Common Resources completes sale for $805M
Houston-based Common Resources LLC has sold the company in two transactions for a total price of $805 million. Dallas-based EXCO Resources Inc. and UK-based BG Group plc bought Common's Haynesville assets for $446 million. EXCO and BG Group will each acquire 50% of Common. The development of these assets will be governed by the existing joint venture with BG Group, including BG Group funding 75% of EXCO's 50% of Haynesville and Bossier drilling and completion costs subject to the limitations in the original joint venture. The assets include producing properties with more than 39 MMcf per day of gross production (12 MMcf per day net) from 7 producing wells and nearly 29,200 net acres prospective for the Haynesville and Bossier shales. The acreage is situated in the Shelby Trough that runs from the southeast corner of DeSoto Parish, LA through southern Shelby, northern San Augustine and eastern Nacogdoches Counties, TX. EXCO's net acquisition price of $223 million will be financed with borrowings under its credit agreement. Talisman Energy Inc. bought Common's Eagle Ford assets for roughly $359 million. EnCap Investments, Pine Brook Road Partners and Soros Fund Management co-led the funding for Common. This sale marks the first exit from Pine Brook Road Partners' debut $1.43 billion fund.
Questar board looks to spin-off E&P business
Questar Corp.'s board of directors has authorized management to proceed with a tax-free spin-off to shareholders of its natural gas and oil exploration and production and midstream field services businesses to form an independent, publicly-traded company to be named QEP Resources Inc. The transaction is subject to market conditions, successful restructuring of certain credit facilities, and final approval of certain material agreements by the boards of both companies. After the spin-off, Questar would remain an integrated natural gas company comprised of subsidiaries Wexpro Co., Questar Pipeline Co., and Questar Gas Co. Questar's corporate headquarters would remain in Salt Lake City. QEP Resources Inc. (formerly Questar Market Resources) would be comprised of subsidiaries Questar Exploration & Production, Questar Gas Management, and Questar Energy Trading. Following the spin, the QEP Resources subsidiaries would be renamed QEP Energy, QEP Field Services, and QEP Marketing, respectively. QEP Resources would be headquartered in Denver. The transaction could be completed within the next three months. After completion of the spin-off, Keith O. Rattie, Questar's chairman, president, and CEO, would serve as chairman of the board of both companies. Charles B. Stanley would be named president and CEO of QEP Resources. Richard J. Doleshek would serve as CFO of QEP Resources. Ronald W. Jibson would be named president and CEO of Questar. Martin H. Craven would be named CFO of Questar. The company estimates that QEP Resources would have total debt of roughly $1.2 billion on the spin date, with no outstanding balance under its revolving credit facility. Questar would also have nearly $1.2 billion of total debt outstanding on the spin date.
Foundation Energy Fund III closes at $73 million
Dallas-based Foundation Energy Management LLC, a manager of oil and gas investment partnerships for institutional investors, has closed Foundation Energy Fund III with $73 million in total capital commitments. Foundation Energy Fund III will acquire, directly operate, and enhance lower-risk onshore oil and gas properties in the US. An initial acquisition for the fund was completed in March, bringing Foundation Energy's managed proven reserve base to over 13 million boe. Foundation Energy raised and invested two funds since its inception in 2005 with over $80 million in total invested capital. The Foundation Energy team has completed nine acquisitions and has acquired oil and gas properties in eight states from Louisiana to Utah and is seeking to acquire other mature producing properties in multiple basins in the lower 48 states. Foundation Energy's prior funds have already returned 30% of capital to investors through monthly distributions of operating cash flow and still own 95% of their acquired properties. Including the acquisitions already completed, the three Foundation Energy funds have acquisition capacity of over $160 million and investor equity capital of $138 million.
Bonanza Creek Energy closes $230M financings
Denver-based Bonanza Creek Energy Operating Co. LLC closed a $200 million Senior Revolving Credit Facility with BNP Paribas (Administrative Agent and Sole Lead Arranger), Compass Bank, and Societe Generale and a $30 million Second Lien Term Loan with D. E. Shaw Direct Capital Portfolios LLC (Administrative Agent) and Wells Fargo Energy Capital Inc. The credit facility has an initial borrowing base of $90 million and together with the Term Loan the proceeds will be used to retire the outstanding principal balance under its previous credit facility and to provide liquidity for production and development opportunities. Rivington Capital Advisors LLC acted as exclusive financial advisor to Bonanza Creek.
