Anadarko divests Chinese subsidiary for $1.075B
Anadarko Petroleum Corp. has entered into a stock purchase agreement with a wholly owned subsidiary of Brightoil Petroleum (Holdings) Ltd., whereby Anadarko will divest its Chinese subsidiary for $1.075 billion. The subsidiary to be divested owns Anadarko's non-operating interest in the Bohai Bay field. During 2013, Anadarko's net oil sales volumes from Bohai Bay averaged approximately 11,000 barrels per day. "At this level of production the deal price translates to ~$97,727/bopd flowing," said Global Hunter Securities (GHS) analysts following the announcement. Noting 4Q volumes net to Anadarko's interest averaged 8,000 bopd, Jefferies LLC analysts put a valuation of ~$125,000/ flowing barrel on the deal, "in-line with expectations," they continued, noting that if the deal closes later in the year as expected, Anadarko's balance sheet will continue to improve as net debt to capital declines to 31% from a previously modeled 34%. The company has been trending toward the divestiture of non-operated assets to improve liquidity and focus on US onshore operations. To date, including the above deal, the Houston-based company has sold nearly $5.5 billion in assets since the beginning of 2013. According to GHS calculations, the company exited 2013 with $3.7 billion in cash and $13.1 billion in long-term debt. Part of that is the lack of capital forked over by Anadarko in China in Q4 2013. The company participated on a fully carried basis in the Liwan 21-1-1 well in the South China Sea, noted GHS analysts, saying that while "the well discovered high-quality sands in a large four-way enclosure, the magnitude of hydrocarbon found was deemed non-commercial." CNOOC operated Anadarko's Chinese assets after Anadarko transferred operatorship at the end of 2012. Prior to the sale, Anadarko owned a 40% working interest in block 04/36 and a 29% WI in block 05/36.
Devon sells Canadian assets for C$3.125B
Oklahoma City, OK-based Devon Energy Corp. has agreed to sell the majority of its Canadian conventional assets to Canadian Natural Resources Ltd. for C$3.125 billion (US$2.8 billion). The sale excludes the company's Horn River, Lloydminster and thermal heavy oil assets located in Canada. At December 31, 2013, proved reserves associated with the divestiture totaled approximately 170 million barrels equivalent. Proceeds are expected to help repay debt incurred to finance its Eagle Ford acquisition from GeoSouthern in November 2013. The company expects net proceeds of US$2.7 billion after adjusting for currency exchange and taxes associated with the sale and repatriation of the funds to the US. The sale also improves Devon's cash position as it increases to $8.7 billion ($6 billion cash at year-end 2013 plus $2.7 billion from this sale), "which is more than enough to pay for the $6 billion GeoSouthern acquisition, noted Global Hunter Securities analysts. "This agreement represents a significant step forward in the execution of our non-core divestiture process," said John Richels, president and CEO. "This tax-efficient transaction provides for a clean exit from our Canadian conventional business at a value of nearly 7 times 2013 EBITDA, a substantial premium compared to Devon's current trading multiple." Scotia Waterous acted as lead financial advisor to Devon. BMO Capital Markets also acted as a financial advisor to Devon and has provided a fairness opinion to the board. Osler, Hoskin & Harcourt LLP acted as legal advisor to Devon.
Diamondback Energy to acquire Permian acreage
Diamondback Energy Inc. has agreed to acquire additional leasehold interests in Martin County, Texas, in the Permian Basin, for an aggregate purchase price of $174 million. The transaction includes 6,450 gross (2,825 net) acres with a 43.8% working interest (75% net revenue interest) and net production of 1,600 boe/d (75% oil) in November 2013 from 145 gross (63 net) producing vertical wells. Net proved reserves, based on the company's internal estimates as of December 31, 2013, were 4,185 Mboe. Diamondback believes the acreage is prospective for horizontal drilling in the Wolfcamp B, Lower Spraberry, Middle Spraberry, Wolfcamp A, Cline, and Clearfork horizons, and has identified 42 potential horizontal drilling locations in each of the Wolfcamp B and Lower Spraberry horizons based on 160-acre spacing per well (or six across a section) and an aggregate of 112 potential horizontal drilling locations in the Middle Spraberry, Wolfcamp A, Cline, and Clearfork intervals based on 120-acre spacing per well (or four across a section). Under the terms of the existing joint operating agreement, the company has made offers to the owners of the remaining 56.2% of the working interests to acquire their interests in the acreage. If all such owners were to sell their interests to us, the aggregate purchase would be $397 million. Diamondback intends to finance the acquisition with a combination of borrowings under its revolving credit facility and the issuance of debt and equity securities. Diamondback will become the operator of this acreage if and when two or more working interest holders totaling more than 50% of the working interest appoint the company as the successor operator.
