Crestwood Midstream completes acquisition of Haynesville/Bossier assets
Crestwood Midstream Partners LP has completed its acquisition of Tristate Sabine LLC from affiliates of Energy Spectrum Capital, Zwolle Pipeline, LLC and the Tristate management. Crestwood paid $65 million at closing which was funded with available capacity under Crestwood's revolving credit facility. An additional $8 million deferred purchase payment was set to be paid on November 1, 2012, subject to customary post-closing adjustments. The acquired assets include approximately 61 miles of high-pressure natural gas gathering pipelines and carbon dioxide treating facilities located in Sabine Parish, Louisiana. The Sabine System provides gathering and treating services for Haynesville and Middle Bossier Shale production from the Toledo Bend South field area for redelivery to Gulf South Pipeline and Tennessee Gas Pipeline. Crestwood is also acquiring gathering and treating contracts on the Sabine System which 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 expansion is expected to be completed during the fourth quarter of 2011, with the final remaining cost to be largely funded from working capital acquired with the acquisition. Following the expansion, gathering volumes are expected to be approximately 60 to 70 MMcf/d.
EXCO Resources sets 2012 budget, decreases Haynesville activity
Dallas-based EXCO Resources Inc. has estimated its 2012 capital budget around $710 million, including $585 million for development and completion activities. The budget is roughly 30% lower than its expected 2011 total budget of $1.1 billion million. Funding is expected to come from cash flow from operations, a $50 million draw on restricted cash, and borrowings under its credit agreement. In 2012, the company plans to run a total of 19 rigs, with 13 rigs in the Haynesville Shale and Bossier Shale, five rigs in the Marcellus Shale, and one rig in the Permian Basin. While the Marcellus activity will increase (up from running two rigs to drill 16 net wells in 2011), the reduction in Haynesville and Bossier activity is significant, said Global Hunter Securities in a November 18 note to investors. "This is a significant reduction in Haynesville/Bossier activity, down from running an average of approximately 20 rigs to drill an expected 70.7 net wells in 2011, supporting our thesis that total Haynesville production could show declines next year," noted the analysts. The shift from Haynesville to Marcellus also caught the attention of analysts at Stifel Nicolaus. "Although we had highlighted this name in our 3Q industry earnings preview note as having downside risk to 2012 estimates and the company had discussed letting go of some rigs in its 3Q earnings call, the capex reduction is greater than what we were expecting and there is a greater shift towards Marcellus vs. Haynesville than what we were anticipating. While the Marcellus is more economic, the wells are also less prolific, and therefore the combination of a greater than expected capex reduction, and a greater mix of Marcellus, results in downside risk to 2012 production guidance, when it is issued in February 2012 with 4Q results," said the analysts in a November 18 note to investors. The firm is downgrading EXCO from Buy to Hold. Approximately $489 million will be allocated to East Texas, North Louisiana, including $460 million to spud 30.9 net operated wells and complete 38.6 net operated wells (and 0.6 net non-operated wells); $128 million to Appalachia, including $93 million to drill and complete 19.2 net wells; $38 million to the Permian spending $32 million to drill and complete 36.2 net wells. The company also plans to make $10 million in contributions to its equity investments.
Nexen sells partial interest in British Columbia natural gas ops for $700 million
Nexen plans to sell a 40% interest in its holdings in the Horn River, Cordova, and Liard Basins of northeastern British Columbia to INPEX Gas British Columbia Ltd. (a partnership between Japanese companies INPEX and JGC Corp.) for $700 million. The 50% cash and 50% carry deal will see Nexen retain a 60% interest and operations.
ConocoPhillips sells interests in certain US pipeline assets for $2B
ConocoPhillips has entered into agreements to sell its interests in two US pipeline companies for a total of $2 billion. ConocoPhillips has entered into definitive agreements with a subsidiary of Caisse de dépôt et placement du Québec (CDPQ) to sell its 16.55% interest in Colonial Pipeline Company and Colonial Ventures LLC. The transaction is anticipated to close in the first quarter of 2012 following the completion of contractual Rights of First Refusal review by the existing shareholders in Colonial. In addition, ConocoPhillips has entered into definitive agreements with Enbridge Holdings (Seaway) LLC, a subsidiary of Enbridge (US) Inc., to sell its ownership interest in the Seaway Crude Pipeline Company (SCPC). The transaction is anticipated to close in December, subject to satisfaction of customary conditions precedent and completion of certain arrangements regarding other logistics services currently provided by SCPC to ConocoPhillips. ConocoPhillips has a $15-20 billion divestiture program for the years 2010-2012. Once closed, the two transactions, along with other sales already closed in the fourth quarter, are expected to increase that total raised from asset sales to nearly $10.5 billion.
