Industry Briefs

EPA selects Kinder Morgan for environmental award

Kinder Morgan Inc. has been recognized as the Natural Gas STAR Transmission Partner of the Year by the US Environmental Protection Agency. The program is a voluntary partnership between the EPA and the oil and gas industry. As a member of this program, Kinder Morgan has identified and implemented cost-effective technologies and practices to reduce emissions of methane, a potent greenhouse gas. The company’s emission reduction program captured 1.8 bcf of natural gas in 2005, primarily through leak detection and repair, and the reduction of pipeline volumes and pressures prior to performing planned maintenance. This gas, which otherwise would have been lost by venting to the atmosphere, is enough to heat more than 26,409 homes for a year. From an air quality perspective, the emission reduction is equivalent to planting more than 200,426 acres of trees or taking nearly 133,617 cars off the road.

Sonoran moves head office from Phoenix to Dallas

Sonoran Energy Inc. plans to move its head office from Phoenix, Ariz. to Dallas, Tex. upon completion of a $12 million credit commitment the company is making with a major Texas-based oil and gas lender. The financing would consist of a senior secured debt facility. The move to Dallas is intended to bring the company’s management and staff closer to Sonoran Energy’s operations in Texas and Louisiana.

Shell to acquire minority shares in Shell Canada

Royal Dutch Shell intends to offer to acquire the minority interests in Shell Canada Ltd. for a cash price of C$40/share. This proposal would value Shell Canada Ltd.’s fully-diluted minority share capital at about C$7.7 billion. The group owns a 78% stake in Shell Canada Ltd. The proposed acquisition follows the unification of the group in 2005 and is another step in simplifying the group structure.

GE Energy Financial Services pairs with Sunland to acquire and develop fields

GE Energy Financial Services and Sunland Resources LLC announced today the acquisition of natural gas and oil reserves in northern Louisiana for $101 million. The properties were acquired from a consortium led by Caruthers Producing Co. Inc. and include 26 producing wells, two proved, developed non-producing wells, and 11 low risk, proved, undeveloped drilling locations in the Caspiana and Black Creek fields. GE Energy Financial Services holds a majority limited partnership interest in Sunland Production Partners LP, the partnership formed with Sunland Resources LLC for the reserve acquisition, and will share in capital expenditures to develop the reserves. Sunland Resources LLC is the general partner and Sunland Production Co. Inc. is the operator of the fields. Reserve production is 44% oil, 55% gas, and 1% natural gas liquids.

Galaxy Energy to sell Powder River assets; will not sell Piceance basin assets

Galaxy Energy Corp. and its wholly-owned subsidiary Dolphin Energy Corp. have signed a non-binding letter of intent with PetroHunter Energy Corp. to negotiate an agreement for the purchase of all of Galaxy’s and Dolphin’s oil and gas interests in the Powder River basin of Wyoming and Montana. PetroHunter has stated its intention to pay $45 million to acquire Dolphin’s interest, with $20 million to be paid in cash and $25 million to be paid in PetroHunter common stock. Dolphin owns an average 86% working interest in 197 oil and gas wells in the Powder River basin. The company has also determined not to proceed with a purchase and sale agreement for the sale of Galaxy’s interest in its unconventional natural gas properties in the Piceance basin of Colorado with Exxel Energy Corp.’s wholly-owned subsidiary, Exxel Energy Inc.

Petroleum Development to acquire Unioil

Petroleum Development Corp. has reached an agreement with Unioil, an independent energy company with properties in northern Colorado and southern Wyoming, pursuant to which PDC will make a cash tender offer to acquire all of Unioil’s outstanding shares for $1.91 per share, for a total transaction cost of $18,224,206. Unioil’s shareholders who collectively own about 82% of Unioil’s outstanding shares, have agreed to tender their shares in the offer. Upon completion of the merger Unioil will become a wholly-owned subsidiary of PDC.

Pearl E&P, Atlas Energy sign merger agreement

Calgary independents Pearl Exploration & Production Ltd. and Atlas Energy Ltd. signed a merger agreement worth C$340 million. Atlas is a heavy oil and natural gas exploration and development company that produces a net 5,800 boe/d. Both boards approved the combination, and Atlas Energy shareholders will vote on the merger. Key projects of the combined company include: Mooney, Druid, Unity, Salt Lake, Ear Lake, Pikes Peak, Onion Lake, and southern Alberta. Atlas has more than 260,000 net undeveloped acres. Other key projects include San Miguel, Tex., Palo Duro, Tex., and Gulf of Mexico shallow-water offshore. The transaction is synergistic with Pearl’s core assets around Onion Lake in northeastern Alberta and northwestern Saskatchewan and will allow the combined company to focus on optimizing value through low cost development, operating, and product marketing.

