Industry Briefs

June 11, 2012

Sumitomo, Tokyo Gas secure US LNG from Dominion

Sumitomo Corp., Japan’s third- largest trading house, and Tokyo Gas Co. have secured a supply contract for liquefied natural gas with Richmond, Va.-based Dominion Resources Inc. Sumitomo and Tokyo Gas will buy 2.3 million metric tons of LNG annually for 20 years from Dominion’s Cove Point project in Maryland. Dominion, which needs US approval to sell to Japan, plans to build and start operating the Cove Point plant in 2017. It will liquefy gas from Sumitomo’s assets in northeastern US.

Prudential Capital creates Dallas group

Prudential Capital Group has created the Dallas-based Energy Finance Group to provide expanded financing capabilities to the oil and gas, utility and power sectors. The group has a 2012 investment appetite of more than $2 billion of senior debt, mezzanine and equity financing to invest in energy and power companies, utilities and energy projects. Randall Kob, managing director, will lead the unit, overseeing a $12 billion energy and power portfolio.

Peregrine subsidiary fast-tracks gas facility

Ryckman Creek Resources, LLC, a wholly-owned subsidiary of Peregrine Midstream Partners LLC, has started gas injections at its high-deliverability, multi-cycle Ryckman Creek Gas Storage Facility in southwestern Wyoming near the Opal Hub. Construction of the 35 Bcf facility started in late September 2011. First gas injections from Northwest Pipeline commenced on May 1, 2012, followed by gas injections from Overthrust Pipeline several days later. Ryckman Creek will have interconnections with five interstate pipelines, all of which are connected to the Opal Hub, including Questar, Ruby and Kern River in addition to Northwest and Overthrust. Gas injections from the pipeline interconnections will commence in phases over the next few months as each interconnect becomes operational, until reservoir commissioning and pad gas injections have been completed this summer. Commercial operations are scheduled to start by September 1, 2012, with the first injections of customer gas.

Copano will grow capacity to meet Eagle Ford demand

In response to producer demand in the Eagle Ford shale play, Copano Energy, LLC will add 400,000 Mcf per day of cryogenic processing capacity at its Houston Central complex in Colorado County, Texas. The expansion will bring Copano’s total processing capacity at its Houston Central complex to 1.0 Bcf per day. Anticipated capital spending for the expansion and associated facilities is approximately $190 million, with an expected in-service date in mid-2014. Copano also announced execution of a new long-term, fee-based gathering and processing agreement with a major Eagle Ford producer which, combined with previously announced producer commitments, will support the expansion. Copano previously announced plans for an initial 400,000 Mcf per day cryogenic processing expansion at Houston Central, which is expected to be in service in the first quarter of 2013.

Greene’s Energy acquires Associated Rental Tools

Greene’s Energy Group, a provider of integrated testing, rentals, and specialty services, announced May 7 that is had acquired the shares of Singapore-based Associated Rental Tools Company Pte, Ltd. Established in 1982, Artco’s array of products and services include air- and manual-operated slip type elevators, spider slips, safety clamps, manual and hydraulic power tongs; fishing and drilling tools, cementing pumps, tubular equipment, rig parts and compressor construction and repair. Dennis Lim, Artco’s majority owner and operator since 1993, will remain as general manager. He will report to John Johnston, general manager of Greene’s Energy Group, which provides integrated testing, rentals, and specialty services for drilling, production, pipeline, and process operations. Greene’s employs more than 950 people worldwide with its group headquarters in Houston, Texas.

Aker Solutions wins surface wellhead contract in Egypt

International oil services group Aker Solutions has signed a two-year frame agreement with Egyptian oil company Badr Petroleum Company (Bapetco). Aker Solutions will be the sole supplier for all of the oil company’s surface wellhead equipment, installation and life-cycle services operations in the Western Desert of Egypt. The contract value was undisclosed. The contract will be delivered out of Aker Solutions’ surface products manufacturing center in Batam, Indonesia, established in 1992.

Environmental Drilling receives backing

Environmental Drilling Solutions, LLC, a provider of solids control, cuttings processing and zero discharge services, has received a growth equity investment from Element Partners and CSL Capital Management. Element Partners is an energy and industrial technology-focused private equity fund, and CSL Capital Management is an energy-services private equity firm. Under the continued management of EDS, the investment firms intend to drive advanced growth in the innovative drilling solids segment and to expand operations onshore and offshore. Based in Lafayette, La. And formed in 2009, EDS serves top-tier oil and gas operators in Louisiana, Texas, Oklahoma, Wyoming, Pennsylvania, Ohio, West Virginia, and the Gulf of Mexico. It also rig vacuum systems, storage tanks, pressure washers, and other related equipment and services.

