Group challenges CERA with $100,000 wager
A group of businessmen and energy experts who believe that global oil production will soon peak, plateau, and decline has issued a $100,000 wager to Cambridge Energy Research Associates, a prominent oil forecasting organization. Members of the group have also offered to hold a public debate on the issue of peak oil with CERA. The group is betting against CERA’s June 2007 forecast that world oil production capacity will reach 112 million barrels/day by 2017, which extrapolates to 107 million b/d of actual production – up from about 87 million barrels today. Steve Andrews, co-founder of the Association for the Study of Peak Oil-USA, said, “CERA is forecasting an addition of 20 million barrels within a decade. . .Anything is possible on paper, but we are betting you can’t do that with the drillbit.” Houston energy banker Matt Simmons and Jeremy Gilbert, former chief petroleum engineer for BP, are among the group that has issued the wager. To call the bet, CERA must match the peak oil group’s $100,000 letter of credit from National City Corp. In the event production in 2017 doesn’t exceed CERA’s forecast of 107 million b/d, the individuals in the group have agreed to donate their winnings to an energy-focused non-profit organization. As of this writing, CERA has not issued a public response.
Allis-Chalmers to acquire Bronco Drilling
The boards of directors of Allis-Chalmers Energy and Bronco Drilling Co. have approved a merger of the two companies. Allis-Chalmers, a diversified international oilfield services provider, is the acquiring company in the transaction. It will acquire Bronco Drilling for $437.8 million in cash and stock. The total purchase price includes $280 million in cash and $157.8 million in stock. The merger will result in a combined company with an enterprise value of about $1.4 billion. Bronco Drilling will survive as a wholly-owned subsidiary of Allis-Chalmers. Upon completion of the transaction, which is expected to occur in mid-2008, Allis-Chalmers stockholders will own about 72.1% of the combined company, and Bronco Drilling stockholders will own about 27.9%. Allis-Chalmers said it has received $350 million in financing to cover the cash portion of the purchase price, repayment of Bronco’s debt, and transaction expenses.
Callon inks deal with CIECO to develop Entrada Field
Callon Petroleum Co. has signed a PSA with CIECO Energy (US) Ltd., a subsidiary of Tokyo-based ITOCHU Corp. Terms of the agreement provide for Callon to sell CIECO a 50% working interest in the Entrada Field, located in the Deepwater Region of the Gulf of Mexico, for a total cash consideration of $175 million and additional contingent cash payments based upon field production milestones. CIECO has also agreed to provide a non-recourse loan to Callon for its $150 million share of field development costs through initial production. Callon will retain a 50% working interest and continue as operator of the field. The transaction was expected to close by Feb. 29. Fred Callon, chairman and CEO, said, “We feel we have gained a strong and important strategic partner in CIECO.” He added, “This agreement provides for a fully funded development plan for the Entrada Field and represents the final major step in meeting our goal of achieving initial production…in the first quarter of 2009.” Merrill Lynch & Co. acted as exclusive financial advisor to Callon in conjunction with the transaction. Callon is headquartered in Natchez, Miss.
SPE membership up 24% since 2004
Total professional and student membership in the Society of Petroleum Engineers grew 8% to a record 79,300 members worldwide in 2007, including an increase in members under age 35, says the SPE. Membership includes engineers, scientists, technicians, managers, operators, educators, and other professionals who work in the global upstream oil and gas industry, as well as students who are studying petroleum engineering or a related field. SPE membership has grown 23% since 2004. For 2007, membership increased in virtually every region of the world, with the largest growth occurring in the Middle East region, including India, which increased 15%. Membership in the Northern Asia Pacific region, which includes China, increased 10%. In 2007, 21% of SPE members were under age 35, helping to reverse the aging of the profession. In 2000, just 14% were under 35. William M. Cobb, 2008 SPE president, noted, “Today, there is a shortage of engineers and geoscientists to help meet record global energy demand. We must recruit new entrants to the petroleum industry to replace a wave of retirements expected over the next decade.”
null
Excelerate partners with RWE
RWE Group has signed an agreement to acquire a 50% stake in Excelerate Energy LLC for about $500 million. RWE is a major European integrated electricity and gas company, and the partnership will combine RWE’s upstream equity gas assets with Excelerate’s growing market access points, LNG infrastructure, and proprietary technology. Rob Bryngelson, president and CEO of Excelerate, commented: “Together, we believe we can grow the LNG business significantly over the coming years. This partnership aligns both companies’ strengths in a way that will support the growth of the business, enable us to more fully leverage the flexibility our technology provides along the LNG value chain, and to maintain our innovative leadership in offshore LNG.” Excelerate Energy, owned by George B. Kaiser, was formed in 2003 to utilize propriety technology allowing LNG to be regasified onboard specially designed regasification vessels. The company is based in The Woodlands, Tex. RWE AG is the listed holding company of the RWE Group, which has operations focused on Germany, the United Kingdom, and Central Eastern Europe.
