Industry Briefs

Bill Barrett closes ON West Tavaputs sale

Narrowing the focus of its portfolio, Bill Barrett Corp. has closed on its sale of the West Tavaputs natural gas property located in the Uinta Basin, Utah to affiliates of EnerVest Ltd. for a total adjusted transaction value of $369 million. Jason Wangler of Wunderlich Securities Inc. called the deal "an important milestone as we believe the company and its management have officially delivered on essentially all goals for 2013 as it continues to actively work in the Niobrara," noting that investors should now be focused on the Denver, CO-based company's "solid Niobrara position that so far has been nothing short of impressive." The sale should reduce the company's debt below $1 billion—closer to a 40% debt-to-cap level, noted Wangler, and, while the company's credit facility availability was reduced to $625 from $825, he believes the deal generates ample cash to reduce debt and the company's liquidity position has improved. Another positive is the advancement of the company's "gas to liquids" transformation as the West Tavaputs field production stream was 99% natural gas. With this deal, the company's liquids content moves past 50%, and as Wangler noted, the Niobrara focus makes it likely that the figure will move higher. Currently, Bill Barrett has four rigs running in the Niobrara drilling on a 40,000 net acre position in the northeast extension. The company also holds 14,000 net acres in the core of the Wattenberg field. With close to 40 wells expected to come online in the near-term, production should increase the nearly 500 boepd results from its initial wells, Wangler concluded.

QEP acquires Permian Basin assets for $950M

EnerVest Ltd. will sell Permian Basin assets to QEP Energy Company, a subsidiary of Denver-based QEP Resources Inc. for $950 million. "This deal provides a second repeatable, well-understood, stacked pay resource play to QEP's inventory. Results from successful offset operators show strong oil potential exists in 3-4 zones within the Wolfcamp formation, as well as shallower and deeper formations. The 26.5K net acre position in west Texas should provide oil diversification and ample running room for the company in two prolific basins into next decade," noted analysts with Sterne Agee. Current net production from the properties is roughly 6,700 barrels of oil equivalent per day (boepd), of which nearly 68% is crude oil, according to QEP. The deal adds proved reserves of approximately 47MMboe and approximately 300MMboe of potentially recoverable resources. Valuing production at $75,000 per flowing boe, the analysts derive a residual acreage value of $16.9K/acre. On a pure reserves basis, the acquisition translates to a price of $20.21/boe of estimated net reserves, they continued. According to Stern Agee, on a pro forma basis, the acquisition increases net debt to $3.7 billion. Net debt/TTM EBITDA increases to 2.4x from 1.8x. The company plans to fund the acquisition with proceeds from its revolving credit facility and cash on hand, but has noted that it may sell various non-core assets located in the Midcontinent during the first half of 2014.

Trilantic Capital Partners raises $2.2B

Trilantic Capital Partners has closed on Trilantic Capital Partners V (North America) LP (Fund V North America), a $2.2 billion private equity fund investing in the business services, consumer, energy and financial services sectors. Trilantic V North America is Trilantic's first stand-alone fund following its emergence from Lehman Brothers Merchant Banking in 2009. In Fund V North America, approximately one-half of the commitments are from new investors and more than one-quarter from foreign LPs. The fund's LP base includes public and private pension plans, sovereign wealth funds, insurance companies, corporations, not-for-profit organizations, family offices and high net worth individuals.

Jones Energy completes Anadarko Basin acquisition

Jones Energy Inc. has closed its acquisition of oil and gas properties in the Anadarko Basin from Sabine Oil & Gas LLC for $195 million. The company funded the acquisition with borrowings under its revolving credit facility.

Mainstream Investors commits additional $10M to Williston Basin

Mainstream Investors LLC, a North Dakota-based private investment firm, will commit an additional $10 million towards oil and gas production in western North Dakota's Williston Basin in 2014. Mainstream participates in energy production through the purchase of mineral interests, leasehold interests and royalty interests, as well as through the purchase of AFEs, or Authorization for Expenditures.

True oil raises $500M in equity capital

Newly-formed True Oil Company LLC has secured a total of $500 million in commitments for equity capital from an investor group led by Los Angeles-based Ares Management which includes True Oil management and other institutional investors. True Oil will use the funds to acquire and develop oil and gas assets in the Permian Basin. Midland, TX-based True Oil is led by Ronnie Scott, Keith Maberry, Michael Rhoads, Will Kiker, and Jamie Rhoads. Prior to forming True Oil, Scott was president and COO of several Midland-based oil and gas companies including Henry Petroleum, Henry Resources, and HPC Energy.

Acacia launches Energy practice in Houston

Acacia Research Corp. has opened a Houston office to support the company's focus on intellectual property partnerships in the energy marketplace. Prior to joining Acacia Research, energy practice leader and senior vice president Charlotte Rutherford held executive positions and managed the global IP practices for Schlumberger, Colgate-Palmolive and Conoco.