EOG Resources Canada to acquire Galveston LNG
EOG Resources Inc.'s Canadian subsidiary, EOG Resources Canada Inc., has agreed to acquire the shares of Galveston LNG Inc. This Calgary-based corporation, through its wholly-owned subsidiary, Kitimat LNG Inc., owns 49% of the planned liquefied natural gas (LNG) export terminal to be located at Bish Cove, near the Port of Kitimat, about 405 miles north of Vancouver, British Columbia. On January 13, 2010, Apache Corp. announced an agreement with Kitimat LNG Inc. to acquire 51% of the planned Kitimat LNG project. Apache will be the operator of the project. Planned capacity of the proposed Kitimat LNG terminal is about 700 million cubic feet of natural gas per day or 5 million metric tons of LNG per year. Preliminary construction costs, currently estimated to be near C$3 billion, will be revised at the conclusion of front-end engineering and design. Upon EOG's acquisition of Galveston LNG Inc., EOG and Apache propose to construct, own, and operate the LNG terminal near the Port of Kitimat designed to link to the pipeline transmission system serving Western Canada's natural gas producing regions via the proposed Pacific Trail Pipelines, a C$1 billion, 300-mile project originating at Summit Lake, British Columbia. Through this acquisition, EOG will acquire a 24.5% interest in the Pacific Trail Pipelines, a partnership between Galveston LNG Inc., Apache, and Pacific Northern Gas Ltd.
Enterprise, Duncan Energy to expand Eagle Ford production facilities
As part of a plan to expand midstream infrastructure to handle natural gas production from the South Texas Eagle Ford shale play, Enterprise Products Partners LP and Duncan Energy Partners LP will expand their jointly-owned South Texas Shoup and Armstrong facilities, which provide natural gas processing and natural gas liquids fractionation services. At the Shoup facility, located in Nueces County, Tex., the focus is on modifying existing fractionation equipment, which would increase its capacity to 77,000 barrels per day. The work is expected to be completed in 2Q10. Incremental volumes of NGLs are expected to be supplied by six existing Enterprise natural gas plants currently feeding the facility. Modifications to existing infrastructure at the Armstrong plant in DeWitt County, Tex., are designed to increase its fractionation capacity to more than 20,000 b/d. Supply for the increase will be enhanced by an efficiency improvement at the on-site natural gas processing plant. The improvements are scheduled for completion in 4Q10.
GlobaLogix expands to support Haynesville shale project work
GlobaLogix Inc., a Houston-based oilfield automation company, has opened an operations center in Carthage, Tex. to support the company's controls and automation, I&E and communications field activity in the Haynesville shale area. Regional project work includes SCADA, network design, system engineering, PLC integration and programming, communication network services, equipment installation and support services. The Carthage office joins GlobaLogix' other offices in Houston, Denver, and Canonsburg, PA.
J. Ray subsidiaries win contracts for Gorgon Project, Te Giac Trang field
J. Ray McDermott SA's subsidiary, PT McDermott Indonesia (PTMI), has been awarded a contract by the Kellogg Joint Venture-Gorgon on behalf of Chevron Australia Pty. Ltd, operator of the Gorgon Project. The estimated value of the contract is over US$150 million. J. Ray will provide services for project management, fabrication engineering, procurement and material management, construction, commissioning assistance, quarantine compliance, loadout and seafastening. Work is expected to start in 4Q10, with project completion after two years. Another subsidiary, J. Ray McDermott Far East Inc., has been awarded a transportation and installation contract by PTSC Mechanical & Construction Co. Ltd. for the Te Giac Trang (TGT) field development project, offshore Vietnam. The scope of work includes transportation and installation of two wellhead platform jackets, topsides (including two drill decks, a main deck and helideck / electrical house), infield pipelines (including tie-spools and one pin-piled pipeline end manifold), and a subsea isolation valve. Work is expected to start in 3Q10. The TGT oilfield is located in the northern part of Block 16-1 offshore Vietnam, around 100 kilometers south east of Vung Tau City, in a water depth of approximately 45 meters, and is operated by Hoang Long Joint Operating Co.
Quicksilver takes stakes in TX
Quicksilver Resources Inc. has acquired additional interests, representing an approximate 25% working interest and related assets, in the company's operated Lake Arlington project in Tarrant County, Tex. from a private party for $62 million in cash, subject to customary adjustments as provided in the purchase agreement, and 3,619,901 units of BreitBurn that were previously owned by Fort Worth-based Quicksilver. The acquired interests include reserves of roughly 125 billion cubic feet (bcf) of natural gas of which 82% are proved developed; approximately 20 bcf of additional potential resources; and net daily production of approximately 10 million cubic feet of natural gas equivalents (MMcfe), at the time of the transaction. The company now expects its 2010 capital program to total nearly $450 million, excluding acquisitions. Production in 2010 is still expected to average in the range of 360 MMcfe to 370 MMcfe per day in 2010, an increase of approximately 11%-14% from the 2009 average daily volumes. With this transaction, Quicksilver now holds approximately 17.7 million units of BBEP representing an approximate 33% interest in the BBEP limited partnership.