EnCana provides gift to school despite plans to close four Barnett rigs

A $2 million gift from EnCana Oil & Gas to the Colorado School of Mines will support construction of Marquez Hall, the new petroleum engineering building planned at the school. The gift, to be made in annual payments of $400,000 during the next five years, will fund two laboratory facilities named for EnCana within the new building.

Despite this gift, the company became the first producer to cutback in drilling because of rising expenses. EnCana, which is based in Alberta, said it will pull four of its 12 rigs out of Barnett Shale production because of high costs. While rig rates have just about tripled in the past three years, natural gas prices have fallen in recent months. EnCana’s Barnett Shale monthly production peaked at 4.1 billion cubic feet in January but dropped to 3.5 billion cubic feet in August. EnCana disclosed the cutback in the Barnett Shale as it reported third-quarter earnings of $1.36 billion for the quarter, or $1.65 per share.

Arrow Enegy to fund expansion with $67 deal

Coal seam gas company Arrow Energy NL signed an options underwriting agreement which will net the company $67 million. The agreement is with Wilson HTM Corporate Finance Ltd. The agreement will help fund the company’s strategy of building on its production base, branching into gas to liquids, and extending its footprints internationally, and to grow shareholder value. The funds will also go towards the inirial exploration and appraisal of three recently awarded coal bed methane projects in India with an estimated resource of about 11.6 tcf of gas.

Foster Wheeler makes five year credit deal

Foster Wheeler Ltd. has closed on a new $350 million, five-year senior secured domestic credit facility. The company will be able to utilize the facility by issuing letters of credit up to the full $350 million limit. The company will also have the option to use up to $100 million of the $350 million limit for revolving borrowings, an option which the company has no immediate plans to use.

Allis-Chambers acquires PetroRentals for $29MM

Houston-based Allis-Chambers Energy Inc. has acquired PetroRentals Inc. for $29.8 million in cash, which includes the payment of about $9.5 million of debt, and 246,761 shares of Allis-Chambers common stock. The acquisition was funded with cash on hand remaining from its recent equity and debt securities offerings. PetroRentals serves both onshore and offshore markets and provides a variety of rental tools and equipment and well services. Allis-Chambers is an oilfield services company that provides services and equipment to oil and natural gas exploration and production companies.

Software Magazine names Energy Solutions to Software 500

Energy Solutions has been included in Software 500, Software Magazine’s list of the world’s foremost software and services providers. The Software 500 is a revenue-based ranking of the world’s largest software and services suppliers targeting medium to large enterprises, their IT professionals, software developers, and business managers involved in software and services purchasing.

Dune Energy closes $7MM deal for Barnett properties

Dune has entered into a second amended purchase and sale agreement with Voyager Partners Ltd. Dune will acquire 95% of Voyager’s interest in producing and non-producing natural gas and oil properties, plus unrelated property and equipment. The properties are predominantly located in Denton County, Tex. on the fairway of the North Texas Fort Worth Basin Barnett shale, and are largely contiguous with existing Dune acreage. Dune has already purchased $31.8 million of Barnett shale properties from Voyager. The agreement calls for Dune to purchase Voyager’s remaining properties, consisting of 2,457 gross acres, in two separate closings for total consideration of $32.8 million. Management estimates these properties contain proved reserves totaling 29.9 bcfe plus probable reserves totaling 16.1 bcfe, for a total of 46 bcfe.

BP awards $3 billion contract to Fluor for Whiting refinery work

BP Products North America Inc. has awarded Fluor Corp. several major packages, valued at a combined $3 billion, for upgrades to increase Canadian heavy oil processing capacity at its 399,000 b/cd Whiting refinery in northwest Indiana. The work scope includes the overall integrated program management and construction management; plus the independent engineering, procurement, and fabrication of three major work packages, including a revamped crude distillation unit, a gas oil hydrotreater, and support infrastructure facilities. The front-end engineering design, the initial award valued at $300 million, is currently under way. The project will increase capacity for coking, hydrogen production, hydrotreating, and sulfur recovery. Construction is expected to start in 2007 and be completed by 2011.

