Industry Briefs

July 11, 2013

Riverstone Holdings closes $7.7B energy and power fund

New York, NY-based energy investment firm Riverstone Holdings LLC closed its latest conventional energy private equity fund, Riverstone Global Energy and Power Fund V LP (Fund V), with total commitments of $7.7 billion. The fund's original target was $6 billion. Fund V will make investments in energy and power business around the world. To date, Fund V has invested $2.3 billion in 19 companies, including eight repeat management teams.

Marathon Oil to sell Angolan assets for $1.5B

Marathon Oil Corp. subsidiary, Marathon International Oil Angola Block 31 Limited, agreed to sell its 10% working interest in the Production Sharing Contract and Joint Operating Agreement in Block 31 offshore Angola to SSI Thirty-One Limited (Sonangol Sinopec International), the company said June 25. The transaction has a total value of approximately $1.5 billion. SSI Thirty-One Limited currently holds a 5% working interest in the block. Production from the PSVM development on Block 31 commenced in the fourth quarter of 2012. The concessionaire of Block 31 is Sonangol, Angola's state-owned oil company. The operator is BP Exploration Angola with a 26.67% working interest. Sonangol EP holds 25%; Sonangol P&P holds 20%; Statoil Angola A.S. holds 13.33%; and SSI Thirty-One Limited currently holds 5%. With this transaction, the company has agreed upon or closed on nearly $2.9 billion in divestitures since 2011, at the upper end of its targeted $1.5 billion to $3 billion of divestitures over the period of 2011 through 2013. Scotia Waterous served as Marathon Oil's financial advisor on the transaction. Closing is anticipated in the fourth quarter of 2013.

Natural Resource Partners enters Bakken as Abraxas shifts focus with sale

Natural Resource Partners LP has entered the Bakken Shale/Three Forks play with an agreement to purchase non-operated working interests in producing oil and gas properties in the Williston Basin of North Dakota and Montana from Abraxas Petroleum Corp. for approximately $35.3 million in cash. The acquisition consists of approximately 13,500 net acres that are held by production with an estimated average working interest of 11% in the Bakken/Three Forks play. The acquisition includes approximately 120 producing wells in addition to interests in 22 wells that are in various stages of development. NRP anticipates funding $8.1 million in additional capital expenditures associated with these new wells in 2013, a portion of which will be paid at closing. NRP expects the acquisition to close in the third quarter of 2013 and to be immediately accretive to NRP's unitholders. By selling the majority of its non-operated Bakken Shale properties, San Antonio, TX-based Abraxas Petroleum is shifting its focus to a core operated portfolio. Inclusive of the non-operated Bakken sale, Abraxas has divested approximately 502 boepd for gross proceeds of $47.3 million since the beginning of 2013. These asset sales have also removed approximately $10 million of budgeted CAPEX commitments for Abraxas. E-Spectrum Advisors LLC acted as divestiture agent for Abraxas on the sale.

FMC Technologies wins $1.2B subsea equipment order from Total

FMC Technologies Inc. has received an order from Total Upstream Nigeria Ltd. for subsea equipment for the Egina field. The award has an estimated value of $1.2 billion. The Egina field is located in Block OML 130 offshore Nigeria. FMC Technologies' scope of supply includes subsea trees and wellheads, manifolds, installation tooling, flowline connection systems, and associated control systems. The equipment is scheduled for delivery commencing in 2015.

Whiting sells OK assets to Breitburn for $860M

BreitBurn Energy Partners LP (BBEP) has agreed to purchase interests in the Postle and North East Hardesty oil fields, along with associated midstream assets, from Whiting Oil and Gas Corp., a wholly-owned subsidiary of Whiting Petroleum Corp., for approximately $860 million. Whiting had been looking to monetize the mature Oklahoma Panhandle assets "for some time," noted Wunderlich Securities analysts, and the deal is viewed favorably as it lowers debt and shows the "hidden value within Whiting's portfolio of assets." Net proceeds from the sale are expected to reduce the company's outstanding balance on its $2 billion credit facility from $1.5 billion to roughly $650 million, putting it at a strong debt-to-capitalization ratio of just over 20%, noted Wunderlich Securities. With its balance sheet in check, look for the company to increase its push into the Niobrara, the analysts noted. As for Breitburn, risk and opportunity await, said Global Hunter Securities analysts. "These assets are integral in allowing BBEP to rebuild the distribution coverage cushion that has been eroded by expiring natural gas hedges and continue its steady distribution growth. Risk and opportunity exist in the acquired assets, being CO2 EOR wells. While there will be a learning curve, best practices can hopefully be applied to other BBEP properties, driving additional production from existing wells," they noted. The company paid $116,000/flowing boe ( $19.46/bbl of proved reserves) versus a historical average of $98,000/flowing boe and $15.50/bbl of reserves, respectively, noted the analysts, but highlighted the "liquids-rich nature of the transaction (98%) vs. historical transactions." BBEP is acquiring additional interests in certain of the acquired assets from other sellers for an additional $30.2 million.

