Industry Briefs

Units of the partnership will trade on the AMEX. The assets of USO will be held by the partnership’s custodian, Brown Brothers Harriman & Co. The AMEX specialist for USO is Bear Hunter Structured Products LLC.

Kinder Morgan Energy Partners buys terminals for $63 million

Kinder Morgan has purchased certain terminal assets from US Development (USD) and A&L Trucking LP in two separate transactions representing a total investment of approximately $63 million. The assets include two rail terminals and a dry-bulk storage and loading operation in southern California and the Texas Gulf Coast area.

Included in the transaction is the purchase of USD’s Lomita rail terminal in Carson, Calif. The terminal can receive and offload as many as 100 railcars within a 24-hour period. The turnaround time makes the facility valuable in working to meet California’s demand for ethanol.

KMP also purchased the USD rail facility located in Deer Park, Texas, which offers loading, storage, and staging services for up to 900 cars at a time. In addition, the adjacent petcoke terminal that KMP purchased in 2005 gives the rail facility access to the Houston Ship Channel.

KMP is also investing about $15 million to expand the CALNEV system, which will increase pipeline capacity for gasoline, jet fuel, and diesel into Las Vegas, Nev., to about 156,000 b/d by the fourth quarter of 2007.

Focus Energy Trust pays $1.2B in merger with Profico Energy

Focus Energy Trust has struck a $1.2-billion deal to more than double its production by merging with Profico Energy Management, western Canada’s largest privately held natural gas company. Most of the deal is being paid for in trust units, and Profico shareholders will end up with about 51% of Focus.

Calgary-based Focus will pay $92.8 million in cash, assume $87.2 million in debt, and issue 31 million trust units and 10 million partnership units, exchangeable for trust units. The big prize is Profico’s Shackleton and southwest Saskatchewan properties, which have about 14,500 boe/d, weighted 98% towards natural gas. The acquisition includes 46.7 MMboe of proved-plus-probable reserves, more than 138,000 hectares of undeveloped land and multi-year drilling inventory of over 1,000 locations.

On completion, Focus will increase its estimated production for the second half of this year from between 9,750 to 10,250 boe/d to between 23,750 and 25,250 boe/d. Its operating costs are expected to fall from $4.50 per barrel to $3.45, while its net debt will rise to $278 million from $98 million. Approval meetings are to be held in late June 2006, with closing of the deal expected shortly thereafter.

Gran Tierra expands into Columbia with acquisition of Argosy Energy

Gran Tierra Energy Inc. will purchase Argosy Energy International. This is Gran Tierra’s first play in Colombia. Consideration is $37.5 million cash, $3.5 million in Gran Tierra common shares, and $1 million in overriding and net profit interests.

Argosy, with its diverse portfolio of producing properties, drill-ready prospects, and exploration acreage, has operated in Colombia since 1983. Its land position is 153,000 net acres. Its production in 2005 averaged 1,070 b/d net before royalty. Proved reserves were 2.8 million bbl at the end of 2005.

Energy Partners renews contract with Object Reservoir

Energy Partners Ltd. has awarded a contract to Object Reservoir Inc. Energy Partners plans to use Object Reservoir to characterize various formations along the southern gulf coast as part of their 2006 drilling plan. The two companies have been involved in the reservoir evaluation process together for nearly three years. Energy Partners is an independent oil and natural gas exploration and production company based in New Orleans, La. Object Reservoir delivers technology to oil and gas producers.

Grenland Group signs contracts with Real Concept, FMC Technologies

Grenland Group ASA confirms having signed a Share Purchase Agreement for the acquisition of the recognized Norwegian engineering company Real Concept Group AS.

With this acquisition, Grenland Group will strengthen its capability and competence in engineering services to the international oil and gas industry within concept development, front end engineering design, process optimization, verification and project execution.

Real Concept Group, now renamed Grenland Realconcept (GRC), has its head office in Oslo and a branch office in Stavanger. Grenland Group has paid NOK 33 million for the shares, of which NOK 13 million in newly issued GG-shares.