Rocksource to acquire Sandhawk Energy

Rocksource ASA and its US subsidiary Rocksource Energy Corp. have entered into an agreement to acquire 98% of Sandhawk Energy LLC for US $2.5 million. The transaction will bring Rocksource’s aggregate working interest in New Ace field to 92%. It will also bring the working interest in adjacent exploration acreage from the current 50% to 99%. Several drillable targets have been identified and a rig is being contracted to start drilling two wells beginning as early as November 2006. A further drilling program will be decided on in early 2007. The acquisition will enable Rocksource to start its drilling campaign onshore US. The two first wells have the potential to increase the reserve base with approximately 5.2 MMboe, of which approximately 4.0 is net to Rocksource. The acquired company, Sandhawk, is an oil and gas company registered in Texas, and has its primary operations in the New Ace field in San Jacinto and Polk Counties, Texas.

Mobilestream Oil signs memo of understanding with Global Resource

Mobilestream Oil Inc. and Global Resource Corp. will be entering into a preliminary, non-binding Memorandum of Understanding for Global Resource’s acquisition of the assets and business of Mobilestream. Mobilestream owns certain microwave technology, embodied in a pending patent, and various proprietary trade secrets for technology that had been exclusively licensed to Carbon Recovery Corp. until Mobilstream acquired the company. The technology is a method of decomposing petroleum-based materials by subjecting them to variable frequency microwave radiation at specifically selected frequencies for a time sufficient to at least partially decompose the materials. The initial application will involve the decomposition of waste tires. It was agreed that, Global intends to restructure itself as a holding company by forming two subsidiaries, one to receive the assets acquired from Carbon Recovery Corp. and the second to receive the assets of Mobilestream. Mobilestream is an oil and natural gas exploration company focused on using proprietary technologies for reverse polymerization and pyrolysis of materials and to maximize the output of under- utilized and non-producing oil wells.

Halliburton to sell O&G assets in Bangladesh

Halliburton’s subsidiary, HBR Energy Inc., has signed a definitive agreement for the intended sale of its working interests in oil and gas assets in Bangladesh to a privately-held, Singapore-based company. When completed, the sale would include HBR Energy’s 25% interest in the Sangu Development Area, which comprises six wells producing in excess of 125 (MMcf/d), a four pile platform, an 18-kilometer gas pipeline and an onshore processing plant, and also HBR Energy’s interest in the Block 16 Extension Area. These assets are currently operated by a subsidiary of Cairn Energy PLC. The purchase price and other terms of the agreement are not being disclosed.

PetroSun catches financing deal

PetroSun Inc. has entered into agreements with Golden Gate Investors Inc. to provide $16 million of financing to the company through convertible debentures and warrants. The funds will be utilized for exploration, development, alternative energy projects, and strategic acquisitions. The terms of the initial $5 million two-year convertible debenture provide for a conversion price of the lesser of $2.00 per share of PetroSun common stock or 80% of the 3 lowest volume weighted average prices during the prior 20 trading days prior to holders election to convert. This debenture provides for an interest rate of 7 3/4%. The second transaction consists of a four-year 4 3/4% convertible debenture and warrants of $11 million that provide a conversion price of the lesser of $3.00 per share of PetroSun common stock or 80% of the three lowest volume weighted average prices during the 20 trading days prior to the holders election to convert. PetroSun provides a comprehensive array of products and services to the oil industry.

Willbros secures private placement, credit facility

Willbros Group Inc. has entered into a purchase agreement for the private placement of approximately 3.7 million shares of its common stock, priced at $14.00 per share, with warrants to purchase an additional 558,354 shares at an exercise price of $19.03 per share. Willbros intends to use the net proceeds, approximately $49 million, for general corporate purposes. Willbros also it expects to close on a new credit agreement with a group of investors led by Calyon Securities for a $100 million three-year senior secured synthetic credit facility.

AMEX launches new trading platform

The American Stock Exchange has started its new trading platform AEMI SM - Auction and Electronic Market Integration. The Amex expects to add products rapidly throughout the next three months with anticipation of a full roll-out of Amex products before the implementation of Regulation NMS rules on February 5, 2007, the timetable released by the Securities and Exchange Commission for SRO compliance. The AEMI trading platform has been in development since April 2004. The system will contain functionality for both pre- and post-regulation NMS compliance. The new market structure will offer participants an expanded range of automated transaction services for equities and exchange traded funds and will combine the speed of an electronic market with the liquidity of an auction market.