Oceaneering International to buy AGR FO for $240M
Oceaneering International Inc. has entered into a definitive agreement to acquire AGR Field Operations from AGR Group ASA for $240 million including acquired debt. AGR FO is Norway's largest asset integrity management service provider for pipelines, offshore production platforms, and onshore facilities. The deal is expected to close this quarter, subject to approval by the Norwegian Competition Authority. Oceaneering intends to fund the deal through cash ($166 million as of 3Q11) and availability under its credit facility ($300 million as of 3Q11). The deal is expected to add $200 million in revenue, $25 million of EBITDA, $20 million of EBIT and $10 million in net income in 2012, according to a November 23 note to investors from Global Hunter Securities (GHS), which implies a 9.6x EBITDA multiple. GHS analysts are increasing 2012 EBITDA and EPS estimates to $588 million and $2.60, up from $262 million and $2.50, respectively. "Assuming it can continue to grow revenues near 11% year over year and maintain 13% EBITDA margins, we are increasing our 2013 EBITDA and EPS estimates to $686 million and $3.12, up from $660 million and $3.00, respectively." The deal, say the analysts, "roughly doubles Oceaneering's inspection business with AGR FO's position in Norway, and its unique subsea technology complements OII's ROV fleet. We also wonder if AGR FO's relationship with Statoil will benefit OII's other businesses and overall exposure in the N. Sea (i.e. business synergies). With that said, Inspection is among the lowest margin segments in the company (12.4% margins in 3Q11), and EBIT margins for AGR appear to be a bit lower at ~10%. The multiple (9.6x 2012E EBITDA) is high and guided accretion is modest (~4%), which likely sets the deal up for investor scrutiny."
UTIMCO commits $200M with Post Oak Energy Capital
Post Oak Energy Capital LP has received a $200 million commitment from The University of Texas Investment Management Company (UTIMCO) in its role as investment manager for the benefit of the University of Texas and Texas A&M University Systems. Post Oak pursues private equity investments primarily in the upstream sector of the oil and gas industry in North America and, to a lesser extent, in oil field services and related infrastructure. Funding from Post Oak will be used for corporate growth capital, development acceleration, acquisitions and recapitalization purposes.
Kodiak to acquire additional Williston Basin acreage
Kodiak O&G Corp. has agreed to purchase additional producing properties and undeveloped leaseholds in the Williston Basin from a private oil and gas company and its financial partners for $540 million in cash and $50 million in Kodiak common shares. Kodiak will also assume the seller's contract for a drilling rig. Upon completion, Kodiak would acquire two blocks of contiguous acreage totaling approximately 50,000 net leasehold acres in Williams and McKenzie Counties, ND. The southernmost lands, approximating 30,000 net acres, are adjacent to the company's core Koala Project area and are contiguous to the lands acquired as part of the acquisition that closed in October. The remaining leasehold is located in northern Williams County near the Nesson Anticline. Net oil and gas production included in the acquisition is currently approximately 3,500 barrels of oil equivalent per day. Production is expected to increase before closing as there are four gross (3.1 net) wells waiting on completion. Also included in the pending acquisition are 19.7 million boe in proved reserves, 81% of which are crude oil and 28% of which are categorized as proved developed. The proved reserves were estimated by Kodiak's internal reservoir engineers and were assigned a PV-10 value of $464 million based upon SEC pricing guidelines as of October 31, 2011. The transaction will expand Kodiak's total acreage position in the Williston Basin to approximately 155,000 net acres. The transaction includes a working interest in 17 gross (13.5 net) operated producing wells and 10 gross (1.3 net) non-operated wells. The acquisition is expected to close in early January 2012. "With two acquisitions in as many months, KOG has basically doubled its position in the Williston Basin. At $2,500/acre in the core area of the Bakken play, we would consider this an attractive acquisition on KOG's part. While the company is certain to ramp production through 2012, we see management's guidance as aggressive given their rig count and the anticipated seasonal slowdown. We would still expect a funding gap between cash flow and CAPEX; however, the company will bridge the short-fall with revolver capacity," said Global Hunter Securities analysts in a November 15 note to investors.
