Industry Briefs

Ruby Pipeline completes $1.075B Private Placement, retires $1.510B secured project financing

Ruby Pipeline LLC (Ruby) has completed an offering of $1.075 billion in aggregate principal amount of senior unsecured notes, comprised of $250 million principal amount of 4.50% Notes due 2017 and $825 million principal amount of 6.00% Notes due 2022. Ruby used the proceeds of the offering, together with cash released from a debt service reserve account and borrowings under Ruby's new $350 million unsecured term loan credit facility to fully repay its previously existing senior secured credit facility. The notes have not been registered under the Securities Act of 1933, as amended (the Securities Act), or any state securities laws; and unless so registered, the notes may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The notes were offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act. Ruby is a Delaware limited liability company, formed in 2007, whose sole asset is the Ruby pipeline, a recently completed 683-mile FERC-regulated natural gas transmission system that extends westward from the Opal Hub in Western Wyoming to the Malin Hub in Oregon, near the California border. Ruby is indirectly owned 50% by El Paso Corp. and 50% by funds managed by Global Infrastructure Management LLC (GIP). The notes are not guaranteed by El Paso Corp., GIP or any other person. On October 16, 2011, El Paso and Kinder Morgan Inc. announced an agreement whereby Kinder Morgan would acquire all of the outstanding shares of El Paso. The transaction is expected to close in the second quarter of 2012 and is subject to the approval of both El Paso's and Kinder Morgan's shareholders and to customary regulatory approvals. Following the closing of the transaction, El Paso will be a subsidiary of Kinder Morgan.

Magnum Hunter Resources acquires $25M in Utica Shale properties

Triad Hunter LLC, a wholly-owned subsidiary of Houston-based independent energy company Magnum Hunter Resources Corp., has closed on the acquisition of leasehold mineral interests located predominately in Noble County, Ohio from an undisclosed seller for a total purchase price of $24.8 million. The Utica Acreage consists of approximately 15,558 gross (12,186 net) acres predominately located in Noble County, Ohio. The net price paid per acre for this acquisition was $2,037. The valuation on the acreage is attractive and the purchase price is in line with previous transactions from PETD, REXX, and GPOR at an average price of $2,400/acre, noted analysts at Stifel Nicolaus following the announcement. The majority of the leasehold acreage acquired in this transaction is held by shallower production. The purchase includes all depths of 300 feet below the top of the Queenston Formation down to all further depths. There is no associated shallow production included with this acquisition. The acreage acquired is in close proximity to Triad Hunter's existing acreage position in Washington and Noble Counties, Ohio, and now provides Triad Hunter approximately 18,187 gross (14,815 net) acres in these two counties, and a total of 23,214 gross (17,316 net) acres that are presently prospective for the Utica Shale.

National Oilwell completes Flexible Pipe acquisition

National Oilwell Varco Inc. signed a definitive agreement to acquire NKT Flexibles I/S (NKT) for roughly US$670 million in cash. NKT, a joint venture between NKT Holding and Subsea 7 SA, is based in Denmark. The company designs and manufactures flexible pipe products and systems for the offshore oil and gas industry, including products associated with Floating Production, Storage and Offloading vessels and other offshore vessels, as well as subsea production systems including flow-lines and flexible risers. NKT recently signed a supply framework agreement with Petrobras and has decided to construct a new facility in Brazil. The transaction is expected to close during the first half of 2012.

J-W Energy restructures midstream subsidiaries

J-W Energy Co. is has formed J-W Midstream Co. The new entity will consolidate J-W Energy Co.'s midstream activities currently conducted by J-W Gathering Co., J-W Pipeline Co. and Q-West Energy Co. J-W Midstream Co. will have the goal of expanding J-W Energy Co.'s presence as a full-service provider of midstream services to the upstream natural gas sector. J-W Midstream Co. has its history deeply rooted as a pipeline company that has been active in the gathering, marketing, compression, dehydration, treating, processing and transmission of natural gas for over thirty years in the Ark-La-Tex region. The company has the capacity to gather and treat over 600 million cubic feet of natural gas per day and currently operates over 400 miles of pipeline systems and seventeen processing and treating facilities.