Duke Energy names planned gas spin-off

Duke Energy, which earlier announced plans to separate its natural gas business into an independent, publicly-traded company, said the spin-off will be called Spectra Energy Corp. It will consist of the business unit now known as Duke Energy Gas Transmission and Duke Energy’s 50% interest in Duke Energy Field Services, which recently was renamed DCP Midstream. Spectra Energy will operate primarily in transmission and storage, distribution, and gathering and processing. Fred Fowler, president of Duke Energy Gas, will become CEO of Spectra Energy. The Spectra Energy name replaces Gas SpinCo Inc., the temporary name given the natural gas business. The stock is expected to be traded on the New York Stock Exchange.

Shell Canada moves ahead with Athabasca expansion

Shell Canada Ltd. will proceed with the Athabasca Oil Sands Project (AOSP) Expansion 1. This is a 100,000 bbl/d expansion of oil sands mining and upgrading facilities and is subject to final regulatory approvals. As disclosed on July 28, 2006, the cost estimates for AOSP Expansion 1 indicate a capital intensity that ranges between $100,000 and $128,000 per flowing barrel. The expansion is a sound investment under a range of commodity prices and will increase AOSP bitumen production and upgrading design capacity to more than 255,000 bbl/d by 2010. With this final investment decision, the company’s proved and probable minable bitumen reserves will increase by 631 million barrels. Federal and provincial cabinet approvals for Jackpine Mine were received in 2004 and the Scotford Upgrader Expansion received Alberta Energy and Utilities Board approval in September 2006. With the application and public hearings complete, a regulatory decision on the Muskeg River Mine Expansion, including the new froth treatment facilities, is anticipated by year-end. The AOSP minority owners Chevron Canada Limited (20%) and Western Oil Sands LP (20%) have also approved their investment in AOSP Expansion 1.

Trans Energy acquires wells, acreage; begins work-over program

Trans Energy Inc. has completed the acquisition of the J.B. Dewhurst oil and gas lease consisting of a 100% working interest and 87.5% net revenue interest in seven wells located on 2,200 acres in Grant District, Wetzel County, W. Va. Trans Energy is an oil and gas exploration and development company in the Appalachian Basin.

Bridge Resources to acquire, develop Dudgeon field

Bridge Resources has entered into a Memorandum of Understanding with Century Exploration (UK) Ltd. and Warwick Energy Ltd., to acquire a 100% interest in Blocks 48/21a and 48/21b in the southern gas area of the UK North Sea and a 3.0625% carried interest in Block 48/22b North for a sum of US$3,000,000 cash and 4,000,000 common shares of the corporation, and the grant of an 8% net royalty interest in the gas field asset.

The Gas Field Asset comprises the Dudgeon field discovered by Placid Oil in 1967. The discovery well 48/21-1 encountered 62 feet of pay in the Rotliegendes Leman Sand at 7,500 feet that flowed at 20.9 MMcf gas with 628 bbl condensate per day. Dudgeon field has been inactive since discovery but the increase in oil and gas prices and the maturity of infrastructure in this area now make it attractive for economic development. Bridge is active in the exploration for hydrocarbons in the Southern Gas Area of the UK North Sea.

Dominion to sell most oil and gas assets

Dominion plans to pursue the sale of most of its oil and natural gas assets to concentrate more on its electric generation and distribution business and its transmission, storage, and retail business, said the utility based in Richmond, Va. Dominion plans to keep its Appalachian basin properties, which account for 17% of its proved reserves and 8% of its average daily production as of Sept. 30. About 76% of the reserves are developed, and about 76% of the reserves are gas. A formal sales process is scheduled to begin in February 2007 after completion of the 2006 reserve audit. Closing is expected by mid-2007, Dominion said. The E&P assets are managed by Dominion Exploration & Production Inc., Houston. Excluding the Appalachian basin, Dominion has proved reserves of 5.5 tcf equivalent of gas spread across the deepwater Gulf of Mexico, West Texas, the Midcontinent and Rockies, and the Western Canadian Sedimentary Basin.

