Shell buys shale company East Resources for $4.7B

Royal Dutch Shell PLC plans to buy East Resources Inc., a major owner of shale gas holdings in the northeast US, for $4.7 billion from Kohlberg Kravis & Co., Jefferies & Co., and East Resources itself. Royal Dutch Shell will purchase Warrendale, PA-based East Resources, which produces oil and gas equivalents of 10,000 barrels of oil per day from primary operations in the Marcellus shale, with cash. Shell began gathering US tight gas assets in 2001, and has expanded production to 140,000 boe/d in 2009. It expects to reach 400,000 by 2020. Privately-held East Resources owns and operates more than 2,500 producing oil and gas wells in New York, Pennsylvania, West Virginia, and Colorado and had been exploring drilling programs in Wyoming.

Lime Rock Resources acquires $100 million WEHLU field

Lime Rock Resources closed the acquisition of oil and gas interests in the West Edmund Hunton Lime Unit (WEHLU) in Oklahoma County, Oklahoma for $100 million. Lime Rock Resources assumed operations of over 30 producing wells in May 2010 and is beginning the assessment of development drilling and operational improvement projects. The acquisition follows the $107 million acquisition of the Potato Hills field in March.

Afren enters East Africa with Black Marlin acquisition

Afren plc has agreed to buy Black Marlin Energy for roughly $101 million. Acquiring Canadian Black Marlin, which will become a wholly owned subsidiary of Afren, gives the British company entry into East Africa. Currently, most of Afren's producing assets are in Nigeria. The deal will add 12 blocks in Ethiopia, Kenya, Madagascar, and the Seychelles. The transaction is expected to increase Afren's net prospective resources base by 1,287 MMboe in high impact rift basins and add six exploration wells expected to be drilled through 2012, targeting 910 MMboe. The terms value Black Marlin at roughly C$0.51 per share, and represent a premium of approximately 35% to the share price at market close on June 1, 2010 of C$0.38. Closing is expected on or about the end of September 2010.

Latham & Watkins represents Buckeye in partnership merger

Midstream energy partnership Buckeye Partners LP and Buckeye GP Holdings LP have announced a definitive agreement that would result in the merger. The transaction would be completed with 100% equity consideration, valued at approximately $1.14 billion, and would result in BPL owning its general partner and the cancellation of BGH's incentive distribution rights. BGH unitholders would receive 0.705 BPL limited partnership units in exchange for each BGH limited partnership unit owned at closing. The transaction would result in approximately 20 million additional limited partnership units being issued by BPL. Latham & Watkins LLP advised Buckeye GP Holdings in the transaction. The independent directors of BPL's general partner were advised by Barclays Capital Inc. and the directors of BGH's general partner were advised by Credit Suisse Securities (USA) LLC. Affiliates of ArcLight Capital Partners LLC and Kelso & Company, which control approximately 62% of BGH's limited partnership units, have committed to vote in favor of the merger.

Lucas Energy adds Eagle Ford acreage

Houston-based Lucas Energy Inc. has acquired approximately 2,000 additional acres in the Eagle Ford - Austin Chalk Trend area. The acquisitions, from several parties, include nine wells, some of which are producing. A workover rig has been employed to improve production on some wells, and to put some wells back on production. Since 2004, Lucas Energy has acquired 61 properties encompassing over 15,000 acres in Texas.

Vanguard Natural Resources amends credit facility

Vanguard Natural Resources LLC has had the borrowing base on its reserve-based credit facility reset to $240 million in conjunction with its semi-annual redetermination. The redetermination included the impact of Vanguard's recent acquisition of oil properties from a private seller which closed in May. The borrowing base was previously set at $195 million. Under the amended credit facility, the company may enter into commodity price hedges with respect to the acquired production upon signing a purchase and sale agreement. The company will no longer have to wait until the acquisition is closed. The amended credit agreement allows the company to hedge up to 85% of the projected oil and gas production from total proved reserves. Previously, hedging was limited to 95% of the projected oil and gas production from proved developed producing reserves.

Genesis Energy selects Allegro ETRM solution

Midstream MLP Genesis Energy LP has selected Allegro Development Corp.'s Allegro 8 platform to manage its crude oil gathering and refined products operations. Allegro is a provider of energy trading and risk management solutions for power and gas utilities, refiners, producers, traders, and commodity consumers.

Transocean to be included in Swiss Market Index

The Management Committee of SIX Swiss Exchange has ruled to include Transocean in the Swiss Market Index (SMI(R)) and the SLI Swiss Leader Index.

