Industry Briefs

RigNet merges with LandTel, acquires Oil Camp AS

RigNet Inc., a global provider of managed communication services for the upstream oil and gas industry, and LandTel Communications, a US supplier of land, coastal, and offshore oilfield communications have merged. Founded in 1995, LandTel began providing onshore rigs with landlines, intercom systems, and fax communications in Louisiana. LandTel currently provides communications services to operators, drilling contractors, and oilfield service companies throughout Louisiana, Mississippi, Texas, the Rocky Mountain region, and the Gulf of Mexico.

In related news, RigNet has acquired OilCamp AS, an independent Norwegian provider of communications services to the oil industry. OilCamp operates the SOIL Network, a secure, high capacity communications network for the oil and gas industry in Norway and the UK. The company also supplies communications solutions to a number of drilling rigs currently operating on the Norwegian continental shelf.

Bjorn Munthe and Tom Rune Espedal, sales and marketing director for OilCamp, will continue to lead the management and growth efforts of the SOIL Network throughout the North Sea and globally. Trygve Hagevik, RigNet’s vice president, Europe and Africa, will assume management for OilCamp’s offshore communications services.

Teton Energy spuds first well in Williston basin

Teton Energy Corp. has spud its first well in the Williston basin on its Goliath leasehold of approximately 90,000 gross acres, 16,000 net to the company’s interest. The Champion 1-25H, located in section 24 and 25 of T157N - R97W in Williams County, North Dakota initiated drilling on September 25, 2006. The Mississippian Bakken formation is the primary target zone of this horizontal, tri-lateral well and is located at a depth of approximately 10,500 feet. The well is currently drilling at approximately 1,825 feet. Teton will have 25% working interest and 20% net revenue interest in this and subsequent wells. The partnership, consisting of American Oil and Gas Inc. and the designated operator, Evertson Operating Co. will continue to evaluate the project following results from this exploratory well.

TGS-NOPEC establishes Russian subsidiary in Moscow

TGS-NOPEC Geophysical Co. has formed a Russian subsidiary and opened an office in Moscow. TGS NOPEC Geophysical Co. Moscow Ltd. is located at Donskaya Street, 4, Building 3, Office 206, Moscow, Russian Federation. The subsidiary will market existing 2D seismic data and well log information in Russia to prospective clients and will promote the generation of new geoscientific data sets to aid in future exploration of the country. TGS and its partners currently have over 100,000 kilometers of legacy 2D seismic, more than 30,000 kilometers of modern seismic, and 16 geologic studies available for license to clients. The company also markets approximately 5,000 well logs and over 50,000 well reports in Russia.

Landmark teams up with WellDynamics

Landmark, a brand of Halliburton’s drilling, evaluation, and digital solutions division, and WellDynamics Inc. are jointly developing the oil and gas industry’s first integrated, model-based solutions for closed-loop optimization of intelligent wells. These solutions will enable customers to execute decisions based on real-time well data and advanced models that monitor, forecast, and optimize well behavior and production for individual wells and across entire gathering networks.

Superior Energy and Warrior Energy strike deal

Superior Energy Services has signed a definitive merger agreement to acquire Warrior Energy Services Corp. for $175 million in cash and 5.3 million shares of common stock. The transaction is expected to close late in the fourth quarter of 2006. Superior estimates the acquisition of Warrior to be accretive to 2007 earnings per share. In connection with this transaction, Superior has secured a commitment for $200 million in long-term debt. Warrior Energy Services is a natural gas and oil well services company that provides wireline and well intervention services to exploration and production companies.

Gray Energy Services completes acquisition of Southern Wireline Service

Gray Wireline Service Inc., a subsidiary of Gray Energy Services LLC, completed the acquisition of Southern Wireline Service Inc. Southern is a longstanding independent provider of cased-hole wireline services in the onshore and transition zone regions of the Gulf Coast and the offshore Gulf of Mexico. Gray Energy Services was formed in 2006 by Centre Partners, Centre Southwest Partners, and the management of Gray Wireline Service Inc., as a platform to create a leading diversified provider of production enhancement solutions across the North American natural gas and oil production industry. Southern, which was founded in 1968 by Jodie Crouch, Sr., operates a fleet of electric line trucks and skids from its facility in Lafayette, as well as a comprehensive array of tools, equipment and related vehicles. The company is currently owned and managed by Jodie Crouch, Sr.’s three sons. The Crouch’s will retain an ownership position in the company and will remain active in the management of the area.

VAALCO lists on NYSE under EGY

VAALCO Energy Inc. has been approved for listing on the New York Stock Exchange. The stock is expected to begin trading on the NYSE under the symbol EGY. The company will cease trading on the AMEX. VAALCO operates the Etame Block offshore Gabon, West Africa, where it has sold 23.9 million gross bbls from the Etame field since startup.