In related news, Grenland Framnæs has signed a contract with FMC Technologies for the engineering, procurement, and construction of four off subsea distribution units (SDUs).

The SDUs will be installed on the Woodside Perseus over Goodwyn project in Australia. The contract is worth approximately NOK 2 million. The deliveries are due in June 2006.

National Oilwell Varco completes Soil Recovery acquisition

National Oilwell Varco has acquired 100% of the outstanding shares of Soil Recovery A/S from Kommunekemi A/S. Based in Denmark, Soil Recovery manufactures and leases its proprietary Soil Recovery Unit -- which is used to process drilled cuttings for final disposal -- under operating agreements in several key oilfield markets, including The Netherlands, Azerbaijan, Angola, and Nigeria. Soil Recovery also operates its own drilled cuttings processing facility in Denmark and supports an installed base of SRU’s in the UK, Norway, and Kazakhstan. Soil Recovery employs 62 people and will be operated as part of the company’s Brandt Environmental Division.

Name change for Canadian subsidiary of Quicksilver Resources

Fort Worth, Texas-based Quicksilver Resources Inc. has changed the name of MGV Energy Inc., its wholly-owned Canadian subsidiary located in Calgary, Alberta, to Quicksilver Resources Canada Inc. Quicksilver Resources Canada will continue to focus on the development opportunities of Canadian coal bed methane recovery in the Western Canadian sedimentary basin of Alberta. The company has demonstrated success in the Horseshoe Canyon coals and is currently testing wells in the Mannville coals. Quicksilver Resources is a natural gas and crude oil production company engaged in the development and acquisition of long-lived natural gas and crude oil properties with a focus on the development and production of unconventional natural gas reserves, including coal bed methane, shale gas, and tight sands gas.

Bill Barrett to purchase properties in Powder River basin

Bill Barrett Corp. has entered into an agreement to purchase CH4 Corp. for $80 million, subject to customary adjustments for working capital changes and other matters. CH4 has about 85,500 gross undeveloped acres in the Powder River basin coalbed methane play, including acreage in the Hartzog Draw area. Funding will come through borrowings under its recently expanded $400 million revolving credit facility.

BP secures rig for Skarv

BP Norge has signed a Letter of Intent with Offshore Rig Services ASA for drilling on the Skarv-Idun field. This is subject to the final Plan for Development and Operation. The contract is valued between $250 million and $500 million depending on the duration of the firm program, extensions, and options. The first rig will be delivered in 2008. Drilling on the BP Skarv-Idun field will start in 2009.

Texola acquires stake in Nevada prospect

Texola Energy has acquired a 100% working interest and an 80% net royalty interest in the Maverick Springs Prospect in Elko and White Pine counties, Nevada. Cedar Strat will retain a 15% back-in working interest after payout. The100,000-plus acre prospect is a fractured shale play that the company believes contains the potential for large compressional structures similar to those in thrust belts around the world. The company also estimates potential reserves that could be as prospective as the Barnett Shale play.

Texola Energy Corp. is a North American-based independent oil and gas company building a long term, junior energy company with a broad group of interests.

GE Energy Financial provides debt facility for Trinidad Drilling

Pursuing growth in oilfield services and in Canada, Stamford, Conn.-based GE Energy Financial Services has closed an expanded syndicated loan facility it structured for Trinidad Drilling Ltd., a Canada-based drilling rig company.

The facility represents a combined debt capacity of CDN $494 million, increasing the principal available from a $250 million facility arranged last year. The facility is comprised of a CDN $250 million revolver, a CDN $100 million five-year term facility, and, a US $125 million five-year term facility for Trinidad USA LLP, a US subsidiary of Trinidad.

GE Energy Financial Services recently expanded its debt finance group to integrate its expertise as a debt investor and arranger in large energy projects with its mid-market commercial energy lending in the United States, Canada, and Europe.

Husky Energy makes oil sands acquisition

Husky Energy has acquired 23,680 acres of oil sands leases adjacent to its Saleski property. The land was purchased at the April 5 land sale for about $10 million and will add about 2.7 billion barrels of bitumen to its existing holdings. Husky holds 100% interest in the Saleski leases and completed a four well evaluation program this winter.