PDC Energy to acquire Core Wattenberg assets

Denver, Colo.-based Petroleum Development Corp. will acquire Core Wattenberg assets that contain significant liquid-rich horizontal drilling opportunities from a private party for a purchase price of approximately $330.6 million. The effective date of the transaction is April 1, 2012 with closing scheduled for June 29, 2012. The assets are located almost entirely in the Core Wattenberg Field of Weld and Adams Counties, Colo., and are approximately 94% operated. They include an estimated 35,000 net acres prospective for horizontal development of the Niobrara and Codell formations. The acquired leasehold is 100% held by production and has an average working interest of approximately 93% with an average net revenue interest of approximately 81%. Current net production is approximately 2,800 barrels of oil equivalent per day from approximately 700 wells producing primarily from the Niobrara and Codell formations. A significant portion of the leasehold is in close proximity to the company’s current position in the Core Wattenberg Field, and the acquired assets include acreage that directly offsets some of the industry’s best results in the Core Horizontal Niobrara to date.

OTC: Malaysian companies generate $7.2B in sales

The Malaysia External Trade Development Corp. (MATRADE) and the Malaysia Petroleum Resources Corp. (MPRC) reported $7.2 billion in total generated sales by Malaysian companies during the Offshore Technology Conference May 1-3 in Houston, Texas. Among those sales, Muhibbah Engineering (M) Bhd signed a Memorandum of Understanding (MOU) agreement with Ford, Bacon & Davis USA regarding engineering and project management services for oil & gas, energy and process services, and Innovative Fluid Process Sdn Bhd signed a MOU with Americas Energy Company for facilities, system design and engineering services.

AMPHORA adds gas, power software to portfolio

Amphora, Inc., Energy Risk’s ETRM software house of the year in 2011, has added the the Affinity Gas and Power ETRM suite to its portfolio of products. Acquired from Société Générale, the Affinity suite’s

components include trade capture, trader tools, gas and power scheduling, confirmations, settlement, credit, full position, profit/loss, and business intelligence. Founded as TradeCapture Inc., in 1997, Amphora is headquartered in Houston, Texas with offices in Zug, Switzerland; Singapore; and Hyderabad, India. It has established an office in Stamford, Conn., with staff involved in the design, development, implementation and support of the Affinity suite.

Dynasty Financial adds Syntal Capital as advisor

Syntal Capital Partners, LLC, an independent investment advisory firm, has joined Dynasty Financial Partners’ wealth management platform. Based in Midland, Texas and launched on May 4, 2012, Syntal specializes in the wealth management needs and issues of families who work in the energy industry and related fields, including investment management, estate planning and trusts, tax management, concentrated stock solutions, banking and lending and philanthropic services. Syntal will leverage Dynasty’s technology, managed investments, institutional research, trust and insurance services, and credit facilities. Fidelity Investments and Pershing Advisor Solutions LLC will provide clearing and custody services for Syntal. Syntal is the 12th independent firm to join Dynasty’s platform.

CARBO to construct ceramics plant in Georgia

Houston-based CARBO Ceramics Inc. will begin construction on a manufacturing plant in Millen, Ga., by the end of the year. Operations could begin at the end of 2013. The plant will be located on a 450-acre tract in Jenkins County close to truck and rail distribution points. CARBO opened its first manufacturing plant in McIntyre, Ga., in 1998, followed in 2005 by a plant in Toomsboro, Ga. The Toomsboro plant earned the Georgia Mining Association “President’s Award” for safety in 2011. CARBO manufactures ceramic and resin-coated sand proppants used in fracturing oil and gas wells, and provides fracture simulation software, design and consulting services, as well as technologies for spill prevention, containment and countermeasures, and geotechnical monitoring.

Legacy Reserves acquires Rockies oil

Legacy Reserves LP has entered into an agreement to purchase oil properties in North Dakota and Montana for $70.8 million in cash. These properties have current net production of approximately 776 barrels of oil equivalent (Boe) per day. Legacy estimates that these properties contain 3.2 MMBoe of proved reserves, of which 95% are oil, 2% are natural gas liquids and 3% are natural gas. In addition, 100% of these reserves are considered proved developed producing (PDP) and 95% are operated. The North Dakota properties contain approximately 75% of the proved reserves, are primarily located in Billings County as well as Golden Valley and McKenzie Counties, and produce mainly from the Madison, Bakken and Birdbear formations. The Montana properties are located primarily in Blaine County and produce mainly from the Sawtooth and Bowes formations. The acquisition was anticipated to close on or about May 23, and will be financed with borrowings under Legacy’s existing credit facility. Legacy also has closed three acquisitions of oil and natural gas properties for approximately $17.3 million in Wyoming and the Permian Basin, bringing its year-to-date acquisitions of producing properties to approximately $88 million.

