Industry Briefs

CNR to buy Anadarko Canada in $4.24 billion deal

Canadian Natural Resources Ltd. (CNR) plans to buy Anadarko Canada Corp. (ACC) for $4.24 billion. Anadarko is keeping its interests in the Mackenzie Delta and other Canadian arctic frontier properties. ACC’s land and production base are in Western Canada. Current production, before royalties, from the working interests being acquired by CNR, is 358 MMcfd of gas and 9,300 b/d crude oil and NGLs.

The assets include 1.5 million net undeveloped acres and key strategic facilities in the high-growth areas of northeastern British Columbia and northwestern Alberta. At year-end 2005, ACC reported proved reserves of 262 million boe, 75% of which was proved developed. The transaction, subject to normal closing conditions, is expected to close by Oct. 31.

Anadarko put its Canadian subsidiary up for sale to help raise $15 billion to reduce debt from its $21 billion purchases of Kerr-McGee Corp. and Western Gas Resources Inc.

Capco Energy expands Gulf of Mexico acreage

Capco Energy has acquired certain OCS producing properties from Tana Exploration LLC at a contracted purchase price of $83 million. Funding for the acquisition was provided by Union Bank of California, third party industry partners, Hoactzin Partners, LP, production revenue credits and cash provided by the company’s major shareholders. Capco currently retains a 75% interest in the acquired interests; however, such interest may reduce to 25% after giving effect to certain obligations including the company’s election to convert Hoactzin’s participation to a working interest in the properties.

As a part of the acquisition, the company terminated its funding agreement with Domain Development Partners I, LP by a cash payment of $1.3 million. Domain had, over the last one year, provided the capital to develop the Brazos Field. A reserve report for the Tana properties prepared by an independent engineering firm reported discounted values as of April 1, 2006 for proved reserves and probable reserves of $98 million and $72 million, respectively.

Petro-Canada purchases oil sands leases adjacent to MacKay River

Petro-Canada has purchased 13 additional oil sands leases for $30 million. The leases comprise a total of 31,232 hectares immediately adjacent to Petro-Canada’s existing in situ development at MacKay River. The company’s in-situ production at MacKay River is currently running at around 25,000 b/d. The next stage of development of this core area, the MacKay River expansion, is expected to more than double production by the end of the decade.

ASL Marine wins shipbuilding contracts valued at $46.5MM

ASL Marine Holdings’ subsidiary, ASL Shipyard Pte Ltd. has secured new shipbuilding contracts worth a total of $46.5 million for the construction of the following vessels: two units of offshore emergency response and rescue vessels and one unit of anchor handling tug/ supply vessel. Revenue from these new shipbuilding contracts will be recognized over the contract period in accordance with the group’s revenue recognition policy, which is based on the percentage of completion method. All three vessels are expected to be completed in 2008.

Foothills Resources closes acquisition; completes $65MM equity, debt financings

Foothills Resources Inc. has closed on the acquisition of four oil fields in southeastern Texas from TARH E&P Holdings LP, an affiliate of Texas American Resources Co., and completed a $22,500,000 private placement financing of units of its common stock and warrants with institutional and accredited investors. The company also entered into a $42,500,000 four-year secured mezzanine finance facility with Goldman Sachs & Co., which also provided $7,500,000 of the funds raised in the private placement financing.

The acquisition includes working interests ranging from 95% to 100% in the four fields, which contain more than 30 productive reservoirs between 800 ft. and 4,500 ft., and approximately 4,000 gross acres of leasehold or fee interests.

The private placement of securities of the company provided total proceeds of $22,500,000 from the issuance of 10,000,000 units consisting of one common share plus one warrant to purchase one-half share. The majority of the proceeds from the two financings was used to close the TARH acquisition, with the remainder intended to provide funding for drilling and other activities on the company’s properties in California and Texas.

Schlumberger and Infosys form alliance to provide information management

Schlumberger and Infosys have formed a global alliance to provide comprehensive information management solutions that integrate upstream technical and business processes for oil and gas companies.

The alliance will address a wide array of solutions, primarily focused on the integration of E&P petrotechnical data and applications, including unstructured data, with financial and human resources back-end systems, in order to streamline operational and strategic business decision-making processes.

This alliance combines the market leading exploration and production domain expertise of Schlumberger with the Global Delivery Model pioneered by the Infosys organization to create an industry unique resource. Infosys’ GDM reduces engagement risk as it takes work where it can be done best, makes the most economic sense, with the least amount of risk.

