cottonwood lies on Garden Banks Block 244 in 2,300 ft of water. The sale will result in a pretax gain of $22 million to Mariner in the fourth quarter. Mariner will not be required to fund $21 million of development costs necessary to establish first production, estimated to occur in first quarter 2007. Consequently, Mariner’s 2006 capital spending forecast of $525-545 million (excluding hurricane repairs and acquisitions) is now expected to be about $504-524 million (excluding hurricane repairs, acquisitions, and dispositions). Mariner acquired its interest in the Cottonwood project from Petrobras in April 2005 when Mariner allowed Petrobras access to Noble Drilling Inc.’s Noble Lorris Bouzigard deepwater semisubmersible, which Mariner has under long-term contract.

Seadrill wins work from ExxonMobil

Seadrill has been awarded a letter of intent by ExxonMobil Exploration and Production Malaysia Inc. for the jackup, West Prospero (Seadrill 4), currently under construction in Singapore. The intended contract has a duration of 400 days, with estimated value of approximately $82 million. Start-up of operations is planed in the third quarter 2007, following delivery.

Linn Energy to acquire private company for $415MM, Appalachian properties for $39MM

Linn Energy LLC has signed definitive purchase agreements to acquire oil and gas properties in three separate transactions for an aggregate purchase price of $454 million. The first transaction involves the acquisition of a private oil and gas company with operations in the Texas Panhandle for $415 million. The other transactions involve the acquisition of natural gas properties located in the Appalachian Basin for $39 million. Linn Energy also executed unit purchase agreements for a private placement of $360 million of equity securities to third party investors, consisting of 6,650,144 units and 7,465,946 class C units, or a total of 14,116,090 units, at a blended price per unit of $25.50. The company expects the acquisitions will provide an increase in the borrowing base under its credit facility from $480 million to $675-$700 million. The private placement investor group was led by Zimmer Lucas Partners LLC and co-led by GPS Partners LLC and Lehman Brothers MLP Partners LP.

Brigham Exploration increases senior credit facility borrowing base

Brigham Exploration Co. has increased its senior credit facility borrowing base from $50 million to $110 million. In April 2006, Brigham’s borrowing base had been reset from $90 million to $50 million in connection with the sale of its 9 5/8% senior notes due 2014. Pursuant to the agreement, Brigham is required to maintain a current ratio of at least 1 to 1 and an interest coverage ratio (as those ratios are defined in the senior credit agreement) for the 4 most recent quarters of at least 3 to 1.

Lamprell garners $84.5MM in contracts

Lamprell plc, a UAE-based provider of specialist engineering services to the international oil and gas industry, has won contracts for the rehabilitation of the Hurricane Katrina-damaged Nabors 660 jackup rig (formerly the Ocean Warwick), the refurbishment of 4 Global Sante Fe jackups and, from new customer Akers FP, a contract for the fabrication of a floating production storage and offloading vessel topside modules. The value of these contracts is likely to be in excess of $84.5 million. Lamprell has been awarded an initial contract by Nabors Drilling International Ltd. for the comprehensive rehabilitation of the Nabors 660 jackup rig, worth $43 million.

Pemex awards $412MM in drilling contracts

Mexican state oil company Pemex’s E&P unit Pemex Exploracion y Produccion has awarded companies Swecomex, Servicios Integrales GSM, and BJ Services a joint drilling contract for US$132 million plus US$280 million. The contract entails drilling and completing wells at fields in the southern region, local group Carso Infraestructura y Construccion said in a filing to the Mexican stock exchange.

Vantage Energy receives $470MM equity commitment

Vantage Energy LLC, a private oil and gas company headquartered in Denver, has received equity commitments of $470 million from an investment group consisting of Quantum Energy Partners, Carlyle/Riverstone, and Lime Rock Partners. Roger J. Biemans will serve as chairman and CEO of Vantage. Thomas B. Tyree, Jr., will serve as president and CFO of Vantage.

TXCO sets record 2007 capital spending

The Exploration Co. (TXCO) has set a record capital expenditure plan and drilling program for 2007. TXCO’s board of directors has approved an initial 2007 capital budget in a range of $70 million to $75 million - the company’s largest ever, targeting 103 gross wells and a 70% increase over the revised 2006 target of 60-plus wells. The company expects to fund its CAPEX program from internal cash flow and an existing bank credit facility. The Maverick Basin’s prolific Glen Rose Porosity oil play will continue to receive the largest share of the budget, $39.3 million for 39 wells, including 5 re-entries. TXCO’s emerging San Miguel oil sands play will receive $9.1 million for 32 wells. The budget calls for 3 wells to the gas-prone Pearsall formation, budgeted at $4.8 million. The budget allocates $4.9 million for 7 wells targeting the Georgetown formation and $5.8 million for 10 wells to the Glen Rose reefs and shoals. The company will continue development of its Pena Creek San Miguel waterflood with $3.5 million set aside for 11 wells. In the Marfa basin, which is prospective for the Barnett and Woodford shales, the company has allocated $3.0 million for one new well and a three-dimensional seismic acquisition program. Other items in the budget, including leasing and infrastructure projects, are earmarked for $2.0 million.

Statoil hires Maersk Newbuild

Statoil has entered into an agreement with Maersk Contractors USA to charter a drilling rig capable of exploration drilling in ultra-deep waters. Worth $696 million, the agreement spans 4 years. The agreement has been concluded through Statoil’s subsidiary, Statoil Gulf of Mexico LLC. The semi-submersible rig is under construction at the Keppel FELS yard in Singapore and delivery is expected in April 2008. It can operate in water depths to 3,000 meters. It will mainly be used for wildcat drilling in deep water in the Gulf of Mexico, but can also be used in Statoil’s other international focus locations. The charter agreement begins as soon as the rig arrives in June 2008. Statoil has also entered into an agreement with Woodside Energy (USA) regarding sharing of the newly-built rig. Woodside Energy (USA) will use the rig for a total of 18 months of the contract period.

MODEC buys floating systems from FMC Technologies

MODEC Inc.’s subsidiary company, MODEC (USA) Inc., has agreed to purchase FMC Technologies Floating Systems Inc. from FMC Technologies Inc. for $54.4 million. FMC Technologies Floating Systems develops and manufactures SOFEC turrets and mooring systems for Floating Production Storage and Offloading vessels (FPSOs), Floating Storage and Offloading vessels (FSOs) and offshore marine loading systems. MODEC is a turnkey service supplier of Floating Production, Storage and Offloading (FPSO) vessels, Floating Storage and Offloading (FSO) vessels, Tension Leg Platforms (TLPs) and production semisubmersibles (CPSs) for the offshore oil and gas industry.