Melrose Resources to acquire Merlon Petroleum

Melrose Resources has entered into a conditional agreement to acquire the entire common stock of Merlon Petroleum Co., a private US corporation, for a cash consideration of $265 million (adjusted for net working capital less debt). It is intended that the purchase price will be funded entirely through a $320 million loan facility being made available to the company by Bank of Scotland Corporate. The acquisition is expected to close in as early as mid-June 2006.

Merlon is an oil and gas exploration and production company with interests in Egypt and in the USA. Merlon is the company’s partner and the operator of its properties in the Nile Delta region of northern Egypt. Merlon owns the balance of the working interests of 50% in the El Mansoura and South East El Mansoura exploration concessions and in nine development leases in the Nile Delta. The acquisition will result in Melrose owning 100% of the working interests in these concessions and leases. In addition, Melrose will take over operatorship of these interests. The concessions cover an area of approximately 5,400 km2 in the Nile Delta.

Penn West and Petrofund to merge, form largest conventional oil and gas trust

Penn West Energy Trust and Petrofund Energy Trust have entered into an agreement that combines the two to create the largest conventional oil and gas trust in North America with an enterprise value of more than $11 billion. The combined trust will operate under the Penn West name and will be led by the senior management team of Penn West including William Andrew as president and CEO and David Middleton as executive vice president and COO.

Each Petrofund unit will be exchanged for 0.6 of a Penn West unit on a tax-deferred basis in Canada and the US. Petrofund unitholders will also receive a one-time special distribution of $1.00 per Petrofund unit, payable immediately prior to the closing of the arrangement. It is expected that the unitholder meetings related to approvals will be held in late June with the arrangement to close shortly thereafter.

True Energy Trust, Shellbridge combine

True and True Energy Inc., a wholly-owned subsidiary of True, have entered into an agreement with Shellbridge Oil & Gas Inc. pursuant to which True Energy will, subject to certain conditions, acquire all of the issued and outstanding common shares of Shellbridge on the basis of 0.14 trust units of True for each outstanding Shellbridge share, resulting in the issue of approximately 4.39 million trust units. Shellbridge has no net debt and a $6.5 million credit facility with the same bank as True Energy.

Benefits of the transaction include: 16% increase in True’s production to 14,000 boepd; 25% increase in undeveloped land; a more diversified suite of assets; reduction in debt to cash flow ratio; pro forma market capitalization in excess of C$600 million; transaction metrics of C$30,500/boepd after deducting undeveloped land value of C$8 million (as estimated by True); an interest in an exploration permit in the lower mainland of British Columbia, presently suspended by a provincial moratorium; and the transaction will augment True’s assets.Canaccord Capital Inc., FirstEnergy Capital Corp., and GMP Securities LP are acting as strategic advisors to True. Orion Securities Inc. is acting as exclusive financial advisor to Shellbridge.

Harvest Natural unit, CVP form mixed company

Harvest Natural Resources’ 80%-owned affiliate, Harvest Vinccler CA (HVCA), has signed a memorandum of understanding with Corporacion Venezolana del Petroleo (CVP), to form a mixed company subject to certain conditions. HVCA will own 40% of the shares of the mixed company (32% net to Harvest Natural Resources) and CVP will own the remaining 60%. The mixed company will jointly develop and operate the South Monagas Unit fields, previously operated by HVCA. The mixed company will receive a 20-year license to operate and develop the fields. Oil produced from the fields by the mixed company will be sold to PDVSA under a long-term marketing agreement. The mixed company will pay 33.33% royalty to the Venezuelan government, and the income tax rate will be 50%.

Touchstone Resources strikes deal with Paradigm Strategic Exploration

Touchstone Resources ASA has signed an agreement with Paradigm Strategic Exploration LLC and Paradigm Asset Holdings Inc. Paradigm will draw from a large library of 3-D and 2-D seismic data under a volume license agreement between the company and a large national seismic-data vendor to generate prospects for exploration and development by the company.

