Industry Briefs

W&T Offshore Inc. has agreed to acquire 21,500 net acres in the West Texas Permian Basin for $366 million from private sellers. According to W&T, the acquired reserves are over 91% oil and natural gas liquids. At January 1, 2011, estimates of proved reserves to be acquired are approximately 27 million barrel equivalents (164 bcfe); and, estimates of proved and probable reserves to be acquired are approximately 53 million barrel equivalents (318 bcfe) (both using a 6 to 1 Mcf to barrel equivalency). The current wells produce around 2,800 barrel equivalents per day. An implied transaction metric of $21,400 per flowing mcfe is in-line with other transactions in the area, and adds close to 7% to W&T Offshore's current production, according to a Jefferies & Co. Inc. research note dated April 26. W&T Offshore plans to spend between $35 million and $40 million on planned development activities on the acquired assets for the remainder of 2011, including maintenance of the three active rigs drilling in the field. W&T expects to fund the acquisition with cash on hand, estimated at $58 million by Jefferies, and an undrawn bank credit facility expected by Jefferies to sit near $575 million once a pending acquisition of a Gulf of Mexico shelf property is complete. The transaction is expected to close in 2Q11.

Alta and Blackstone announced the formation of Alta Energy Partners, and a concurrent commitment to invest up to $1 billion via this entity to acquire and develop unconventional oil and gas assets in North America. On April 12, Houston-based Contango Oil & Gas Co. agreed to invest $20 million in the partnership over the next two years. Founded in 1999 by Joseph G. Greenberg, its president and CEO, Alta Resources has been active in the development of shale gas assets from the Fayetteville shale basin in Arkansas to the Marcellus shale field in Pennsylvania. George P. Mitchell, a partner in Alta Resources, is widely regarded as the father of shale gas for his pioneering role in developing the Barnett shale in Texas (OGFJ, August 2010).

While interest in its Eagle Ford Shale position was high, Brent Smolik, president of El Paso Exploration & Production Co. noted that the company has decided to develop its Eagle Ford program without a partner. "The Eagle Ford shale program is one of our most valuable assets, and we are very excited about the future of this program. It is a key resource for oil reserves and production growth; the wells in our Central area in LaSalle County, Texas are exceeding our expectations, and we continue to drive efficiencies in our drilling and completion processes as we have in the Haynesville shale program."

Chesapeake Energy continues its vertical integration with an agreement to acquire Bronco Drilling for $315 million, or $11.00 per share including debt, net working capital and outstanding warrants. The per share purchase price represents premiums of 6% and 24% over the closing price of Bronco's common stock on April 14, 2011 and the average closing price for the 90-calendar day period ending on April 14, 2011, respectively. Following closing, Chesapeake will integrate Bronco's 22 rigs into its wholly owned subsidiary, Nomac Drilling LLC, which currently owns 95 drilling rigs available for service, of which 90 are currently drilling under contract for Chesapeake. The company is currently operating a total of 160 drilling rigs and plans to end 2012 utilizing approximately 200 drilling rigs. Johnson Rice & Co. LLC is acting as financial advisor to Bronco and has delivered a fairness opinion to its board. Thompson & Knight is acting as legal counsel to Bronco. Jefferies & Co. Inc. is acting as financial advisor to Chesapeake. Commercial Law Group PC and Wachtell, Lipton, Rosen & Katz are acting as legal advisors to Chesapeake.

Koch Pipeline Co. LP plans to build a crude oil pipeline from Pettus, Texas to Corpus Christi, Texas to move more Eagle Ford Shale production. Current plans include a 20-inch line, which is currently in the permitting and right-of-way acquisition phase and should be complete in mid-2012. The completion of the line is timed with affiliate Flint Hills Resources' updates to an Ingleside terminal that will have the capacity to ship up to 200,000 barrels per day of production via barge to other Gulf Coast markets. Koch Pipeline is constructing a station near Helena in Karnes County along with connections to tank batteries in Karnes and DeWitt counties as well as a 16-inch pipeline from Helena to Pettus. The 16-inch pipeline will connect to the new line at Pettus.