Progress Energy sells natural gas assets

Raleigh, NC-based Progress Energy has completed the sale of Winchester Energy and its associated natural gas businesses to a wholly-owned subsidiary of Texas-based EXCO Resources Inc. for approximately $1.16 billion in cash. As announced in July, net proceeds from the sale will be used to reduce debt. The sale includes Progress Energy’s holdings in Winchester Production Co., Westchester Gas Co., Texas Gas Gathering, and Talco Midstream Assets. Specific assets include more than 325 bcfe of proved natural gas reserves, more than 500 producing wells and more than 350 miles of pipelines and gathering lines and other related assets, all located in east Texas and Louisiana.

BP acquires North Sea acreage from Chevron

BP has reached an agreement to acquire acreage interests from Chevron in the UK Central North Sea containing the Arundel and Kidd discoveries and further exploration potential. BP will increase its interest in License P103 (Block 16/23 South) and entering License P240 (Block 16/22 Arundel). BP will also become operator of both blocks upon completion of the transaction. These interests will be acquired in exchange for 2.2% of BP’s interest in the Alba field which will be reduced from 15.5% down to 13.3%. The Arundel and Kidd discoveries and associated exploration potential are located adjacent to the Farragon field which BP operates.

Cabot Oil & Gas completes asset sale

Cabot Oil & Gas has completed its asset sale transaction covering its offshore and south Louisiana reserves. The proceeds from the sale will be used to fund operations, repurchase Cabot’s common stock, repay debt, and pay the associated tax bill. Cabot Oil & Gas Corp., headquartered in Houston, is as independent natural gas producer with substantial interests onshore Gulf Coast; the West, with the Rocky Mountains and Mid-Continent; the East and in Canada.

PXP completes divestiture of California and Texas assets

Plains Exploration & Production Co. has completed the sale of certain oil and gas properties located onshore California and in West Texas for total cash consideration of approximately $865 million. PXP intends to issue operating and financial guidance for the fourth quarter 2006 via Form 8-K to reflect the impact of this property sale. The company is also increasing its estimate of 2006 total capital spending from $526 million to $610 million, including capitalized G&A and interest. This change primarily reflects additional investments in the deepwater Gulf of Mexico. The previously announced transaction to sell certain deepwater Gulf of Mexico assets is on schedule to close early November 2006.

Whole Earth Environmental wins NM conservation award

The New Mexico Oil Conservation Division has presented Whole Earth Environmental Inc. its 2006 Environmental Merit Award for the company’s successful remediation of contaminated groundwater in Lea County. The company was recognized for employing a uniquely engineered portable reverse osmosis filtration system in tandem with renewable energy sources to successfully recover and abate groundwater contaminated by the accidental discharge of produced salt water. The reverse osmosis system is designed to continuously produce potable wand concentrated waste streams from once contaminated water, which is delivered to collection tanks where the drinkable water is stored for reuse. A solar and wind collection controller system was utilized to power the pumping and process units to filter the tainted water. Based in Houston, Whole Earth Environmental is a privately-held company engaged in the remediation of hydrocarbon and brine for the petroleum extraction industry.

Sondex moves to acquire Innicor Subsurface Technologies

Sondex plc, a supplier of downhole technology to the oil and gas industry, has entered into a pre-acquisition agreement with Canadian-based Innicor Subsurface Technologies Inc. Under the agreement, Sondex will acquire all of Innicor’s outstanding common shares for approximately US$65.5 million. The offer, which is contingent on take up by 90% of Innicor shareholders and approval by Sondex shareholders, is expected to be final in early November 2006.

Innicor, headquartered in Calgary, is a designer, manufacturer and provider of downhole completions equipment to the oil and gas industry. Innicor has 19.4 million common shares outstanding, fully diluted.

Sondex, which has offices in Houston and Lafayette, has also proposed to raise approximately US$75.5 million by issuing new ordinary shares in London.

Chaparral stockholders approve merger

Stockholders of Chaparral Resources Inc. voted to effect a merger with a wholly-owned subsidiary of LUKOIL Overseas Holding Ltd. The approved merger provides that the subsidiary of LUKOIL, NRL Acquisition Corp., will merge with and into Chaparral and each issued and outstanding share of the company’s common stock (other than shares held by LUKOIL or its affiliates and any shares with respect to which appraisal rights have been properly perfected under Delaware law) will be converted into the right to receive $5.80 in cash, without interest and less any applicable withholding taxes. With the close of the transaction, the company ceased to be a publicly traded company and became an indirect wholly-owned subsidiary of LUKOIL. Petrie Parkman & Co. served as the financial advisor to Chaparral and Baker Botts LLP were the legal advisors to the company.

The officers and directors of NRL Acquisition Corp. will become the new officers and directors of the Chaparral. All of the existing directors and officers of Chapparal, including Peter Drilling and Alan Berlin as independent directors, and Charles Talbot as CFO have resigned.