Halliburton, PETRONAS Carigali collaborate on evaluation, development of shale resources

Halliburton has signed an agreement with PETRONAS Carigali Sdn Bhd, the national oil company of Malaysia, for the evaluation and development of global shale resources. This collaboration will enable PETRONAS Carigali to shorten its in-house capability development by leveraging on Halliburton's technology and experience in the North America shale industry. Halliburton will work with PETRONAS Carigali to set up a Shale Technical Centre of Excellence in Kuala Lumpur. Halliburton is aggressively expanding its global infrastructure to support shale development outside of North America.

Petrobras issues US$ 7 billion in Global Notes

Petrobras has closed the issuance of Global Notes in the international capital markets in the amount of US$ 7 billion. The notes were issued by Petrobras' wholly owned subsidiary, Petrobras International Finance Company (PifCo). The transaction - the issuance of notes due 2015 and 2017 and the reopening of the bonds due 2021 and 2041 - was priced on February 1, 2012. The transaction was executed in one day, with a demand of approximately US$ 25 billion as a result of more than 1,600 orders coming from more than 700 investors. The final allocation was more concentrated in the United States (58.4%), Europe (28.1%) and Asia, mostly dedicated to the high grade market. The ratings of the notes were Baa1 (Moody's), BBB (Standard & Poor's) and BBB (Fitch) and Petrobras will use the proceeds of this multi-tranche offering for general corporate purposes. BB Securities Ltd, Citigroup Global Markets Inc., Itau BBA USA Securities Inc., JP Morgan Securities LLC, Morgan Stanley & Co. LLC and Santander Investment Securities Inc. were the joint lead managers for the transaction and Banco Votorantim Nassau Branch and Mitsubishi UFJ Securities (USA) Inc. were the co-managers.

Petrodyne adds reserves in Mississippian Lime oil play

Petrodyne Resources Ltd. has acquired additional PUD acreage in the core of the Horizontal Mississippi Lime Oil Play in Northwest Oklahoma. Petrodyne's acreage acquisition adds 60 PUD locations and an estimated 312 Mbo and 2.32 Bcf of de-risked reserves. With the acquisition, the company's total proved undeveloped reserves now stand at 465.63 Mboe; reserves are located across Alfalfa, Grant, and Garfield counties in Northwest Oklahoma. The company plans to participate in the drilling of 10+ horizontal wells on the newly acquired acreage by the end of the fourth quarter 2012. Petrodyne's partners in these wells include Sandridge Exploration & Production LLC (1 million acres), Chesapeake Exploration LLC (1 million acres), Eagle Energy Corp., and Panther Energy Co. Petrodyne's Mississippian (Tier 1 Core) position consists primarily of de-risked, non-operated working interest and overriding royalty interests across Alfalfa, Grant and Garfield counties in Northwestern Oklahoma.

Magnolia Petroleum acquires Mississippi Lime acreage

AIM-listed oil and gas production company Magnolia Petroleum Plc has acquired a 100% interest in 800 acres in the oil producing Mississippi Lime formation, Oklahoma and minority interests in leases over a further 284 net acres. The company plans to drill at least three vertical wells to test the Mississippi on the acquired acreage in the near future. Ongoing leasing activity has acquired a further 284 net acres with an average working interest of 3.4% with further acreage expected to be acquired in the future. The company paid total aggregate costs of roughly $230,000 for acquiring the 1,084 acres. During its due diligence process, the company identified a number of prospects on the acreage and following further analysis, aims to spud a first well by the end of the year.