GreenHunter closes on $150 million credit facility with WestLB Bank
GreenHunter Energy has closed on a new senior bank credit facility of up to $150 million with WestLB, a European commercial bank with total assets of $285.3 billion. The first project financing to be funded under this facility totals $43.5 million, and the borrowings will be used to fund the continued development, conversion, and operation of a 105 million gallon-per-year biodiesel refinery, terminal operations, methanol tower, and glycerin refinery, all of which are now under construction in Houston. Gary Evans, chairman and CEO of GreenHunter, said, “With the closing of this debt financing, our company further enhances our capital structure, during a period when extremely difficult credit markets are being experienced worldwide. With these new funds, we remain on track to complete our renewable fuels campus by the end of [February].” Evans was founder and CEO of Magnum Hunter Resources, a successful E&P company that he started with $1,000 in 1985 and sold for $2.2 billion in June 2005 to Cimarex Energy.
Taylor Energy sells properties to two South Korean subsidiaries
Founded in 1979, New Orleans-based Taylor Energy Co. LLC has agreed to sell its Gulf of Mexico shelf oil and gas properties to KNOC USA Corp. and Samsung Oil & Gas USA Corp., subsidiaries of KNOC and Samsung. The value of the transactions was not disclosed. The sale includes the five fields in OCS GOM in 70 feet to over 650 feet of water. Production from these properties is about 72% oil, 17,000 boe/d gross, and is 100% operated. KNOC and Samsung said they intend to retain Taylor employees with an office in New Orleans and continue as operator. This acquisition represents the first large, operated acquisition of producing oil and gas properties by KNOC and Samsung in North America. Taylor is one of the largest privately held oil and gas companies operating in GOM federal waters. KNOC was founded by the South Korean government in 1979 with the purpose to secure stable supplies of petroleum for South Korea. Its major activities are exploration and production, strategic storage, and domestic distribution of petroleum with major international assets located in Nigeria, Yemen, Kazakhstan, Russia, Canada, Vietnam, Libya, and Indonesia. Samsung was founded in 1938 and operates a wide range of investments, including energy and natural resource development, manufacturing and sales of electronic products, the conventional business of import-exports, and trilateral trading of chemicals, metals, and machinery, and has a network of more than 70 overseas offices. Merrill Lynch & Co. advised KNOC and Samsung on the transaction. Closing is expected in March 2008.
Chukchi Sea bids top $2.6 billion
Companies bidding for drilling rights in US federal waters of the Chukchi Sea, off the northwest coast of Alaska, have lodged bids amounting to more than $2.6 billion, according to the US Minerals Management Service. The high bids in the lease sale exceed the prior largest sale in the early 1980s, said the MMS.
Layline acquires Brookshire assets
Layline Petroleum I LLC has acquired leasehold interests in certain producing properties in the Brookshire Field in Waller County, Texas, from RTC Resources LP and Gen-Nan Resources and Equipment LP. The negotiated transaction was assisted by Lone Star Natural Resources LLC. Current production levels in the Brookshire properties are about 230 boe/day net. The transaction was funded by an expansion of Layline’s senior debt facility with CIT Energy to $47.5 million and with the support of existing shareholders. Macquarie Bank Ltd. enabled the expansion of a hedging facility, said Chris Lewis, Layline president, who added, “This [acquisition] expands our portfolio of mostly operated shallow oil production to 500 boe/day. . .These assets nicely fit our strategy to acquire and improve mature producing oil fields.” Layline is a privately-held, independent oil and gas company based in Houston.
Simmons & Company expands
Founded in 1974, Simmons & Company International, one of the largest investment banking practices serving the energy industry, has outgrown its accommodations. The firm recently renewed and expanded its lease in the Bank of America Center in downtown Houston and now occupies all of floors 18 and 19 in the building – more than 60,000 square feet. “We were faced with the prospect of having to move out, in a tightening market, of what I still consider to be one of the top buildings of its kind, not only in Houston but in any of our large cities,” said Matt Simmons, SCI chairman and founder. “None of our employees wanted to leave this building,” said Mike Frazier, SCI president and CEO. “Fortunately, after looking at various alternatives, both downtown and elsewhere, we were able to sign this lease for the space that will accommodate our growth as we enter our fourth decade of energy investment banking.” SCI also has offices in Boston; London; Aberdeen, Scotland; and Oslo, Norway. The firm’s clients range from small, privately-held companies to multi-billion dollar public entities.