Industry Briefs

July 1, 2012

Basic Energy Services relocates corporate HQ to Fort Worth

Basic Energy Services Inc. said June 4 that it will relocate its corporate headquarters to Fort Worth, Texas from Midland, Texas. Ken Huseman, Basic's president and CEO, commented, "Basic was founded in the Permian Basin in 1992 and has enjoyed 20 years of growth and success due in large part to our corporate presence in Midland. While we will retain a significant operating presence with more than 30 service points and 2,300 employees in the Permian Basin, the move of our corporate headquarters to Fort Worth will facilitate the future growth and expansion of our company." Huseman continued, "Fort Worth provides a broader pool of experienced potential employees in the areas of human resources, accounting, finance, and information technology that are essential to the continued growth of a publicly-traded company. We have been fortunate to find exceptional people for those positions to date in Midland. However, due to the recent rapid expansion of the energy sector in Permian Basin, it has become challenging to find administrative and professional employees in the Midland area and difficult to attract people to the area who have the skills and experience required to meet the needs of our company." The company chose Fort Worth as the optimal location for its corporate headquarters due to its particular operating footprint, said Huseman. "The corporate office will have reasonable access to the majority of our field operations including those in the Permian Basin, Mid-Continent, and Ark-La-Tex regions and improved airport access to our remaining operations and the financial markets." The move is expected to be completed by year-end.

Ken Huseman, president and CEO of Basic Energy Services Inc.

Bourbon gets new financing from 8 French, 6 foreign banks

To support its growth and finance its investment program for new vessels, France's Bourbon has established new financing for a total of 420 million euros (US$525 million). The financing takes the form of a new club deal for a total of 240 million euros (US$300 million) with a syndicate of eight French banks. In addition, Bourbon has strengthened the geographical diversification of its financing by obtaining loans from six foreign banks for a total equivalent to around 180 million euros (US$225 million). Bourbon offers vessels to the offshore oil and gas industry. The company provides local service through its 27 operating subsidiaries. Bourbon has two operating activities, marine services and subsea services, and also protects the French coastline for the French navy. Under the company's 2015 Leadership Strategy plan, the company is investing US$2 billion in a large fleet of innovative and high-performance and built-in series offshore vessels. In 2011, Bourbon posted revenues of €1.008 billion (US$1.26 billion) and operated a fleet of 443 vessels (as of March 31, 2012).

Patterson-UTI Energy issues $300M senior unsecured notes

Patterson-UTI Energy Inc. has issued $300 million aggregate principal amount of unsecured 4.27% Series B Senior Notes due June 14, 2022. Proceeds will be used to repay the outstanding balance on its revolver ($108.5 million as of March 31) and term loan ($90 million as of March 31). In a prepared statement, Patterson-UTI's chairman, Mark S. Siegel, noted that after the debt repayment, the company has roughly $110 million in cash and $360 million available under its revolving credit facility. A Global Hunter Securities note to clients painted the move favorably. "We had modeled it drawing another $60 million down on its revolver in Q3 2012 to fund capex, but its cash balance (~$110 million) following this raise should alleviate that need and leave the company with significant liquidity, prior to building cash in 2013 as capex requirements dwindle relative to expected operating cash flows," the analyst said.

LINN Energy acquires Jonah Field properties for $1 billion

Houston-based LINN Energy LLC said June 25 that it has signed a definitive purchase agreement to acquire properties in the Jonah Field, located in the Green River Basin of southwest Wyoming, from BP America Production Company for a contract price of $1.025 billion, subject to the usual closing conditions. The deal will be financed with proceeds from borrowings under its revolving credit facility. Significant characteristics expected from the acquisition include an estimated adjusted EBITDA of about $160 million (first 12 months); production of about 145 MMcfe/d (55% operated); a low decline rate of approximately 14%; proved reserves of approximately 730 bcfe (56% PDP), 73% natural gas, 23% NGLs, and 4% oil; identified resource potential of approximately 1.2 tcfe; about 750 producing wells and more than 12,500 net acres; and estimated maintenance capital of approximately $40 million to $50 million (first 12 months). LINN has hedged approximately 100% of the oil and natural gas production associated with the transaction through 2017. Including the pending Jonah Field transaction, LINN has announced or closed almost $3 billion of acquisitions year to date. Prior to closing, LINN intends to request an increase to its revolving credit facility note amount from $2 billion to $3 billion, subject to lender approval and final documentation. Barclays Capital, BMO Capital Markets, and RBC Richardson Barr acted as financial advisors to LINN Energy for the acquisition.