Unit acquires two private companies, hires transfer agent

Unit Corp.’s wholly-owned subsidiary, Unit Petroleum Co., has signed an agreement to acquire Brighton Energy LLC, a privately-owned oil and natural gas company for approximately $67.0 million in cash. The acquisition involves all of Brighton’s oil and natural gas assets outside of the southeastern Arkoma Basin and includes approximately 27.0 bcfe of proved reserves and 5.0 MMcfe per day of current production. The reserves are 78% natural gas and 67% proved developed.

The company’s wholly-owned subsidiary, Superior Pipeline Co. LLC, closed its acquisition of Berkshire Energy LLC, a private-company, for an adjusted purchase price of $21.7 million. The principal assets are all located in central Oklahoma and consist of a natural gas processing plant, a natural gas gathering system with 15 miles of pipeline, three field compressors, and two plant compressors. The plant’s capacity is 15,000 Mcf per day and the current average system inlet volume is 7,000 Mcf per day. Unit has also engaged American Stock Transfer & Trust Co. to serve as transfer agent and registrar for its common stock in place of Mellon Investor Services LLC.

ONGC inks deal for marginal fields development

ONGC has entered into a service contract for development of three offshore marginal fields with the consortium of Prize Petroleum Co. Ltd., Hindustan Petroleum Corp. Ltd., and Trenergy. Development of marginal fields is one of the strategic business pursuits of ONGC, for increasing production by unlocking small pools of discovered hydrocarbon reserves. ONGC has identified 153 marginal fields out of which 38 fields have been monetized and 94 fields are under monetization.

Ignis Petroleum acquires acreage in Barnett shale

Ignis Petroleum has agreed to acquire 45% of the acreage, producing properties, and natural gas gathering and treating system currently held by W. B. Osborn Oil & Gas Operations Ltd. and St. Jo Pipeline Ltd. within the St. Jo Ridge (Barnett shale) field, located in Montague and Cooke Counties, Texas. Upon closing, the effective date of the transaction will be June 1, 2006. WBO will remain the operator. The purchase price was $18,450,000, before closing adjustments, to be paid in cash. As part of the transaction, Ignis will commit to invest capital into an ongoing continuous drilling program as well as invest up to $5,000,000 in future property acquisitions within an area of mutual interest.

Ignis will acquire 45% of WBO’s interests in 7,890 gross acres, 13 producing wells, and an estimated total net proved reserves of 1.4 MMboe of which 0.5 MMboe are proved developed producing as of June 1, 2006. Approximately 50% of the proved reserves are oil 50% are a combination of gas and gas liquids. The gathering and treating system consists of a 100% interest in approximately 24 miles of gathering lines, which accumulates and treats natural gas at a central plant.

GasRock provides $40MM mezzanine debt facility for Z2 Oil & Gas

Houston-based GasRock Capital LLC has provided Z2 Oil & Gas LLC with a $40 million advancing credit facility to refinance its existing debt and to develop Z2’s Big Foot field in Texas.

The transaction exemplifies the targeted investment type for GasRock, whose capital is used by high-growth upstream energy companies.

Wood Group JV awarded integrated maintenance contract from BP

Neal & Massy Wood Group, a Trinidadian company jointly owned by Neal & Massy Holdings Ltd. and John Wood Group PLC, has been awarded a five-year integrated maintenance contract by BP. The contract includes the provision of minor modifications and integrated maintenance services for all BP’s offshore platforms and relevant upstream facilities in Trinidad. BP took the decision to nominate one fully integrated service provider rather than multiple service providers to improve the safety, integrity and efficiency of BP facilities, to build up a significant local integrated maintenance and modifications capability in Trinidad, and to improve the competency and skills of the local Trinidadian workforce. The contract value has not been disclosed, but BP is currently spending approximately $50 million per year on the maintenance support activities to be taken over.

Sondex acquires Ultima Labs

Sondex plc, a supplier of downhole technology to the oil and gas industry, has acquired Houston-based Ultima Labs Inc. Sondex has acquired Ultima Labs for an initial consideration of $1.65 million and further contingent payments of up to $7.35 million based on future performance. Ultima Labs has a wide range of IP and products related to logging while drilling and wireline applications for the oil and gas service industry. Their primary LWD product, which will be commercialized in the near future, involves multiple resistivity measurements of rocks and their fluid contents to assess oil and gas production potential.

PetroSearch secures $5MM credit facility from Macquarie Bank

Petrosearch Energy has signed a commitment letter for a $5 million debt facility with Macquarie Bank Ltd. of Sydney, Australia. Proceeds will provide funds for the company’s initial capital commitments to the Barnett shale project as well as other possible resource projects. Interest on the Facility is at LIBOR plus 500 basis points. In conjunction with the facility, Petrosearch will issue 2 million warrants to Macquarie at a premium to market over the previous 30 calendar day trading prices, of which 1 million of those warrants may expire in 120 days, depending upon future events. Macquarie Bank Ltd. is not licensed to conduct banking business in the United States. The facility will be arranged through the bank’s representative office in Houston.