EnCap Flatrock Midstream provides financing to newly-formed Caballo Energy

Caballo Energy LLC has secured a private equity commitment from the EnCap Energy Infrastructure Fund LP (EEIF), a private equity fund managed by EnCap Investments LP and EnCap Flatrock Midstream. Tulsa-based Caballo Energy was formed to acquire, develop and manage natural gas gathering, compression, treating, processing, and marketing assets. Company activities will be concentrated in the mid-Continent region, including Texas, Oklahoma, Louisiana, Kansas, and New Mexico. Robert Firth was named president of Caballo Energy, and David Hall was named vice president. Firth served as CEO of Atlas Pipeline Mid Continent LP from 2004 to 2009. Hall was the CFO at Atlas Pipeline during the same period.

Mainland Resources receives partner funding

Houston-based Mainland Resources Inc. has deposited an aggregate total of $8.65 million into escrow to be used to drill the Burkley-Phillips No. 1 well to test the Haynesville shale formation on the Buena Vista Prospect in Mississippi. The escrow funds are comprised of $7.785 million contributed by Mainland's corporate treasury and $865,000 contributed by Guggenheim Partners LLC as their portion of drilling costs of the first well drilled on the Buena Vista prospect. The estimated total cost to drill and complete the well is just over US$13.5 million. Mainland, as operator, will drill the well using RAPAD Drilling & Well Service Inc. to total well depth around 22,000 feet. The company's working interest in the Burkley-Phillips No.1 is 72%. Mainland will fund 90% of the well costs to earn its 72% interest. Guggenheim Partners LLC will fund 10% to earn an 8% working interest in the well. Mainland currently holds interest in excess of 17,000 acres in the Buena Vista Prospect.

Petrohawk Energy closes KinderHawk JV, Terryville sale

Petrohawk Energy Corp. has closed on two previously announced transactions, a 50/50 joint venture with Kinder Morgan Energy Partners LP involving the company's midstream business in the Haynesville Shale for $875 million, and the sale of Terryville Field for $320 million. KinderHawk Field Services LLC, the entity formed upon the closing of Petrohawk's JV in the Haynesville with Kinder Morgan, creates one of the largest gathering and treating systems in the US with roughly 2 billion cubic feet per day of planned mainline throughput capacity. KinderHawk's assets comprise more than 200 miles of pipeline currently in service, with a total of 375 miles of pipeline with projected throughput of over 800 million cubic feet per day planned by year-end 2010. Petrohawk's interests in Terryville Field, located in Lincoln and Claiborne Parishes, La., were sold to a private company for $320 million. At closing, production was approximately 20 million cubic feet of natural gas equivalent per day (MMcfe/d).

P2 Energy Solutions partners with TIBCO, Trinity Management Consulting

P2 Energy Solutions has formed two recent partnerships to support its Excalibur product line. First, the company partnered with TIBCO to form "P2 Analytics Powered by TIBCO Spotfire." The new offering integrates Excalibur, P2's financial, operational accounting, and land management software, with the TIBCO Spotfire® Analytics Platform. The partnership enables users to interactively query, visualize, aggregate, filter, and drill into datasets of virtually any size for improved real-time decision-making. P2 has also partnered with Trinity Management Consulting. The agreement formalizes a longstanding relationship between the parties and provides the Excalibur community with more certified consultants in the market.

Northern Oil and Gas closes $100M credit facility, updates hedging activity

Minnesota-based Northern Oil and Gas Inc. has completed the assignment of its revolving credit facility to Macquarie Bank Ltd. from CIT Capital USA Inc. Northern Oil and Macquarie have entered into an amended credit agreement. The initial borrowing base has been increased to $25 million and maximum borrowings of up to $100 million. The new facility will have a four year term and does not contain any minimum interest rate on borrowings. Borrowings will bear interest at a spread ranging from 2.00% to 3.25% over LIBOR or prime rate. Northern Oil has no current borrowings under the facility, no other debt and currently has approximately $85 million in cash on hand. As of May 1st 2010, Northern Oil has hedged approximately 568,196 barrels of oil for delivery in 2010 and 2011 at an average price of approximately $80.50.

HitecVision to invest $420M in offshore service industry

HitecVision, Europe's largest equity investor focusing exclusively on the oil and gas industry, has accepted commitments of US$420 million for its new fund, HitecVision Asset Solutions, exceeding the original US$320 million target. The fund will invest in companies in the asset-based side of the international offshore oil and gas service industry.The official launch of the fundraising started in February 2010, and investor interest exceeded the US$420 million hard cap.

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