Pan-Ocean closes sale to Addax Petroleum

Pan-Ocean Energy has completed the sale of substantially all of the assets and operations of the company to Addax Petroleum Corp. for cash consideration of CDN$1.6 billion. Under the agreement, which was announced this summer, Addax Petroleum acquired 100% of the shares of the of Pan-Ocean’s wholly-owned subsidiary, PanAfrican Energy Corp. Ltd., which conducts all of PanOcean’s operations which are based in Gabon, West Africa, as well as a subsidiary which provides management and operational services. Net proceeds, after payment of transaction related costs and a reserve for contingencies, will be used for the purchase and cancellation of all Class B Shares of PanOcean at a price of CDN$58.50 per share and all Class A Shares at a price of CDN$65.80 per share.

CGG and Veritas DGC enter merger agreement

Compagnie Generale de Geophysique and Veritas DGC Inc. have entered into a definitive merger agreement whereby CGG will acquire Veritas in a part cash, part stock transaction. The total consideration for the shares of Veritas is fixed at about $1.5 billion cash and about 47 million CGG ADSs. The resulting shareholding of CGG-Veritas should be held approximately 65% by CGG’s shareholders and 35% by Veritas’ shareholders. The new board of directors is expected to reflect the combined shareholder base with Robert Brunck as chairman and CEO. Thierry Pilenko, currently chairman and CEO of Veritas, will be proposed for appointment as one of the combined company’s new directors. After the merger, Geophysical Services will be headed by CGG’s Christophe Pettenati-Auziere, president geophysical services, reporting to him will be Timothy L. Wells, president Western Hemisphere and Luc Benoit-Cattin, president Eastern Hemisphere. Credit Suisse and Rothschild are acting as financial advisors to CGG. Skadden, Arps, Slate, Meagher & Flom LLP, Willkie Farr & Gallagher LLP, Linklaters and Goodmans LLP are acting as legal advisors to CGG. Goldman Sachs is acting as financial advisor to Veritas. Vinson & Elkins LLP and Paul, Hastings, Janofsky & Walker (Europe) LLP are acting as legal advisors to Veritas.

Riata Energy makes financing plans for proposed acquisition

Riata Energy Inc. has entered into an exclusivity agreement and letter of intent to acquire NEG Oil & Gas LLC (NEG) for an aggregate consideration of $1.519 billion, $1.025 billion of which would be payable in cash. Riata currently intends, based on market conditions, to finance the cash component of the acquisition price with a combination of private debt and equity financing. While the composition of any short term financing may vary, Riata expects that the permanent financing for the acquisition would be funded in equal parts of debt and equity.

Hydro inks gas sales agreement with Gazprom

Hydro signed an agreement for sale of gas to Gazprom Marketing & Trading, the UK-based subsidiary of the Russian energy company OAO Gazprom. According to the agreement, Hydro will supply 500 million cubic meters of gas to Gazprom Marketing & Trading in the British market. The gas agreement has a duration of one year starting from October 1, 2006. The gas will be transported through the southern section of the gas pipeline Langeled that will open for the transport of Norwegian gas between Sleipner and Easington in Great Britain in October. The northern part of Langeled, which will be completed in October 2007, will stretch from Sleipner to Nyhamna in Aukra municipality. From there, the undersea gas pipeline will transport gas from the Ormen Lange field to the British market.

ADCO awards $70MM in contracts to Halliburton

The Abu Dhabi Co. for onshore oil production (ADCO) has awarded Halliburton contracts valued at more than $70 million for cementing services, stimulation services, and special tools. Under the three-year agreement, Halliburton will provide optimum solutions to ongoing ADCO exploration and production activities located in the onshore fields of Abu Dhabi, United Arab Emirates.

Lions Petroleum acquires acreage and pipeline in Kansas

Delaware-based Lions Petroleum Inc. has signed a letter of intent for the acquisition of 26,635 acres of oil and gas leases located in southeast Kansas. This includes the rights to all depths. Included in this acquisition are 26 coal bed methane wells that are in various stages of production and completion. This letter of intent also includes the acquisition of approximately 20 miles of 6-inch pipeline with compression and a tap into a main transport pipeline in southeast Kansas. The total purchase price for this acquisition is $3 million and has 90 days to close. A separate letter of intent has also been signed for the acquisition of 1,336 acres of oil and gas leases in southeast Kansas that has 14 coal bed methane wells in various stages of production and completion. The purchase price on this acquisition is $250,000.00 and will have 120 days to close.