TGS-NOPEC buys Arcis Seismic Solutions

TGS-NOPEC Geophysical Co. said June 15 that it has acquired Calgary-based Arcis Seismic Solutions Corp. The total equity value is approximately $51 million, reflecting an enterprise value of $72 million, based on net debt at the date of acquisition. Arcis is a privately owned geophysical company founded in 1996 with a head office located in Calgary, Alberta, Canada and a regional business development presence in Latin America (Colombia) and the Middle East/North Africa (Cyprus). Arcis has built a 3D multi-client library consisting of 4,899 square miles with core activity in hydrocarbon trends in Alberta, British Columbia and Saskatchewan (including Bakken, Horn River, Montney and Duvernay).

ExxonMobil moves 2,100 jobs to Houston

ExxonMobil, which began construction of a new campus in Houston last year, says it will relocate 2,100 employees in Fairfax County, Va., to the new campus once it is complete, effectively ending the company's presence in Virginia after several decades. Exxon merged with Fairfax-based Mobil Oil in 1999 and relocated the merged company's corporate headquarters to Texas shortly thereafter. ExxonMobil's Fairfax offices include its refining and supply business, research and engineering, and fuels and lubricants marketing. The Fairfax move, which includes all local employees, is part of ExxonMobil's consolidation to the new Woodlands-area campus that will also include employees from Akron, Ohio, and other Houston-area locations. In all, the new campus will house about 10,000 ExxonMobil employees, who will begin moving to the campus in phases starting in early 2014. The transfers are expected to be completed by 2015.

Morgan Lewis advises KazMunaiGas on $1.1B financing

KazMunaiGas, Kazakhstan's state oil and gas company, secured a $1.13 billion Chinese loan on June 6 to complete an upgrade that will enable its Atyrau oil refinery to produce cleaner fuels. Morgan Lewis advised KazMunaiGas on the transaction. The loan from China's Export-Import Bank will be repayable over 13.5 years. It will finance a large part of a $1.68 billion project to build a new facility at Atyrau, Kazakhstan's oldest refinery, which will be capable of processing 2.4 million tonnes per year of fuel oil and vacuum gas oil. Chinese company Sinopec Engineering is overseeing the Atyrau deep refining project as part of a consortium that also includes Japan's Marubeni Corp. and Kazakh firm KazStroiServis. The facility is scheduled for completion in 2015.

Apax-led group to acquire Paradigm for $1 billion

In an all-cash transaction valued at about US$1 billion, funds advised by Apax Partners and JMI Equity said June 11 they have agreed to acquire Paradigm Ltd., an independent software vendor focused on the petroleum exploration and production sector. Paradigm is a multi-national company with chief offices in London and Amsterdam and a significant presence across Europe, the Americas, the Middle East, Africa, China, and Australasia. Paradigm's software is intended to optimize drilling and production decisions through the analysis of vast quantities of seismic and well-log data, spanning the entire spectrum of the E&P lifecycle from basin evaluation through to development and production. Paradigm says it has more than 700 customers, including super-major oil companies; national oil companies; independent E&P companies; and seismic processing service firms. Bank of America Merrill Lynch and Simmons & Co. acted as financial advisers to Apax, and Kirkland & Ellis LLP provided legal advice. UBS and Royal Bank of Canada provided debt financing. Jefferies & Company Inc. acted as adviser to Paradigm, and Skadden, Arps, Slate, Meagher & Flom LLP provided legal, and PwC financial advisory services.

Saratoga Resources gains $20.1M capital infusion

Saratoga Resources Inc. announced May 24 the closing of a $19.3 million private placement of common stock, before fees and expenses, to select institutional and accredited investors and, in a separate transaction, the receipt of $0.8 million of proceeds from the exercise of outstanding warrants. The company sold an aggregate of 3,089,360 shares of common stock in the private placement at $6.25 per share. C.K. Cooper & Company and Ladenburg Thalmann & Co. Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc., acted as co-placement agents in the offering.

Noble Royalties closes $37.75M Bakken Shale royalty acquisition

Noble Royalties Inc. has closed on the acquisition of producing oil and natural gas royalties in seven North Dakota counties from an undisclosed seller. The $37.75 million Bakken Shale acquisition consists of 81% oil, 15% natural gas and 4% natural gas liquids production. The acquisition includes not only the currently producing wells in the Bakken Shale, but other target formations that are being developed in the area. These include the Three Forks, Mission Canyon, Duperow and Red River formations.

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