Quorum acquires software from Woodlands Solutions
Quorum Business Solutions Inc., a provider of business information technology solutions for the energy industry, has completed its acquisition of energy trading and risk management (ETRM) software solution Phoenix ETRM from Houston-based Woodlands Solutions LLC. This acquisition expands Quorum's software solution portfolio into multi-commodity energy trading and risk management (C/ETRM). Phoenix ETRM will augment Quorum's portfolio of software solutions that manage operational, administrative, financial, and transactional business processes for energy companies. Woodlands Solutions' founders, Michael Muse and Stephen Wall, will join Quorum as part of the transaction.
Oildex strikes equity partnership with Accel-KKR
Transzap Inc., the provider of Oildex smart information management solutions for the oil and gas industry, has received an equity investment to support its strategic growth from Accel-KKR, a technology-focused private equity firm. Oildex remains focused on delivering innovative cloud-based data management solutions and information platform to streamline oil and gas operational accounting processes, share knowledge, provide better visibility into cash management and support more profitable business relationships. Joe Porten, vice president at Accel-KKR, will join Tom Barnds, managing director at Accel-KKR, and Dean Jacobson, principal at Accel-KKR, as the newest members of Oildex's board of directors. Vaquero Capital LLC served as financial advisor to Transzap in connection with this transaction. The terms of the deal were not disclosed.
Flotek to acquire SiteLark
Flotek Industries Inc. has entered into a Letter of Intent to acquire Plano, Texas based SiteLark LLC, a provider of reservoir engineering and modelling services for a variety of hydrocarbon applications. SiteLark, founded by Deepankar Biswas, PhD, also provides engineering services for enhanced oil recovery projects and serves as a provider of in-depth modelling and evaluation services for Eclipse IOR Services, or EOGA, a wholly owned subsidiary of Flotek. Flotek will provide total initial consideration of $0.6 million in cash and Flotek common stock for SiteLark, subject to completion of due diligence and certain adjustments. Flotek expects to close on the SiteLark acquisition by March 31, 2014.
Newpark sells environmental business
Newpark Resources Inc. has entered into a definitive agreement to sell its Environmental Services business to ECOSERV LLC, a portfolio company of Denver-based private equity group Lariat Partners LP. Newpark will receive $100 million in cash, subject to adjustment based on actual working capital conveyed at closing. The sale is expected to close in the first quarter of 2014, subject to customary conditions, including regulatory approval. Proceeds will be used for general corporate purposes, potential acquisitions and/or share repurchases under the company's current repurchase program. Simmons & Company International is serving as financial advisor to Newpark. Newpark is a provider of drilling fluids, temporary worksites and access roads for oilfield and other commercial markets.
Helix inks Petrobras deal offshore Brazil
Helix Energy Solutions Group Inc. has entered into agreements with Petróleo Brasileiro S.A. (Petrobras) to provide well intervention services offshore Brazil. Helix will be providing the services with two newbuild chartered monohull vessels, which will be built at the Flensburger shipyard in Germany for Siem Offshore AS. Siem will be the owner of the vessels, and charter both the vessels and marine crew to Helix for an initial period of seven years. Helix's aggregate investment in the topside equipment for both vessels is expected to be approximately $260 million. The initial term of the contract with Petrobras is four years with options to extend. The first vessel is expected to be in-service for Petrobras mid-2016.
Magellan agrees to sell onshore Australia assets
Magellan Petroleum Corp. has agreed to sell the Palm Valley and Dingo gas fields to Brisbane, Australia-based junior exploration and production company Central Petroleum Ltd. through the sale of its wholly owned subsidiary Magellan Petroleum (NT) Pty. Ltd. for a total of AUD $35 million in cash and Central stock. In addition, Magellan will receive bonuses from Central in the event that future gas sales revenues from Palm Valley exceed certain levels. Of the AUD $35 million, AUD $20 million is payable in cash and AUD $15 million is payable in Central stock upon transaction completion. The cash consideration will be paid in two tranches: AUD $15 million at completion and AUD $5 million on or before April 15, 2014. Magellan will be entitled to appoint one director to serve on Central's board. In completing the sale, the company expects to incur no tax liabilities, approximately AUD $1 million of transaction costs, and approximately AUD $2 million of related wind-down expenses.
Intervale Capital forms Energes Oilfield Solutions
Intervale Capital, an energy-focused private equity firm, has capitalized a new platform company, Energes Oilfield Solutions. The company's service suite includes flowback and well-testing, H2S monitoring and safety services, and water transfer. The Houston-based company has two field locations in South Texas and a third in development in West Texas. Gary Coates, previously a vice president at Tetra Technologies, serves as Energes' president and CEO. Energes purchased the assets of Mesa Safety Solutions, a provider of H2S monitoring, safety training, and water transfer services.