Apache Corp. completes Cordillera acquisition

Houston, Texas-based Apache Corp. has completed its acquisition of Cordillera Energy Partners III, LLC, a privately held company with operations and acreage across the Granite Wash, Tonkawa, Cleveland and Marmaton plays in western Oklahoma and the Texas Panhandle. Apache paid approximately $2.5 billion in cash and 6.3 million shares of Apache common stock. Cordillera’s leasing activity in the highly liquids-rich fairway in the Anadarko Basin since January brought the total to 312,000 net acres, up from 254,000 acres. In April, net production averaged approximately 21,900 barrels of oil equivalent, up 22 percent from January. At year-end, estimated proved reserves totaled 71.5 million boe.

Wood Group Mustang wins Ichthys contract

Wood Group Mustang has been awarded the topsides detailed engineering and procurement support for the semi-submersible central processing facility (CPF) in the Ichthys field development. The contract was awarded by Samsung Heavy Industries Co. Ltd., the EPC contractor for the CPF. The project, located off the northwest coast of Australia in 250 meters of water, will be operated by INPEX. The topsides facility will weigh approximately 70,000 (60,000 dry) tonnes with a topside deck footprint of 156m x 132m (514ft x 434ft). It will be designed for a peak gas export rate of 1,657MMscfd as well as liquids transfer to the floating production storage and offloading (FPSO) vessel for condensate production of approximately 85,000 bpd. The semi-submersible platform is a core component of the Ichthys liquefied natural gas (LNG) project, a joint venture between INPEX (76%, the operator) and Total (24%). Detailed engineering is scheduled to be completed in the third quarter of 2013 and first production is expected by the end of 2016.

Dahlman Rose announces follow-on investment

Dahlman Rose & Co.’s parent company has entered into a definitive agreement to sell an additional $10 million of equity to affiliates of Lovell Minnick Partners LLC, a private equity firm that specializes in the global financial services industry. Dahlman Rose plans to use the proceeds to expand its investment banking, research and institutional sales and trading platforms. Lovell Minnick Partners is actively investing Lovell Minnick Equity Partners III LP, which closed in January 2010. This $455 million partnership has completed four investments to date.

Kinder Morgan to buy 50% interest in KKR joint venture

Kinder Morgan Energy Partners, LP, has signed a definitive agreement with an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. LP, whereby KMP will purchase from KKR its 50 percent interest in the joint venture that owns the Altamont gathering, processing and treating assets (Uinta Basin in Utah) and the Camino Real Gathering System (Eagle Ford shale in Texas) for $300 million in KMP common units. El Paso Corp. owns the other 50 percent of the joint venture. KMP anticipates this transaction will close subsequent to the completion of Kinder Morgan’s acquisition of El Paso, slated for the end of May.

Element Partners invests in EDS

Element Partners, a private equity fund, and CSL Capital Management, a private equity firm, along with North Sky Capital and key members of management, have acquired Environmental Drilling Solutions. EDS provides closed-loop drilling solids control services to the North American oil and gas industry. EDS’s management team will continue to run the business, and current investor NGP Energy Technology Partners will retain an interest in the company. PNC Bank arranged a syndicated credit facility to support the transaction and additional proceeds from the investment will be used to expand operations onshore and offshore. EDS, based in Lafayette, La., was formed in 2009. It serves oil and gas operators in Louisiana, Texas, Oklahoma, Wyoming, Pennsylvania, Ohio, West Virginia, and the Gulf of Mexico. EDS was represented in the transaction by Farlie, Turner & Co.

Post Oak leads equity commitment to Crown IV

Post Oak Energy Capital, LP, through investment partnerships and with Wells Fargo Energy Capital and funds and accounts under management by BlackRock, has led a $60 million equity commitment to Crown Oil Partners IV, LP. Funding will be used for Midland, Texas-based Crown IV’s corporate growth capital, development acceleration and acquisitions. Half of the commitment, $30 million, was funded at closing with the remaining $30 million available to support future activities. Crown IV is led by Mike Black and Brandon Black; it is Mike Black’s fifth formed oil and gas partnership since 1988. Post Oak has been involved in two prior financings of enterprises led by Mike Black.

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