Industry Briefs

Aug. 5, 2013

Fieldwood Energy pays $3.75B for Apache GoM shelf business

Houston-based Fieldwood Energy LLC, a portfolio company of Riverstone Holdings LLC, the New York-based private equity firm, has acquired Apache Corp.'s Gulf of Mexico Shelf business for $3.75 billion, before purchase price adjustments. Houston-based Apache sold the properties as part of previously announced plans to divest $4 billion in assets. The properties to be acquired represent the largest operated asset base on the Gulf of Mexico Shelf and comprise more than 500 blocks and 1.9 million net acres. Fieldwood hopes to retain substantially all of Apache's Gulf of Mexico Shelf employees. As of year-end 2012, total proved reserves attributable to the assets were 239 MMboe, of which over 55% is oil and over 75% is developed. Current daily production exceeds 95,000 boe and is over 90% operated. Apache has retained half of the deepwater rights, allowing the company to participate in any new deep shelf plays, while selling out of the more mature shallow assets. With this in mind, even though transaction metrics were below recent sales comps in the area ($40,614 per flowing barrel of production, $15.69/boe of proved reserves, vs. $52,546/boe/d and $19.65/mmboe of proved reserves), said Stifel analysts in a research note, "the sale does help reduce the corporate decline rate and provides $1.75 billion of capital for buybacks to begin ($2 billion towards debt reduction). As a result, we view the transaction as a slight positive since the historic limited corporate growth rate and lack of past share buybacks, despite the corporate valuation, were turnoffs for investors." Fieldwood has obtained underwritten committed financing for the transaction from Citigroup Global Markets JP Morgan, Deutsche Bank AG New York Branch, BofA Merrill Lynch and Goldman Sachs Bank USA. Vinson & Elkins LLP and Simpson Thacher & Bartlett LLP served as legal advisors to Fieldwood.

Apache operations in the Gulf of Mexico. Apache Corp.

Petrobras signs $1.5B financing agreement with JBIC

On July 16, Petrobras signed two financing programs with the Japan Bank for International Cooperation (JBIC) for the offer of two lines of credit amounting to US$ 1.5 billion. Mizuho Bank Ltd. is the agent bank for these programs and the lines of credit will be 60% financed by JBIC and 40% by private Japanese financial institutions, which are insured by Nippon Export and Investment Insurance (NEXI). The lines of credit are for Petrobras to purchase equipment and services from Japanese companies in Brazil and abroad, based on the memorandum of understanding signed in October 2012, when a strategic partnership between JBIC and Petrobras was established.

Ewing Bemiss launches energy private equity firm Turning Basin Capital

Turning Basin Capital, a private-equity firm focused on providing growth or buyout capital to lower-middle market companies in the energy sector has been launched by Ewing Bemiss & Co., an investment banking firm to middle-market companies. Targets include companies that provide goods or services to the energy sector and are beneficiaries of macro themes affecting the larger energy market: energy independence, global warming concerns, resource scarcity, emergence of technologies and regulatory changes. The new firm will be led by Mark Murray, who joined Richmond, Virginia-based Ewing Bemiss in February after 11 years at Dominion Resources where he was responsible for strategic venture investments and business development for the alternative energy solutions group. Prior to that, Murray held a variety of roles in the law department.

ALS spends close to $550M on OIl service acquisitions

Australia-listed ALS Ltd. has agreed to acquire UK-based Reservoir Group for $533 million (9.6 x Reservoir's FY2013 EBITDA). Reservoir is a provider of specialist oil and gas services and equipment that assists with the evaluation, development and optimization of oil and gas discoveries. Reservoir has major hub operations in Aberdeen, Dubai, Houston, and Edmonton, and operational infrastructure in nearly 40 sites. Reservoir's existing senior management team has committed to continue in the business and will roll over roughly 50% of their equity in Reservoir into ALS shares. Reservoir senior management will hold a 1.5% pro forma shareholding in ALS. Separately, ALS has agreed to acquire Earth Data for approximately $16.6 million. Earth Data is an Australian-based provider of gas sampling and analysis services to Australia's oil and gas industries, and safety monitoring sampling and analysis for fugitive emissions to Australian coal mines. Earth Data operates laboratories in Brisbane and the Hunter Valley.

PennWell acquires PNEC Petroleum Data Management Conference

PennWell Corp., a diversified global media and information company, has acquired PNEC, the Petroleum Network Education Conferences, from Philip C. Crouse & Associates Inc. and entered into a consulting agreement with Cindy R. Crouse for the operation of the annual event based in Houston and next scheduled for May 2014. PNEC is an annual conference and exhibition serving the data integration, information and management disciplines critical to exploration and production within the global oil and gas industry. Founded in 1997 and held annually since then, PNEC brings together geologists, geophysicists, engineers, technicians, programmers, analysts and other professionals involved in data and information management. The 17th annual PNEC was held May 14-16, 2013 at the Double Tree by Hilton Greenway Hotel in Houston for a record 580 attendees from 37 countries. PNEC will be managed by Mark Peters, vice president and group publishing director of PennWell's Offshore and Oil & Gas Financial Journal magazines and the company's domestic events, including Subsea Tieback Forum & Exhibition, Deepwater Operations Forum & Exhibition, Topsides, Platforms & Hulls Forum & Exhibition, and the Oil & Gas Pipeline Conference & Exhibition.