Additionally, Touchstone acquired a non-operated working interest position and additional leasehold interest in exploration prospects in the Smackover trend of southern Alabama. Initial drilling is anticipated to start within the next six months.

US firm signs oil exploration deal for offshore Nicaragua

Nicaragua has signed two oil and natural gas exploration and production contracts with US company MKJ Exploraciones. The six-year concession contracts off Nicaragua’s Caribbean coast were signed by Attorney General Alberto Novoa and MKJ’s president, Eric Conrad. According to the Nicaraguan government, MKJ will explore two areas of the Nicaraguan Caribbean: one located 75 miles east-southeast of Puerto Cabezas, and another 105 miles northeast of the town of Bluefields. Both zones have a combined area of about 3,100 square miles. Novoa said the US firm would be granted a 30-year production period if it discovers oil or natural gas deposits in commercially marketable quantities. The contract also requires MKJ to present an environmental-impact study to the Natural Resources Ministry and receive government approval before beginning operations. MKJ Exploraciones is a unit of Louisiana-based MKJ Xploration.

SolArc, Veson Nautical create joint venture in MarineCenter

SolArc Inc. and Veson Nautical have created a joint venture to develop MarineCenter, a functional extension to SolArc RightAngle that enables workflow and data integration of SolArc RightAngle with Veson’s Integrated Maritime Operations System (IMOS). MarineCenter will provide global energy companies a new level of ability to manage their positions and vessel movement costs as hydrocarbon commodity volumes are shipped globally.

Both the SolArc RightAngle commodity trading, risk and logistics management software, and the Veson IMOS chartering, operations and accounting system provide a modular and configurable approach. MarineCenter will be able to support all existing management and reporting structures for any type of marine and trading operation.

Improved system integration is expected to produce more efficient equipment utilization, streamlined payables, demurrage reduction, more accurate allocation of marine costs to internal and external accounts, and improved decision-making for contract marine services. It will also reduce errors and manpower demands; increase automation of port nominations, vessel instructions and dock schedules; improve the timing and accuracy of demurrage claims; and provide better information for trade decisions.

MarineCenter also will build on the strengths of its parent systems in such areas as enabling complete coverage for lease charter arrangements and incorporating marine charter data into cost analyses and forecast curves.

Energy Solutions releases PipelineStudio 2.8

Energy Solutions International, the Houston-based supplier of oil and gas pipeline management software, has released its pipeline engineering and design product, PipelineStudio(R), which helps pipeline companies reduce operating costs through proven steady-state and transient hydraulic modeling.Version 2.8 of PipelineStudio offers reporting functionality, including allowing users to view simulation results in Microsoft Excel and to configure their own report templates. Other PipelineStudio 2.8 features include: more flexibility in heating value calculation; enhanced thermal modeling though variable ambient temperature and ambient medium velocities; and expanded fluid component library.

Galaxy completes $4.5 million financing

Galaxy Energy Corp. has closed a $4.5 million private placement of subordinated convertible debentures with institutional and other accredited investors. The debentures have a 30-month maturity, which will extend until all of the company’s senior debt has been retired, accrue interest at 15% per year and are payable at maturity. In the event the debentures are retired at maturity, the holders are entitled to an additional payment equal to the sum of 25% plus 0.75% for each month (or part thereof) in excess of 30 months that the debentures have remained outstanding. The majority of the proceeds from the financing will be used to reduce debt as well as other corporate purposes. Galaxy plans to continue its efforts to raise additional funds for its exploration and development activities.

Marathon acquires acreage in Bakken Shale play

Marathon Oil has completed a series of land acquisitions totaling almost 200,000 leasehold acres in the Bakken Shale play, located in North Dakota and eastern Montana.

Marathon’s acreage is located within an established resource basin in Billings, Divide, Dunn, McKenzie, Mountrail, and Williams Counties in North Dakota and Richland County in Montana. Several acquired locations are adjacent to existing producing wells and recent discoveries. The company anticipates participating in the drilling of about 300 wells over the next four to five years with additional infill potential likely. This program has the potential to add more than 20,000 boe/d of production by 2012.