Centurion secures debt facility with BNP Paribas

Centurion Energy International has closed its new debt facility with BNP Paribas for $215 million of debt capacity. This new debt facility has replaced the existing facility with Standard Bank plc, currently limited to $100 million. Proceeds from the new debt facility will be used to repay existing outstanding debt, to support Centurion’s continued investment in the development of its key gas producing assets in Egypt and fund further exploration activities. In addition, Canaccord Adams Ltd. has been appointed as a broker and the nominated adviser (Nomad) to Centurion with immediate effect for the purposes of maintaining good standing and regulatory compliance with the AIM market of the London Stock Exchange.

Abraxas sells non-core assets in South Texas

Abraxas Petroleum has closed on the sale of certain non-core assets located in South Texas for a total consideration of $12 million, subject to closing adjustments. The non-core assets were located in the Three Rivers (Edwards) field of Live Oak County, Texas and represented less than 2% of the company’s net proved reserves as of December 31, 2005 and approximately 3% of the company’s current daily net production. The net proceeds will be used to repay outstanding indebtedness under the company’s revolving credit facility, to continue the development of core assets in Texas, and for general corporate purposes.

Swift Energy closes South Louisiana acquisition

Swift Energy has closed the vast majority of the property interests of the previously announced acquisition from BP America Production Co. with an effective date of April 1, 2006. The property interests are located in five primarily onshore South Louisiana fields: Bayou Sale, Horseshoe Bayou and Jeanerette fields (all located in St. Mary Parish), High Island field in Cameron Parish, and Bayou Penchant field in Terrebonne Parish. The final purchase price of the property interests closed at this time was $157.3 million and is subject to post-closing adjustments. This acquisition was funded with approximately $49.3 million of bank borrowings under the company’s credit facility, and the balance with cash-on-hand and initial performance deposit. Swift Energy expects that this acquisition will increase its production in the fourth quarter 2006 by 0.6 to 1.0 bcfe.

DeepOcean acquires CTC Marine Projects

DeepOcean ASA has completed the acquisition of the UK-based submarine trenching company CTC Marine Projects Ltd. The acquisition price, excluding debt, consists of an initial consideration of GBP 45.8 million and a deferred payment of GBP 14.2 million, which is dependent on future earnings in CTC Marine Projects. The initial consideration consists of 6,120,826 shares in DeepOcean with a value of approximately GBP 12 million and a cash consideration of GBP 33,750,107. The cash consideration is financed through a bond issue, a new bank facility and cash. In connection with the transaction, DeepOcean will hold a meeting for the purpose of considering and electing Charles Tompkins to be a director of the board.

Dune amends credit facility

Dune Energy has entered into an amended credit agreement which provides for a commitment of up to $50 million, consisting of an initial commitment of $30.2 million, of which $16.5 million was drawn by Dune on September 27, 2006. Dune is an oil and gas exploration and production company with operations concentrated along the Louisiana/Texas Gulf Coast as well as the Fort Worth Basin Barnett Shale.

ConocoPhillips, EnCana create heavy oil business

ConocoPhillips and EnCana Corp. agreed to create an integrated heavy oil joint ventures that will involve two 50-50 operating partnerships: one Canadian upstream and one US downstream. The transaction is expected to close Jan. 2, 2007. Each partnership will have a management committee with three ConocoPhillips and three EnCana representatives. Each parent company will hold equal voting rights. The upstream partnership involves EnCana’s Foster Creek and Christina Lake projects in the eastern flank of the Athabasca oil sands in northeast Alberta, having recoverable bitumen of more than 6.5 billion bbl. EnCana will operate and be the managing partner of the upstream partnership, to be based in Calgary. The partnership plans to increase production to 400,000 b/d of bitumen by 2015 from current production of 50,000 b/d. A blend of 50-50 bitumen and synthetic oil will be sold at major Alberta trading hubs.

The downstream partnership involves ConocoPhillips’ 306,000 b/cd Wood River refinery in Roxana, Ill., and its 146,000 b/cd refinery in Borger, Tex. ConocoPhillips will operate and be managing partner of the downstream partnership, to be based in Houston. The partnership plans to expand heavy oil processing capacity at these facilities to 550,000 b/d by 2015 from 60,000 b/d. Total throughput at the two facilities is expected to increase to 600,000 b/d from the current 450,000 b/d during the same period. ConocoPhillips and EnCana each will own 50% of the partnership; however, ConocoPhillips will hold a disproportionate economic interest in the Borger refinery for 2 years: 85% in 2007 and 65% in 2008.