Memorial Production Partners to acquire oil and gas properties

Memorial Production Partners LP has signed definitive agreements to acquire certain oil and gas properties in the Permian Basin, East Texas, and the Rockies, from its sponsor, Memorial Resource Development LLC, and affiliates of Natural Gas Partners for an aggregate purchase price of approximately $606 million. The transaction is expected to close in October 2013. The acquired properties consist of 973 gross (648.6 net) wells on 363,000 gross (136,000 net) acres in Texas, New Mexico, Wyoming and Colorado. MEMP will operate 94% of total proved reserves and 74% of the producing wells. MEMP will acquire approximately 275 Bcfe of proved reserves, which are located approximately 48% in the Permian Basin, 31% in East Texas and 21% in the Rockies. The acquisition will increase MEMP's proved reserves by 36% to over 1.0 Tcfe and average daily production for May by 42% to approximately 152 MMcfe/d. MEMP expects to fund the transaction through borrowings under its $1 billion multi-year revolving credit facility, which carries a current borrowing base of $480 million prior to any increases for the acquisition. As of July 1, 2013, MEMP had $441 million of available borrowing capacity. As part of the transaction, MEMP will acquire commodity hedges that cover approximately 72% of acquired PDP volumes through 2015 (82% through 2014). In addition, MEMP will acquire interest rate hedges for a notional principal amount of $11.5 million extending through June 2014 at a fixed annual LIBOR rate of 0.5%. Consistent with its hedging policy, MEMP has layered on incremental commodity hedges that, together with the acquired hedges, cover up to 85% of projected production volumes related to this acquisition through 2018.

Energy Service Partners to serve oil and gas industry

Energy Service Partners (ESP) is a new oilfield service company specializing in wireline pressure control equipment. The company's founder, James Young, serves as president of the Lafayette, LA- based company. In 1993, Young and his father started Dutch Inc., a small rental tool company serving operators in the Gulf of Mexico. Young oversaw the merger of Boyd's Rental Tools and Dutch Inc., an entity that eventually became Wireline Control Systems, an operating unit of Smith International where Young served as president from 1996 until 2010.

Lightning Protection Summit aims to prepare INdustry professionals

The 2nd Lightning Protection Summit at the Houston Ship Channel for Petroleum and Chemical Professionals will be held October 10, 2013, at The Monument Inn in La Porte, TX. The aim of the summit is to help petroleum and chemical professionals understand the risks of lightning on the industry and how to best prepare. The summit will feature Albin J. Gasiewski PhD, Professor of Electrical and Computer Engineering Director, NOAA-CU Center for Environmental Technology, University of Colorado at Boulder; and research by Prof. Earle Williams, Principle Research Engineer at the School of Civil and Environmental Engineering at MIT.

Baker Hughes rolls out new index

Baker Hughes Inc. has introduced the Baker Hughes Well Count, a new index that provides US onshore well count data to the oil and gas industry. The Baker Hughes Well Count is an extension of the Baker Hughes Rig Count, which has provided activity data for more than 70 years. The Baker Hughes Well Count will be published quarterly on the second Friday of January, April, July, and October. Users can access the current Baker Hughes Well Count information as well as historical data that dates back to the first quarter of 2012. The index will be presented both by wells spud for US onshore as well as by major basin.

HSB Solomon acquires Ziff Energy Group

HSB Solomon Associates (Solomon), a performance improvement company for the global energy industry and a subsidiary of The Hartford Steam Boiler Inspection and Insurance Company (HSB), has acquired Ziff Energy Group, an international energy consulting firm. The transaction adds global energy exploration and production benchmarking and North American natural gas forecasting to Solomon's suite of products and services.

Hornbeck Offshore sells downstream segment for $230M Hornbeck Offshore Services Inc. has agreed to sell substantially all of the assets and business of its downstream segment's tug and tank barge fleet to an affiliate of Genesis Energy LP for a cash consideration of $230 million. Simultaneously with the execution of the agreement, Genesis posted a $23 million deposit. Hornbeck expects to use after-tax proceeds from the transaction for general corporate purposes, which may include retirement of debt or funding for the acquisition, construction or retrofit of vessels. Vessels to be sold to Genesis comprise Hornbeck's active fleet of nine ocean-going tugs and nine double-hulled tank barges. The transaction is anticipated to close by the end of the third quarter of 2013. J.P. Morgan Securities LLC acted as exclusive financial advisor to Hornbeck Offshore.