PTSC wins $70MM contract from Talisman

Petroleum Technical Services Co., a subsidiary of PetroVietnam, has signed a $70 million oil and gas contract with Talisman Malaysia Ltd. The project’s scope includes engineering, procurement, fabrication, and construction of three topsides of three wellhead riser platforms with a total fabrication tonnage of approximately 3,000 tons. Completion of the project is scheduled within the next 12 months. With Vietnam close to joining the WTO, this project will exhibit the potential for further co-operation in the oil and gas industries between Vietnam and Malaysia.

FMC Technologies acquires certain Galaxy Oilfield assets

FMC Technologies has acquired certain assets of Galaxy Oilfield Service Ltd., based in Edmonton, Alberta, Canada. Galaxy supplies unique, high temperature equipment used in the thermal well production of Canada’s oil sands. This acquisition enables FMC Technologies’ Surface Wellhead business to expand its heavy oil extraction capabilities and address the projected growth of oil sands production in Canada and into other heavy oil markets around the world.

Talisman Energy plans major new gas development

Over the past year, Talisman Energy has acquired a significant land position in the Western Canadian Basin along the “outer foothills” trend of the Rocky Mountains. The acreage lies in a relatively undeveloped part of the basin, east of and running parallel to Talisman’s existing foothills play in both Alberta and British Columbia.

Talisman acquired the land through both Crown land sales and third party deals, spending approximately $230 million to acquire over 260,000 acres (410 sections) of land. The company has identified over 100 drilling locations to date and estimates prospective natural gas resources of between 1-2 tcf on the acquired acreage. Production from this area could total 200 mmcf/d net by the end of the decade.

Talisman expects to spend approximately $250 million in the Outer Foothills area in 2007, drilling 30 or more wells. The company has secured the rigs required to carry out these activities. Four wells have been drilled to date in 2006, three are currently being tested, and the fourth will be tested this winter. Average recovery per well is expected to be in the 6-10 bcf range, although some wells along trend have produced over 25 bcf.

Abbot wins $65MM new rigs contract

Abbot Group’s land rig design engineering and fabrication subsidiary, Bentec, has been awarded a $65 million contract by Eurasia Drilling, formerly the drilling subsidiary of Lukoil, for four 250 ton fast moving hybrid rigs, derived from Bentec’s original HR5000 design. Work will commence immediately with the first rig being delivered in 12 months time and the other three by the end of 2007. This contract brings the total order intake for Bentec to approximately $200 million so far this year, and the number of rigs under construction to ten with the prospect of yet further contract awards. The Abbot Group is the largest offshore drilling contractor in the North Sea, one of the largest international land drilling contractors outside the Americas, and an operator of mobile offshore drilling units.

Cano to raise $81MM in private equity deal

Cano Petroleum Inc. has entered into definitive agreements with institutional investors, in a private equity transaction, to sell approximately 49,116 shares of convertible preferred stock at a price of $1,000.00 per share and approximately 6,584,247 shares of common stock at a price of $4.83 per share, the three day average closing price of the stock prior to the execution of the definitive agreements, plus a warrant component. The convertible preferred stock will be convertible to common stock at a price of $5.75 per share and the common stock will be subject to 25% warrant coverage at an exercise price of $4.79 per share. Gross proceeds from the transactions are anticipated at approximately $81 million. Cash proceeds from the financing will be used to retire approximately $69 million in current debt, provide working capital and for general corporate purposes, including the funding of Cano’s fiscal 2007 capital budget.

Callon Petroleum completes $175MM credit facility

Callon Petroleum Co. has completed a $175 million amended and restated senior secured credit facility with Union Bank of California NA as the lead arranger and administrative agent. The credit facility includes more favorable borrowing rates and an initial borrowing base of $75 million, which will be reviewed and re-determined on a semi-annual basis. There is currently $6 million of borrowings outstanding under the facility, which matures on July 31, 2010.

Sojitz Energy gains stake in Grove field

Sojitz Energy Project Ltd. plans to acquire a stake in Newfield Exploration UK Ltd.’s Southern Gas basin exploration and development program, including Grove field.

Grove is expected to come on stream in December with production anticipated to reach 60 MMcfd of gas and 1,000 b/d of oil by early 2007.