Warburg Pincus affiliate invests up to $600M in new African E&P

Delonex Energy Ltd., a new exploration and production company (E&P) focused on Central and East Africa, has received an investment of up to $600 million from an affiliate of private equity firm Warburg Pincus.

Delonex Energy is led by CEO Rahul Dhir, the former CEO of Cairn India Ltd. Dhir was also recently an executive-in-residence at Warburg Pincus, where he worked in close collaboration with the firm over the past several months to formulate Delonex's business plan. Delonex Energy's strategic areas include the East African Continental Rift System, the Central African Rift System, and the coastal margins of East Africa. Delonex Energy plans on accessing opportunities in these areas through farm-in and direct awards from host governments. Delonex Energy is headquartered in London, with subsidiaries in UK, India and Kenya.

Kinder Morgan initiates new business

Kinder Morgan Energy Partners LP is initiating a new business of owning, leasing and acquiring natural resource reserves within its Terminals business segment to pursue non-operating investments in coal and other mineral reserve properties and infrastructure. Richard M. Whiting, a senior executive with more than 35 years of experience in the coal industry, has joined KMP as president of Kinder Morgan Resources LLC, which will own mineral reserve properties and other assets in North America. KMP will not actively engage in the mining of coal or other natural resources, but will lease properties it acquires to various operators in exchange for royalty payments. The lessees of the properties will manage any commodity price risk associated with the operations, not KMP.

Holland Services gets investment from HIG Capital

An affiliate of HIG Capital LLC, a global private equity firm, has invested in Holland Services. Holland, a large land services provider serving multi-national and domestic energy firms, has assisted oil and gas companies with all aspects of acquiring, selling and developing land and mineral rights since 1985. Financing for the transaction was provided by THL Credit. The investment in Holland is the second time THL and HIG have partnered to invest in the oilfield services sector.

Isramco gets US$500M financing for Tamar field

Milbank, Tweed, Hadley & McCloy LLP has advised the lenders and hedge counterparties on a further US$500 million term loan financing for Isramco Negev 2 LP (Isramco) in support of its share of the development of the Tamargas field located of the coast of Israel. The loan proceeds partially refinance the US$750 million bridge and term loans extended to Isramco in 2011 and also support future development and expansion of the field which became operational in March 2013. Isramco is the largest local partner in the Project and owns a 28.5% stake in the Tamar gas field. The other investors are Noble Energy, Delek Drilling, Avner Oil and Gas and Alon Gas Exploration. Financing was arranged by Deutsche Bank, who also led the 2011 financings, and Natixis and was successfully syndicated to a large number of onshore and offshore financial institutions. Deutsche Bank has now arranged US$1.25 billion in debt financing for Isramco's share of the development of the Tamar offshore gas field since 2011.

Schlumberger acquires Alberta-based Gushor

Schlumberger has acquired Gushor Inc., a petroleum geochemistry and fluid analysis company based in Calgary, Alberta, Canada, that provides exploration and production (E&P) solutions in the heavy oil and oil sand industry. A University of Calgary spin-off formed in 2006, Gushor specializes in the integration of geology, fluid properties, petroleum geochemistry and reservoir engineering information.

CIT lead arranger in $60M financing for Independence Contract Drilling

CIT Group Inc. arranged a $60 million senior secured credit facility for Independence Contract Drilling (ICD), a vertically integrated premium land drilling services provider, to build a fleet of fast moving land-based oil and gas programmable AC drilling rigs. CIT Corporate Finance served as Sole Lead Arranger and Sole Lead Administrative Agent in the transaction. Financing was provided by CIT Bank, the US commercial bank subsidiary of CIT. Terms of the transaction were not disclosed.

