Berry to purchase East Texas Cotton Valley assets for $620M
Bakersfield, Calif.-based Berry Petroleum Co. has entered into an agreement with a consortium of private sellers to acquire their interests in natural gas producing properties on 4,500 net acres in Limestone and Harrison Counties of East Texas for $620 million in cash.
Ryder Scott Co.’s proved reserve estimates associated with the properties, adjusted for additional interests purchased by the company, are 335 billion cubic feet equivalent (bcfe), 29% of which are proved developed reserves. Upon closing, the acquisition will add roughly 32 million cubic feet equivalent per day (MMcfe/d) to Berry’s production from 100 producing wells.
Berry has identified over 100 drilling locations targeting stacked pay in various productive zones including the Pettit, Travis Peak, Cotton Valley Sands, Cotton Valley Lime and Bossier Sands as well as approximately 75 recompletion opportunities. The company will continue testing two vertical wells drilled in the Bossier Shale in Limestone County and three vertical wells drilled in the Haynesville Shale in Harrison County.
Also included in the acquisition is a gathering system valued at $20 million that is expected to gather all current and future production from the acquired properties.
Berry anticipates spending $425 million to develop the proved undeveloped and probable reserves and expects full-life finding and development costs will be approximately $2.77 per thousand cubic feet equivalent (Mcfe). Berry is increasing its 2008 capital budget by an additional $75 million to $370 million to develop this resource and plans to fund the additional capital from internally generated cash flow. There are currently five rigs dedicated to the project and Berry expects the acquired properties to provide self-funded production growth over the coming years.
The transaction will initially be funded by borrowings from a new $1.5 billion senior secured credit facility with a $1 billion borrowing base. The company is also considering an equity offering as part of the financing for the transaction.
Tudor, Pickering and Holt advised Berry on the acquisition.
The company’s ‘BB’ corporate credit rating from Standard & Poor’s was unaffected by the acquisition announcement. According to S&P analysts, the acquisition is expected to improve Berry’s geographic diversity and increase the company’s growth prospects. On the other hand, Berry’s adjusted debt will increase to more than $1 billion as a result of the transaction; however, its credit measures remain at acceptable levels for the current rating with debt to barrel of oil equivalent below $5.
Transocean drills deepest extended-reach well
The Transocean jackup GSF Rig 127 set a world record for the longest extended-reach well ever drilled at 40,320 feet MD (measured depth) with a 35,770-foot horizontal section. The well was drilled offshore Qatar in 36 days and incident-free. The new record of 7.6 miles is also the first well in the history of offshore drilling that exceeds 40,000 feet. The well surpasses by approximately 2,000 feet the prior extended-reach record of 38,322 feet MD set by another drilling contractor with a land rig drilling at Sakhalin Island earlier this year.
Concho Resources buys upprivately-held Henry PetroleumPermian basin assets for $565M
Midland, Tex.-based Concho Resources Inc. has entered into a definitive agreement to acquire all the outstanding general partner, limited partner and membership interests of Henry Petroleum and certain affiliated entities, for $565 million in cash.
Henry is a private Midland, Tex.-based oil and gas exploration and production company with operations located in the Permian basin of West Texas and Southeast New Mexico including a large position in the Spraberry/Wolfcamp oil play where Henry has drilled over 500 wells since 2002.
Henry Petroleum’s technical and operational staff is expected to be retained by Concho.
Concho expects to allocate the purchase price as follows: $440 million to proved oil and gas reserves, $197 million to unproved oil and gas properties, and $70 million to other assets.
The company has agreed to purchase certain additional non-operated rights and interests in Henry’s properties from certain persons affiliated with Henry for aggregate cash consideration of roughly $44 million.
Concho has received commitments for a new amended and restated senior credit facility jointly arranged by J.P. Morgan Securities Inc. and Banc of America Securities LLC.
Concho also plans to use the proceeds from a $250 million private placement of 8.3 million shares of Concho common stock for which Banc of America Securities LLC acted as exclusive placement agent that is expected to close in connection with the closing of the acquisition.
In addition to this recent acquisition, the company has undergone a few management changes in the past few months. In May, the company appointed Steven L. Beal, on an interim basis, as its CFO, after Curt F. Kamradt resigned for personal reasons. Beal takes on the position in addition to his role as a director, president, and COO. The company is currently seeking a permanent CFO.
Another recent appointment is that of Matthew G. Hyde to vice president - exploration.
Goodrich, Chesapeake form JV in Haynesville Shale in Louisiana
Goodrich Petroleum Corp. and Oklahoma City-based Chesapeake Energy Corp. have entered into a joint venture to develop Goodrich’s Haynesville Shale acreage in the Bethany-Longstreet and Longwood fields of Caddo and DeSoto Parishes, La.
Chesapeake has agreed to pay Goodrich roughly $178 million for the deep rights to approximately 10,250 net acres of oil and natural gas leasehold comprised of a 20% working interest in nearly 25,000 net acres in the Bethany-Longstreet field and a 50% working interest in approximately 10,500 net acres in the Longwood field.
Chesapeake has also agreed to purchase 7,500 net acres of deep rights in the Bethany-Longstreet field from a third party, bringing the ownership interest in the deep rights in both fields after closing to 50% each for Goodrich and Chesapeake. Chesapeake will be the operator of the joint venture for the Haynesville Shale development.
Goodrich is retaining the shallow rights (through the base of the Cotton Valley sand) and the existing production and reserves with respect to its 70% interest in the Bethany-Longstreet field and its 100% interest in the Longwood field and is retaining its interest in both the shallow and Haynesville Shale rights on all of its East Texas assets.
Halliburton to acquire 100% of WellDynamics
Halliburton has entered into a definitive agreement with Shell Technology Ventures Fund 1 BV to acquire its 49% equity interest in WellDynamics BV. Following completion, Halliburton will own 100% of WellDynamics.
The Hague, Netherlands-based WellDynamics provides intelligent well completion technology worldwide.
“WellDynamics and Landmark have combined SmartWell and WellSolver technology to create a key workflow for Halliburton’s Digital Asset environment, enabling engineering personnel to model, measure and optimize well performance in a real-time, collaborative environment, optimizing overall asset performance,” added Tim Probert, executive vice president of strategy and corporate development for Halliburton.