Howard Energy Partners teams up with Alinda Capital Partners

Investment funds managed by infrastructure investment firm Alinda Capital Partners have acquired a 59% capital unit interest in Howard Midstream Energy Partners LLC d/b/a Howard Energy Partners (HEP). The 59% interest in HEP acquired by Alinda represents the ownership previously held by Quanta Capital Solutions Inc., a subsidiary of Quanta Services Inc., GE Energy Financial Services, a business unit of GE, Clear Springs Energy LLC, and other minority interest holders. Post-closing, Crosstex Energy LP will retain its 31% ownership of the outstanding capital units in HEP, with the remaining capital units owned by management and other minority interest holders. Tudor, Pickering, Holt & Co. acted as exclusive financial advisor to HEP in the transaction.

Armour Energy exercises GIPPSLAND farm-in rights

Armour Energy Ltd. has exercised a right to farm in to Petroleum Retention Lease 2 in Victoria (PRL2), held by Lakes Oil NL. The farm-in agreement will give Armour Energy the right to obtain up to a 50% working interest in the highly prospective PRL2 as part of a two-stage farm-in program. Armour Energy may withdraw from the agreement without cost. PRL2, located in the onshore Gippsland Basin in Victoria, is considered prospective for both tight and conventional gas accumulations, and is in close proximity to existing infrastructure and markets. PRL2 covers several tight conventional reservoirs in the Strzelecki formation of the Gippsland Basin, onshore in Victoria. The southern half of PRL2 is considered by Armour Energy to be geologically very similar to the highly productive offshore section of the Gippsland Basin.

Bumi Armada Subsidiary signs $1.4B Kraken contract

Armada Kraken Pte. Ltd., a wholly owned subsidiary of Malaysia-based international offshore oilfield services provider Bumi Armada Berhad, has signed a bareboat charter contract with EnQuest Heather Ltd., EnQuest ENS Ltd., First Oil and Gas Ltd., Nautical Petroleum Ltd., and Nautical Petroleum AG as field partners, led by EnQuest Heather Ltd. as field operator, for a floating production, storage, and offloading vessel (FPSO) to be deployed at the Kraken field located in the UK sector of the North Sea. Simultaneously, Bumi Armada UK Ltd., another wholly owned subsidiary of Bumi Armada, and EnQuest Heather Ltd. also signed a reimbursable contract for the operations and maintenance of the Kraken FPSO. Both contracts run simultaneously for a fixed period of eight years, valued at $1.4 billion, with options for 17 annual extensions.

The FPSO will have a storage capacity of 600,000 barrels.

Abraxas sells WyCross

Abraxas Petroleum Corp. agreed to sell the company's Eagle Ford interests at WyCross in McMullen County, TX to an undisclosed buyer for $73 million. The assets consist of approximately 1,200 net acres, 3.7 million barrels of proved reserves (1) (2.8 million barrels of oil, 3 billion cubic feet of gas and 0.5 million barrels of NGLS) and produced 655 boepd (597 bblpd, 154 MMcfpd and 32 bbls of NGLs per day) net to Abraxas during September 2013. Proceeds will help pay down the company's bank line before being redeployed into additional operated lease blocks in the Eagle Ford and Bakken. With the sale, Abraxas now expects 2013 production to average 4,300-4,350 boepd with an exit rate of approximately 4,500 boepd. At closing, the company will have received approximately $99.5 million in asset sale and dissolution proceeds from the Eagle Ford since originally contributing 8,333 net Eagle Ford acres to its Blue Eagle joint venture in August 2010. From that JV, the company maintains a 100% working interest in 4,115 net acres and 50 bopd at its Jourdanton prospect in Atascosa County, a 100% working interest in 1,908 net acres at its Yoakum prospect in Dewitt County, and the entirety of its original Edwards production and reserves at both Nordheim and Yoakum. Abraxas currently has approximately $95 million drawn on its $147 million revolver and continues to operate one rig in the Eagle Ford and recently spudded the Dutch 2H (100% working interest) in McMullen County.

Oando executes facility agreement with Oando Plc

Oando Energy Resources Inc., a company focused on oil and gas exploration and production in Nigeria, has entered into a second facility agreement with Oando Plc, the 94.6% shareholder of the company, pursuant to which Oando Energy Resources will borrow US$200 million, at an annual interest rate of 5%, repayable in cash by February 28, 2014. The intended use of proceeds of the loan will be payment of the purchase price for the proposed acquisition by Oando Energy Resources of the Nigerian upstream oil and gas business of ConocoPhillips. Pursuant to the second facility agreement and the facility agreement between the company and Oando dated May 30, 2013, as amended, Oando Energy Resources owes an aggregate of US$601 million plus interest to Oando.