Industry Briefs

First Reserve commits $100M to Marcellus midstream infrastructure

First Reserve Corp. has entered into an agreement to provide an equity commitment of $100 million from its Energy Infrastructure Fund to a joint venture with Energy Corporation of America (ECA). Through the JV, First Reserve will own a 50% interest in two newly constructed gathering systems located in Pennsylvania's Greene and Clearfield counties. Both systems service the Marcellus Shale. The JV will operate under long-term contracts with a fixed take-or-pay structure. In addition to the initial investment, the JV intends to explore the opportunity to develop new or expand existing gathering systems in the region to accelerate the production of additional hydrocarbons.

Superior Energy Services, Complete Production Services to merge

The boards of Superior Energy Services Inc. and Complete Production Services Inc. have approved a definitive merger agreement combining the two companies into one diversified mid-cap oilfield services company. Complete stockholders will receive 0.945 common shares of Superior and cash of $7.00 in exchange for each share of Complete common stock held at closing. This represents a premium of 29% to Complete's average price over the last two months. Upon closing, Superior and Complete stockholders are expected to own approximately 52% and 48%, respectively, of Superior's outstanding shares. The combined company will retain the name Superior and will be led by David Dunlap, Superior's current president and CEO. The Superior board of directors will be expanded to include two independent Complete board members. The merger is subject to the approval of both Superior's and Complete's stockholders as well as other customary approvals. The companies anticipate that the transaction will close as soon as the end of this calendar year. Greenhill & Co. is acting as Superior's transaction and financial advisor and rendered a fairness opinion to Superior's board of directors. In addition, JPMorgan provided transaction advice, acted as financial advisor and provided a bridge financing commitment with respect to the cash portion of the transaction. Jones, Walker, Waechter, Poitevent, Carrere & Denegre LLP is acting as Superior's legal advisor. Credit Suisse Securities (USA) LLC is acting as Complete's financial advisor and rendered a fairness opinion to Complete's board of directors. Complete's legal advisor is Latham & Watkins LLP.

PRE Resources, GE Energy Financial partner to buy Rocky Mountain reserves

PRE Resources Inc. is teaming up with GE Energy Financial Services to buy more than 100 producing wells and undeveloped acreage across 29 fields in Wyoming and Colorado. GE Energy Financial Services provided $46 million and committed to additional capital expenditures to form a partnership with Denver-based PRE Resources to buy the fields spread across Weston, Campbell, Crook, Niobrara and Hot Springs counties, WY, as well as Moffat County, CO. The seller was undisclosed. Denver-based, privately-held PRE Resources is investing $5 million in the acquisition and will serve as general partner and operator, with GE Energy Financial Services serving as limited partner. The fields feature primarily long-lived oil reserves on nearly 18,000 net acres. PRE Resources is engaged in the exploration, exploitation, acquisition and production of crude oil and natural gas in the US. The company's core areas include Wyoming's Powder River and Greater Green River Basins; the Michigan Basin in Northern Michigan, California's Ventura Basin and the Williston Basin of North Dakota.

Kinder Morgan to acquire treating company in Eagle Ford Shale for $155 million

Kinder Morgan Energy Partners LP signed a definitive purchase and sale agreement to acquire SouthTex Treaters, a manufacturer, designer, and fabricator of natural gas treating plants that remove CO2 and H2S, for approximately $155 million. The manufactured amine plants range in size from 5 to 1,200 gallons per minute of treating capacity. Kinder Morgan Treating, a subsidiary of KMP, is the largest provider of contract-operated treating and hydrocarbon dew-point conditioning plants. The acquisition will allow Kinder Morgan Treating to build amine plants and offer customers the option to own or lease the equipment. Closing is expected in 4Q2011.

ETP enters Woodford, Barnett midstream agreement with XTO

Energy Transfer Partners LP has entered into a long-term, fee-based agreement with ExxonMobil subsidiary XTO Energy to provide natural gas gathering, processing and transportation services from both the Woodford and Barnett Shale regions. ETP will construct a 117-mile natural gas gathering pipeline from the Woodford Shale located in Oklahoma to its existing gathering and processing infrastructure in the Barnett Shale. As part of the project, the partnership also will construct a new 200 million cubic feet per day cryogenic processing plant at its existing Godley processing facility in Johnson County, Texas. The 117-mile, 24and 30-inch Red River Gathering Pipeline will originate in Carter County, Oklahoma and will have an initial capacity of 450 million cubic feet per day, with anticipated capacity expansion exceeding 550 million cubic feet per day. The pipeline is expected to be in service by 4Q2012. The new processing plant will increase the partnership's processing capacity at Godley from 500 million cubic feet per day to 700 million cubic feet per day and is expected to be in service by 3Q2013. The total cost to build the pipeline and processing plant is estimated to be approximately $360 million.