The $100 million transaction, subject to UK government approval, calls for Sojitz to receive 15% of Newfield’s interest in Grove field and 20% of Newfield’s interest in the West Cutter prospect, Seven Seas discovery, and two wells drilled in the West Sole area under Newfield’s exploration-development agreement with BP Exploration Operating Co. Ltd.

Newfield recently installed a production platform in Grove field. The platform has production capacity of 100 MMcfd of gas and 2,000 b/d of oil. Newfield is drilling the Grove 5 well as a horizontal producer.

An exploration well drilled from a remote surface location into the western fault block recently encountered 40 ft of net gas pay. It temporarily was abandoned with a subsea production tree installed.

Final plans for that well will be determined after information from platform development wells is integrated into an overall field development plan, Newfield said.

In early 2005, Newfield announced a discovery with its wholly owned Grove prospect on Block 49/10a in the Southern Gas basin. Newfield has an agreement with BP to explore acreage around West Sole field (OGJ, Oct. 13, 2004, Newsletter).

Triple Point, SAP team up to deliver new software solution

Triple Point Technology, a global supplier of cross-industry software platforms for the supply, trading, marketing, and movement of commodities, has signed a co-development agreement with SAP AG to deliver Commodity SL, a solution that improves commodity management while offering a competitive advantage and increased profitability. The new solution, based on SAP NetWeaver, integrates real-time market-based portfolio and risk management from Triple Point Technology with SAP’s advanced logistical solutions. Holly Corp., an independent petroleum refiner and marketer, has signed on as the first customer and will provide functional development guidance. The solution is expected to be globally available in the third quarter of 2007 and will be tailored to the oil industry with the intention of other industries to follow, including gas, coal, metals, agricultural products, and freight.

Endeavour to close acquisition of North Sea interests

Endeavour International Corp. expects to close its recently announced acquisition of interests in seven producing fields in the Central North Sea section of the United Kingdom Continental Shelf early in the fourth quarter. In addition, the company will continue its exploratory drilling campaign with a well expected to begin drilling in the fourth quarter. In May, Endeavour announced its first discovery in the Southern Gas Basin in the United Kingdom of the North Sea when the Cygnus 44/12-2 well tested as a gas discovery.

Goodrich Petroleum increases credit facility by $20 million

Goodrich Petroleum Corp.’s bank group has approved a $45MM increase in the borrowing base which governs its revolving credit agreement, as well as an increase of $20MM in the second lien term loan provided by a group of banks and institutional investors. The company intends to use the increase to continue to fund its core Cotton Valley drilling program. Additionally, the company announced that it has restructured one of its gas hedges for 2007, cancelling a collar on 10,000 MMbtu per day which had a $7.00 floor and a $16.90 ceiling and replacing it with a similar collar with a $9.00 floor and a $10.65 ceiling for all of 2007. In completing this transaction, the counterparty agreed to pay a small cash premium (approximately $58,000) up front to the company.

Petrogen changes name to Pluris; purchases Argentina company

Pluris Energy, formerly known as Petrogen Corp. was renamed “Pluris Energy Group Inc.” and has completed a five-for-one reverse split of its common shares. There are currently 13,562,010 common shares of the company issued and outstanding.

The company acquired as a wholly-owned subsidiary, Pluris Energy Group Inc., a British Virgin Islands company, for the purpose of purchasing interests in quality assets with high growth potential in producing international oil and gas regions throughout the world. Pluris Energy holds non-operated revenue generating interests in international hydrocarbon production and development opportunity sets.

Pluris Energy has entered into a share purchase agreement to purchase 100% of the shares of San Enrique Petrolera SA. Terms of the SPA will be disclosed at a later date.

San Enrique’s key assets are operated by the renowned company, ROCH, SA and consist of 65,646 net acres in the southern tip of Argentina’s Tierra del Fuego region situated in the Austral Basin, an under-explored, income and export tax-free trading zone and 2,700 net acres in the Neuquen Basin, Argentina’s most prolific oil and gas basin. Total net acreage to all of San Enrique’s property interests currently consists of 251,376 acres.