Lime Rock Partners makes oil service technology investments
Lime Rock Partners, an energy-focused global private equity firm, has completed its third oil service technology investment in 2010. The firm recently closed a NOK 50 million investment in Reelwell, a Stavanger, Norway-based drilling technology company. Earlier this year, Lime Rock closed a $10 million commitment to Silixa, a London-based developer of a proprietary system to record acoustic signals along optical fiber for use in the oil and gas and other industries.
Voyager adds Williston Basin acreage to target Bakken
Voyager Oil & Gas Inc. has purchased nearly 11,500 net acres of leasehold in Williams and McKenzie Counties, North Dakota and Richland County, Montana. Voyager also has an additional 4,000 acres under contract that is expected to close in July. The latest acquisition, including acreage under contract, brings the Williston Bakken leasehold to 21,000 net acres. Voyager is also currently participating in multiple wells in Mountrail and Williams Counties, ND. The company is currently awaiting completion on two Bakken wells and owns acreage under 50 permitted wells. Voyager is based in Billings, Montana.
Chesapeake outlines plan to raise $5B to repay debt, increase liquids investment
Chesapeake Energy Corp. has entered into securities purchase agreements with Maju Investments (Mauritius) Pte Ltd, an affiliate of Temasek Holdings (Private) Ltd., and Hampton Asset Holding Ltd., an affiliate of Hopu Investment Management Co. Ltd., under which they have collectively agreed to buy $600 million of a new series of Chesapeake 5.75% cumulative non-voting convertible preferred stock with a liquidation preference of $1,000 per share. The annual dividend on each share of preferred stock is $57.50. Each share of preferred stock will be convertible at any time at the option of the holder into approximately 37.037 shares of Chesapeake common stock, which is based on an initial conversion price of $27 per common share. Through a series of transactions over the next 24 months, the company is planning to raise up to $5 billion in order to repay up to $3.5 billion of senior indebtedness and increase its investment in liquids-rich plays by up to $1.5 billion. Chesapeake will repay $600 million of certain outstanding senior notes with proceeds from the aforementioned preferred stock placements Asia investors. Over the next 24 months, Chesapeake anticipates repaying up to an additional $2.9 billion of senior notes with proceeds from the potential placement of up to $500 million of additional preferred stock to investors in Asia, the proposed sale of a 20% equity interest in Chesapeake Appalachia LLC, potential joint ventures, and/or other asset monetizations. By the end of 3Q10, the company intends to enter into a joint venture on its Eagle Ford Shale. The company is also considering joint ventures on other liquids-rich plays. Chesapeake's goal is to achieve a 50 operated rig program on its liquids-rich plays within the next 12 months. Finally, Chesapeake plans further midstream asset monetizations from its subsidiary, Chesapeake Midstream Development LP. Some of the monetizations may be completed with a subsidiary of the company's 50/50 midstream joint venture with Global Infrastructure Partners LP.
Patterson-UTI sells working interests for $22.3M
Patterson-UTI Energy Inc. has sold certain oil and gas working interest rights for $22.3 million, which resulted in an estimated net of tax gain of $13 million, or $0.08 per share. The interests sold included rights to explore and develop zones deeper than depths it generally targeted for such properties. The purchaser acquired the right to participate 20% in future wells drilled at the shallower depths. The sale did not include any producing wells. Patterson-UTI Energy Inc. subsidiaries provide onshore contract drilling and pressure pumping services to exploration and production companies in North America.
Paramount to acquire Redcliffe for $68M
Paramount Resources Ltd. will acquire all 82% of the issued and outstanding Class A Shares of Redcliffe not already owned, after conversion of all outstanding Class B Shares, for cash consideration of $0.42 per Redcliffe Class A Shares. Redcliffe will convert its outstanding Class B Shares to Class A Shares on a 10-for-1 basis. The purchase price represents a 31% premium to the closing price of the Class A Shares on May 7, 2010 and a 34% premium over the 10-day weighted average trading price. The transaction is expected to close in June and values Redcliffe at $68.5 million, including assumption of Redcliffe's net debt of nearly $12.5 million. The acquired assets include nearly 115,000 (65,000 net) acres of undeveloped land, valued at $30 million by Paramount, of which 48,000 (24,000 net) acres is in proximity to Paramount's Karr-Gold Creek project; roughly 850 boe/d of production; and proved plus probable reserves of 3.35 MMboe consisting of 2.05 MMboe of gas and 1.30 MMbbl of oil and NGLs, at December 31, 2009.
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