Williams to spin-off E&P business by year-end

The board of directors of Williams has approved a revised plan to separate the company's businesses into two stand-alone, publicly traded corporations. The revised plan calls for Williams to fully separate its exploration and production business via a tax-free spinoff to Williams shareholders by year-end 2011. The new independent E&P business will be known as WPX Energy Inc. The previously proposed plan was to conduct an initial public offering (IPO) of WPX Energy in 2011, followed by a spinoff of Williams' remaining WPX Energy shares in first-quarter 2012. Following the spinoff, Williams shareholders will own common stock in Williams, an owner/operator of North American midstream and natural gas pipeline infrastructure assets; and common stock in WPX Energy, a large-scale, independent North American diversified exploration and production company with positions in North American oil shale and gas basins along with additional holdings in South America. WPX Energy's stock will trade on the New York Stock Exchange under the symbol "WPX." WPX Energy has named the members of its senior management team, including Ralph A. Hill, CEO; Rodney J. Sailor, senior vice president, CFO and treasurer; James J. Bender, senior vice president, general counsel and corporate secretary; Bryan K. Guderian, senior vice president of operations; Neal A. Buck, senior vice president of business development and land; Steven G. Natali, senior vice president of exploration; and J. Kevin Vann, chief accounting officer and controller. Barclays Capital and Citi are acting as lead financial advisers to Williams. JP Morgan also serves as a financial adviser to the company. Williams' legal adviser is Gibson, Dunn & Crutcher LLP.

STW, CK Investments form water treatment JV

Midland, TX-based STW Resources Holding Corp., a water reclamation services company, has executed a joint venture agreement with CK Investments Energy Co., (CKI) to commission a proprietary brackish/produced water processing facility in the Permian and Delaware Basins of West Texas. CKI is an energy investment company with major holdings including B&K Trucking (BKT). BKT is a water transportation and frac tank rental company with operations throughout the Permian and Delaware Basins of West Texas. BKT's water transportation is engaged in transporting both fresh and brine water for oilfield uses such as drilling and hydraulic fracturing. There are over 800,000 billion gallons of water in the salty aquifers of Texas. STW Resources' system will process approximately 20,000 to 30,000 barrels per day, or 840,000-1,260,000 gallons per day.

Crestwood to acquire Haynesville/Bossier midstream assets

Crestwood Midstream Partners LP has signed a definitive agreement to acquire Tristate Sabine LLC from affiliates of Energy Spectrum Capital, Zwolle Pipeline LLC and the Tristate management for $65 million in cash to be paid at closing and a deferred payment of approximately $8 million one year following the closing date, subject to customary post-closing adjustments. Crestwood will acquire entities that own and operate approximately 52 miles of high-pressure natural gas gathering pipelines located in Sabine Parish, Louisiana (the Tristate System). The Tristate System provides gathering and treating services for Haynesville and Bossier Shale production from the Toledo Bend South field area for redelivery to Gulf South Pipeline and Tennessee Gas Pipeline. Contracts on the Tristate System dedicate approximately 20,000 acres under long-term, fixed-fee arrangements. System capacity is currently being expanded to 100 million cubic feet per day (MMcf/d) for gathering and 80 MMcf/d for treating. The majority of the system has been constructed since 2009. The acquisition will be financed with borrowings under Crestwood's existing revolving credit facility. Evercore Partners acted as exclusive sell side advisor.

GE Energy Financial invests in Summit Midstream

GE Energy Financial Services has made an investment in Summit Midstream Partners LLC. Summit Midstream's assets include gathering, compression, and dehydration facilities in the core of the Barnett Shale. On October 11, Summit announced the $590 million acquisition of South Piceance Basin assets in the Rockies from an Encana Corp. subsidiary. Summit's Barnett asset, DFW midstream, is a large gas gathering system in the Arlington, TX, area consisting of approximately 120 miles of 8-30 inch gathering pipeline and nearly 50,000 horsepower of compression. The Piceance acquisition consists of 260 miles of pipeline and 90,000 horsepower of compression serving multiple customers under long-term contracts. After completion of the Piceance acquisition, Summit will transport approximately 1 bcf of natural gas per day. Financial details of GE's investment in Summit were not disclosed.

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