PetroFrontier, Statoil amend agreement in Southern Georgina Basin

PetroFrontier Corp. has agreed to amend the existing farmin agreement with Statoil Australia Oil & Gas AS whereby Statoil has committed to spend the next US$50 million throughout the remainder of 2013 and 2014 to fully fund up to a 385 km 2D seismic program and the drilling and stimulation of four to six vertical test wells. Throughout 2012 and the first half of 2013, PetroFrontier and Statoil jointly spent approximately US$30 million on exploration in the Southern Georgina Basin. Under the Amended Farmin Agreement, Statoil could spend a total of up to US$175 million by the end of 2016 before PetroFrontier will be required to contribute further. Statoil will also become the operator effective September 1, 2013. Under the terms of the Amended Farmin Agreement, up to the next US$160 million of exploration costs will be fully funded by Statoil over three phases to the end of 2016, in return for 80% of PetroFrontier's working interest in EP 103/EP 104 (100% WI), EP 127/EP 128 (75% WI) and EPA 213/EPA 252 (100% WI) in the Southern Georgina Basin, Northern Territory, Australia.

Warren Resources increases 2013 Capex

Warren Resources Inc. is increasing its 2013 capital expenditure budget by $15 million to $73 million. The increase in planned capital expenditures is due to a decision to drill 25 new coalbed methane (CBM) wells in the Spyglass Hill Unit in the Washakie Basin, which is a sub-basin of the Greater Green River Basin, Wyoming. The additional wells are expected to be placed into sales in the latter part of 2013; therefore, Warren is not updating its full-year gas production guidance at this time. The Spyglass Hill Unit comprises approximately 113,000 gross acres and holds all of the leases within the Unit to all depths, including those depths and formations below the CBM Mesa Verde coal formation. Warren holds approximately 88,000 net acres in the Unit. In order to maintain and perpetuate the Unit, the Company and the other working interest owners are required to drill 25 CBM wells each year.

GeoMet closes Alabama producing properties sale

On June 14, 2013, GeoMet Inc. closed the previously announced sale of all of its coal bed methane properties located in the state of Alabama. The sale resulted in net proceeds of approximately $62 million after normal and customary purchase price adjustments of $1.2 million to account for net cash flows from the effective date to the closing date. Simultaneously with the close of the property sale, approximately $57 million was used to repay outstanding borrowings under the company's credit agreement and $5 million was held in reserve to pay transaction related costs and expenses, including the liquidation of certain natural gas hedge positions. After this repayment, borrowings outstanding under the credit agreement totaled $77 million and such amount has been established as the new borrowing base. In connection with this repayment the non-conforming "Tranche B" portion of total outstanding borrowings, which has existed since August 2012, has been eliminated and the company no longer has a borrowing base deficiency under the credit agreement. Lantana Oil & Gas Partners, a Houston based divestiture firm, represented GeoMet in this transaction.

Kabe to form exploration JV with Canadian firm

Kabe Exploration Inc. has entered into a letter of intent to form a joint venture partnership with Canadian oil and gas holding company International Equity Partners Oil & Gas Inc. for the exploration and development of 7,300 acres of oil leases in the Mississippian field of southern Kansas. International Equity Partners Oil & Gas will contribute capital and expertise toward developing the assets for production. Kabe's five year operational plan is expected to bring 24 new oil wells into production. Each well in the area is estimated to yield 400,000 barrels of oil, or a potential 9.6 million total barrels for the project.

Dejour names auditor

At its Annual and Special Meeting of Shareholders held June 14 in Vancouver, Dejour Energy Inc. appointed BDO Canada LLP as the company's auditors for the ensuing year.

DrillingInfo acquires Transform

Drillinginfo Inc., a provider of SaaS-based decision-support technology for the upstream oil and gas industry, has acquired Denver-based Transform Software & Services Inc., a provider of analytic interpretation and modeling. Details of the transaction were not disclosed. Austin, TX-based Drillinginfo will retain Transform's Denver-based office and all of its employees. Transform's CEO and co-founder, Dean Witte, PhD, an industry veteran and geophysicist, has been named senior vice president of research for Drillinginfo and CEO of the Transform division. Murray Roth, Transform's president and co-founder, is now vice president of worldwide consulting for Drillinginfo and president of the Transform division. Vaquero Capital served as the mergers and acquisitions advisor to Drillinginfo on the transaction.

ARKeX raises $15M in new investment

ARKeX, a provider of non-seismic geophysical imaging services, has raised US$15 million in new equity from 4D Global Energy Investments, an investment vehicle managed by 4D Global Energy Advisors, a Paris-based growth capital investor that specialises in the energy sector. The new investment will enable ARKeX to expand its full tensor gravity gradiometry (FTG) multi-client data library and proprietary services. Founding Partner of 4D Global Energy Advisors Jérôme Halbout has joined the ARKeX board as a non-executive director alongside the existing investors Energy Ventures, Ferd, and SEP.