GeoResources proposes merger with Southern Bay Oil & Gas and Chandler Energy

GeoResources Inc. has approved a definitive merger agreement with Southern Bay Oil & Gas LP and Chandler Energy LLC. In the proposed transaction, the total purchase price is approximately $78 million and will be paid through the issuance of 8,263,000 shares of GeoResources common stock for 100% of the partnership interests of Southern Bay Oil & Gas and 1,931,000 shares of GeoResources common stock for 100% of the outstanding membership interests of Chandler Energy LLC. The transactions would create a combined entity with assets in the Williston Basin, the Rocky Mountains and the Gulf Coast. Pro forma reserves for the proposed combined entity at June 30, 2006 were approximately 8.1 MMboe, 74% proved developed, with daily production of approximately 1,500 boe. The terms of the transactions also involve Southern Bay and Chandler committing additional capital contributions of approximately $20 million to finance initial expansion plans of the combined entity, as well as offers by GeoResources to purchase certain working interests in one of Chandler’s Colorado projects.

Upon closing, Frank A. Lodzinski, president and CEO of Southern Bay would assume the role of CEO, president, and director of GeoResources; Collis P. Chandler, III, president of Denver-based Chandler Energy, would serve as executive VP, and director; and Jeffrey P. Vickers, president of GeoResources, would serve as VP, Williston Basin Exploration and Development. The composition of the GeoResources’ board of directors, including to-be-named directors, will meet the independence requirements of NASDAQ regarding directors, with four directors to be named by Southern Bay, two directors to be named by Chandler, and one director to be named by GeoResources. The parties anticipate that GeoResources’ headquarters would relocate to Houston, and the company will have operating offices in Williston and Denver.

Stratic Energy negotiates $18 million debt facility

Stratic Energy’s subsidiary Stratic Energy (UK) Ltd. has negotiated a US$18 million, 18-month senior secured revolving credit facility with the Royal Bank of Scotland plc . The funds will be used primarily for the development of its UK projects and potential projects (West Don, Crawford, and Cairngorm) and for other general corporate purposes. It is expected that the facility will become available for drawing in early October 2006.

Stratic is an international exploration and development company with gas developments in Turkey, oil developments in the North Sea, and exploration acreage in Morocco, Italy and Syria.

Storm Cat Energy completes Powder River basin acquisition

Storm Cat Energy has closed the purchase of approximately 25,200 gross acres in the Powder River basin for approximately $30.7 million in cash. The acreage is approximately 81% undeveloped and 90% of the acreage is located on US federal lands. Storm Cat is acquiring approximately 10.2 bcf of proved reserves, 9.6 bcf of probable reserves, and 7.8 bcf of possible reserves. Storm Cat will have approximately 19.8 bcf of proved reserves, 13.8 bcf of probable reserves, and 7.9 bcf of possible reserves. Storm Cat’s reserve quantity estimations were evaluated by Netherland Sewell & Associates. The proceeds from a recently completed $15 million secured mezzanine facility as well as funds from the company’s $250 million revolving credit facility were used to fund the acquisition.

Cabot to sell offshore and Louisiana portfolio for $340 million

Cabot Oil & Gas has agreed to sell its offshore portfolio and its south Louisiana properties. Cabot will sell the properties to Phoenix Exploration Co. LP for total cash consideration of $340 million. With the total proceeds, Cabot intends to repurchase shares of common stock, fund its operations, repay a portion of its outstanding debt, and pay the resulting tax bill. At year-end 2005, the assets to be sold totaled 73 bcfe in Cabot’s proved reserve report. The assets averaged 49.4 MMcfe per day of production for the first seven months of this year. Subsequent to the sale, Cabot’s total proved reserve portfolio and its production profile will be approximately 96% natural gas. The company was assisted in this transaction by Goldman Sachs & Co. and Fulbright & Jaworski LLP.

Crosstex Energy selects Quorum NGL marketing software

Quorum Business Solutions Inc., a provider of software solutions for the oil and gas industry, has been chosen by Crosstex Energy LP to implement its Quorum Liquids Marketing software to manage the company’s commercial natural gas liquids marketing activities. Quorum Liquids Marketing is an integrated software solution that manages contracts, trades, settlements, credit and risk management, and accounting for NGL marketing. The software also tracks and manages physical and financial transactions while providing real-time position management and analysis for traders, schedulers, and credit/risk managers.

Oil States acquires drilling rigs in West Texas

Oil States International Inc.’s subsidiary, Capstar Drilling LP, acquired three land drilling rigs in the Permian Basin for total consideration of $14.0 million. The rigs are new or newly refurbished and are consistent in design and operation with the company’s existing drilling rig fleet. The acquisition was principally financed with funds available under Oil States’ existing credit facility.