Rodman & Renshaw Capital Group Inc. has completed its acquisition of Hudson Holding Corp. The merger furthers Rodman's mission of building a full service investment bank for growth companies with expanded sales, trading and research capabilities. Each Hudson stockholder will receive approximately 0.0332 shares of Rodman common stock for each common share of Hudson held. The combined company will operate under the Rodman name, trade on the NASDAQ GM under the symbol "RODM," and remain headquartered in New York City.

Marathon Oil Corp. has signed an agreement with a wholly owned subsidiary of Nexen Inc. under which Nexen will acquire a 40% working interest in 10 of Marathon's concessions in Poland's Paleozoic shale play. Marathon currently holds an interest in 11 concessions in Poland, encompassing 2.3 million acres. The shales are Lower Paleozoic and located at depths of between 8,000 and 13,000 feet. Marathon plans to acquire 2D seismic during the first half of 2011, potentially followed by the drilling of one to two wells in the fourth quarter of 2011 and seven to eight wells during 2012. Marathon will remain operator of the 11 concessions.

Fountain Quail Water Management LLC, a subsidiary of Aqua-Pure Ventures Inc., has entered into an $18 million exclusivity agreement with Eureka Resources LLC for wastewater disposal-related services in the Marcellus Shale. Under the agreement, Fort Worth-based Fountain Quail, a recycler of industrial wastewater in North America, will receive an initial payment of $9 million and up to an additional $9 million in royalty payments based on the amount of water processed by the three Nomad units currently housed at Eureka's facility. Eureka will assume full ownership and operation of the three Nomad units and will have certain areas of northeast Pennsylvania as it exclusive territory. Once payment of the total $18 million is made, Eureka can choose to continue its exclusivity agreement for an additional $125,000 per unit per year. The agreement also makes provision for further expansion on mutually agreeable terms. Aqua-Pure has developed and refined its patented technology for recycling flowback and produced water over the past seven years in North Texas' Barnett Shale. The company has recycled more than 700 million gallons of shale gas wastewater.

Eureka Energy Ltd. announced completion of an option agreement to acquire 3,975 net acres in the Burleson and Washington counties, Texas. The acreage lies within the eastern liquids-rich fairway and potentially is within the gas-condensate window of the Eagle Ford Shale. The Brioche Project area is located in the northeast part of the Eagle Ford trend some 70km northeast of Eureka's Pan de Azucar (Fayette Co.) acreage and about 200km northeast of Eureka's Sugarloaf AMI (Karnes County) acreage. The option has been secured by payment of a non-refundable US$1 million deposit. The all up cost for the lease land is US$2,000 per net acre for a 75% NRI in three year leases.

The Supreme Court of British Columbia issued a final order April 12 approving the acquisition by Magnum Hunter Resources Corp. of NGAS Resources Inc. in an all-stock transaction structured as a statutory arrangement under British Columbia law, where NGAS is organized. NGAS shareholders approved the acquisition of NGAS by Magnum Hunter on April 8, 2011. Back in December, Magnum Hunter entered a definitive agreement to acquire the Appalachian Basin-focused NGAS for roughly US$98 million in common stock and assumed liabilities. Magnum Hunter has agreed to acquire NGAS for $0.55 per share with a fixed exchange ratio of 0.0846 based on an agreed Magnum Hunter stock price of $6.50 per share.

ATP Oil & Gas has received its second Gulf of Mexico deepwater permit since the termination of the moratorium. The company is now approved to complete the previously drilled #2 well at Green Canyon Block 300. The company holds a 55% working interest in The GC 300 #2. The well is located in 3,454' of water. In 2006, the well encountered gas pay between 15,590' and 15,721' vertical depth. Drilling operations on the well are expected to begin again this year.

Eagle Rock Energy Partners LP announced that the borrowing base under its senior secured credit facility has been increased from $140 million to $160 million by its commercial lenders as part of the Partnership's regularly scheduled semi-annual borrowing base redetermination.

Allegro Development Corp., a provider of energy trading and risk management (ETRM) software, has been selected by PAA Natural Gas Storage LP (PNG) to provide its Allegro 8 platform to manage the hedging activities of PNG's natural gas optimization group. Allegro's enterprise solution will support PNG's hedging, scheduling, inventory, risk management, credit and settlement activities as the company expands its business. PNG, a subsidiary of Plains All American Pipeline LP, provides natural gas storage services to a broad mix of customers.

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