Trayport launches new energy trading screen
Trayport, a provider of energy trading solutions to traders brokers and exchanges worldwide, has launched Joule, its new trading screen. Joule builds upon Trayport's existing energy trading solution by offering improvements in trading functionality, customization, speed and market making capabilities. Improvements include the ability to dock and stack market sheets, view trade history, market depth, and use chart and Watchlist windows. Users can manage market making commitments within dedicated screens. They can control multiple orders with a single screen whilst automating price updates based on other market prices. Users can update and trade with a single click and update prices directly from the keyboard. They can unify order entries for standard and automated order and open charts directly from live market contracts in a single click. New charting functionality will also allow users to view market trends via Candlestick, Volume and Price Plots and interact with charts.
Transocean plans offering
Transocean Ltd. intends to offer 26 million shares, with an option for another 3.9 million shares to cover over-allotments. Net proceeds are expected to be used to partially refinance the Aker acquisition and replenish the company's cash position following the expected $1.7 billion repurchase of its 1.50% Series B Convertible Senior Notes due Dec. 2037. According to Global Hunter Securities, if 26.9 million shares are issued, the deal is ~8.4% dilutive.
Enerjex gains additional Mississippian formation acreage in Kansas
EnerJex Resources Inc. has exercised its option to acquire a 90% working interest in certain oil producing properties located adjacent to the company's existing Black Oaks Project, which produces oil from the Mississippian formation. Pursuant to the terms of this agreement, EnerJex has acquired a 90% working interest in 720 acres and may acquire a 90% working interest in 1,280 additional adjacent acres upon fulfilling certain drilling milestones. In total, this additional acreage nearly doubles EnerJex's exposure to its Mississippian oil play in Kansas to 4,100 acres. Based on EnerJex's December 31, 2010 third-party reserve report (updated to reflect NYMEX strip pricing on 6/13/2011), the company's existing Black Oaks Project holds 1.4 million net barrels of proved oil reserves which are expected to generate future pre-tax net cash flow of $89 million with a PV10 value of $29 million.
TPG Capital forms new venture to acquire onshore natural gas properties
TPG Capital (TPG), a global private investment firm, has partnered with Dan Allen Hughes Jr. and Thomas M. Hart III to form a new venture, Maverick American Natural Gas (Maverick), with an initial commitment of up to $1 billion of equity capital to acquire and operate conventional natural gas producing properties in North America. Hughes will serve as chairman and Hart will serve as president. In addition to his role at Maverick, Hughes is CEO and president of Dan A. Hughes Company LP and Hupecol Operating Company LLC. Hughes has been active in the E&P industry for more than 30 years. Hart has been engaged in energy transactional work for almost 20 years. Before co-founding Maverick, Hart was a senior corporate development officer for El Paso Corp. for 10 years, most recently as SVP Business Development for El Paso Exploration & Production Co. Maverick is headquartered in San Antonio, Texas.
Assessment project awarded to Knowledge Reservoir by PETRONAS
Knowledge Reservoir, a global energy consulting company, has been awarded a project by Petroliam Nasional Berhad (PETRONAS) for the Development of Workflows for Assessment of Unconventional Resources. This project will be executed in conjunction with Cekap Technical Services. The project results from interest at PETRONAS in the development and deployment of Unconventional Resource Workflows and their capture in a Work Flow Process Tool (WFPT) designed to facilitate the in-house resource assessment of unconventional plays and the associated underlying hydrocarbon assets. The project will be global in scope and covers several unconventional resource types, namely coalbed methane (CBM) and shale gas/oil. The project objectives are to: Develop a roadmap for PETRONAS to be able to classify, quantify and report unconventional resources as per industry standards and practices, capture the developed roadmap in the form of a hierarchy of unconventional workflows, deploy the workflows as a dedicated web-based WFPT designed to launch under the PETRONAS portal, and conduct a detailed assessment on a resource of interest selected by PETRONAS using the WFPT roadmap.
CNOOC completes OPTI acquisition
CNOOC Luxembourg S.a r.l, an indirect wholly-owned subsidiary of CNOOC Ltd., has completed its US$2.1 billion acquisition of OPTI Canada Inc. CNOOC first announced its acquisition plans in July. OPTI will redeem on December 28, 2011 all of its outstanding First Lien Notes at a price equal to 102% of the principal amount of the First Lien Notes plus accrued and unpaid interest to the date of redemption, pursuant to the indentures governing the First Lien Notes. The First Lien Notes consist of US$525 million principal amount of 9% First Lien Notes due 2012 and US$300 million principal amount of 9.75% First Lien Notes due 2013. CNOOC's financial advisors are BMO Capital Markets and CIBC World Markets. Its legal advisor is Gowling Lafleur Henderson.
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