Petro-Canada acquires gas assets in Syria

Petro-Canada has completed an agreement with a wholly-owned subsidiary of Marathon Oil Corp. to purchase a 90% interest in Marathon’s production sharing contract in the Ash Shaer and Cherrife natural gas fields in central Syria for US$46 million. Under this agreement, Petro-Canada will act as operator and will have the option to purchase the remaining 10% interest from Marathon within five years subject only to approval by the government. Transfer of the 90% interest in the 25-year PSC to Petro-Canada has been approved by the Syrian Government. According to the terms of the PSC, Petro-Canada is obligated to develop and produce an estimated 80 million cubic feet per day of natural gas from the Ash Shaer and Cherrife fields, with first gas expected to be delivered in 2010. Life-of-field production from Ash Shaer and Cherrife is currently estimated at approximately 500 bcf of natural gas equivalent (83 MMboe) over the term of the 25-year contract. Appraisal work is expected to identify upside, which could double the initial life-of-field estimate. This could lead to an expansion of production capacity after initial start-up. Capital investment for the project is expected to range from around US$460 to US$660 million, depending on the life-of-field production.

Endeavour completes Talisman Expro acquisition

Endeavour International Corp.’s subsidiary, Endeavour Energy UK Ltd., completed its previously-announced acquisition of all the shares of Talisman Expro Ltd., formerly a subsidiary of Talisman Energy Inc. As a result of the transaction, Endeavour acquired interests in eight fields in the Central North Sea section of the UK Continental Shelf that averaged daily production of approximately 8,800 boe during the first half of the year. In connection with the acquisition, Endeavour closed a series of financing transactions. The company raised $82 million from a public equity offering of 35 million shares of common stock and issued $125 million of convertible preferred stock. In addition, the company put in place a $225 million reserve based senior credit facility and $75 million second lien term loan.

Providence and partners secure new Irish acreage

Providence, the AIM listed and Dublin IEX listed oil and gas exploration and production company, has, in conjunction with interest owners ExxonMobil and Sosina, been awarded 15 new blocks under a licensing option in the Goban Spur area, off the west coast of Ireland. This follows a joint application made by the partnership in June 2006, under the open acreage provisions of the 1992 Licensing Act. The option extends over Blocks 61/17, 18, 19, 20, 22, 23, 24 & 25 & 62/21 over the Goban Graben and Blocks 61/14, 15, 62/11, 16, 17, & 22 over the Goban Spur basin; and covers a total area of approximately 4,000sq. km. The option has a duration of 3 years, at which point an application can be made for a standard exploration license, which carries a well commitment. Located approximately 300 km offshore, the area is about 150 km due south of the Dunquin Prospect, which Providence operates as part of a partnership with ExxonMobil and Sosina.

White Energy acquires Texas ethanol project from Scoular

Dallas-based White Energy Holding Co. LLC, a US ethanol producer, has acquired a 100-million-gallon-per-year greenfield ethanol project from The Scoular Co., a nationwide agricultural services company, headquartered in Omaha, Neb. The plant, located in Plainview, Tex., will be a “near twin” of White Energy’s other ethanol facility under construction in Hereford, Tex. White Energy also owns an operating 45-MGPY plant in Russell, Kansas which, when combined with output of the two Texas plants, will bring White Energy’s total production capacity to 245 MGPY.

In addition to acquiring the Plainview site, White Energy has formed a long-term strategic relationship with Scoular, based in Omaha, Nebraska. Under comprehensive long-term Agreements, Scoular will provide grain procurement and distillers grain marketing services for selected White Energy plants and comprehensive risk management services for the company. According to the company, once completed, the Plainview plant will be one of a handful in the country that can simultaneously unload 110 rail cars of grain while loading out 95 rail cars of ethanol.

Anzon completes banking facility

Anzon Australia Ltd. has completed an additional US$20 million Standby financing facility. The company executed a second amendment to its existing Multi-Option Facility Agreement with BOS International (a wholly owned subsidiary of HBOS Australia) and Westpac Banking Corp., who acted as Joint Lead Arrangers for the transaction, increasing the available funds by an additional US$20 million. The total project finance arrangements now amount to US$95 million.

Total wins Dutch North Sea license

Total has been awarded an exploration license for block L3, on the Dutch Continental Shelf, in the Netherlands. The block is situated 100 kilometers offshore north of Den Helder, within water depths of around 40 meters, and covers 406 square kilometers. The license is granted for four years. The national Dutch State company EBN is expected to become a 40% partner of the project and Total, as operator, will hold the remaining 60%. The L3 block is in the vicinity of the L4a, L7 and F15a producing blocks operated by Total.