Tap Oil Sells Harriet subsidiary to Apache

Tap Oil Ltd. has executed an agreement to sell its wholly owned subsidiary, Tap (Harriet) Pty Ltd., to a subsidiary of Apache Corp. for $10 million. Tap (Harriet) Pty Ltd. holds a 12.2229% interest in the Harriet Joint Venture (HJV) as well as a 10% interest in WA-45-R, WA-46-R and a 20% interest in WA-334-P. Following completion of the sale, Apache will assume all the liabilities and benefits of Tap (Harriet) Pty Ltd from an effective date of January 1, 2012, including the legal actions. Tap's managing director/CEO, Troy Hayden said, "This is a great outcome at every level for Tap, our shareholders and potential investors. Removing the legal issues associated with the Harriet Joint Venture allows Tap management to focus on our development projects and exploration activities and enables potential investors to now assess Tap's value without the uncertainty associated with outstanding protracted legal cases.

New Voyager credit facility to pay debt, accelerate Williston Basin activities

Billings, MT-based Voyager Oil & Gas has entered into a new $150 million credit facility with Macquarie Bank Ltd. The facility will be used to retire existing debt and allow Voyager to accelerate development and production growth in the Williston Basin for the purpose of Bakken and Three Forks well development, production growth and acquisition in the Williston Basin. The credit facility is set up as a two-tranche loan to be completely secured by the company's assets. The first tranche (Tranche A) has an initial $15 million borrowing base with a $100 million face amount. The second tranche (Tranche B) may provide a maximum of $50 million for development/acquisition expenses. Tranche A holds a current interest rate of 3.25% above LIBOR; Tranche B's interest rate is 7.5% plus LIBOR.

DA Davidson & Co. acquires McGladrey Capital Markets

D.A. Davidson & Co., a national full-service investment firm, has acquired McGladrey Capital Markets LLC (MCM), an investment banking firm headquartered in Costa Mesa, California. The acquisition will double the size of Davidson's investment banking group and expand its sector expertise in aerospace & defense, basic materials and packaging, food and beverage, infrastructure, industrials, energy services, and healthcare. No financial information was disclosed. On a combined basis, the two companies' middle market transactions will place Davidson in the top 10 of all domestic investment banks focused on transactions under $500 million. D.A. Davidson's investment banking group provides a full range of advisory and execution services in the areas of mergers and acquisitions, public and private equity offerings, senior and subordinate debt financing, financial restructuring and fairness opinions. Davidson's Investment Banking Group is headquartered in Portland, Ore. with offices in Los Angeles, Salt Lake City, Seattle and Great Falls, Mont. MCM will operate as D.A. Davidson from its Costa Mesa and Chicago offices. Prior to the acquisition, the company was affiliated with RSM McGladrey Inc., a professional services firm providing accounting, tax and business consulting.

Copano adds to Eagle Ford presence with pipeline expansion, long term contract

Copano Energy LLC will extend its wholly-owned 96-mile, 24-inch DK Pipeline in the Eagle Ford Shale play by adding approximately 65 miles of 24-inch pipeline southwest into McMullen County, Texas. The DK Pipeline extension is expected to begin service in the first half of 2013 and is projected to cost approximately $120 million. The pipeline extension will follow the same route as Copano's recently announced condensate pipeline, Double Eagle Pipeline LLC, a joint venture with Magellan Midstream Partners LP, in the rich gas window of the Eagle Ford Shale. The extension of the DK Pipeline is supported by a new long-term agreement with Petrohawk Energy Corp., a subsidiary of BHP Billiton.

NEAH Energy Executes letter of intent to establish water treatment company

Newco Energy Acquisition Holdings LLC (NEAH Energy), an energy-related asset and services acquisition firm, has executed a Letter of Intent (LOI) with a water technology company to establish a new water treatment and processing company (WaterCo). The proposed WaterCo is intended to focus exclusively on servicing the global oil and natural gas industry based upon technology developments and market demand for industrial on-site water treatment, processing, and purification. Specifically, the joint venture will handle polluted water from hydraulic fracturing at drilling sites in the US and worldwide. The proposed technology and equipment are patent protected and proprietary to the technology company. Newco Energy will own the majority of the proposed WaterCo and be the operating partner, while the water technology company will provide manufacturing and technical support, in addition to being compensated through royalty/license fees. The LOI provides for, among other key terms, a period of exclusivity between the parties to allow for structuring, financing and other legal arrangements to be completed. NEAH will be leading the equity and debt negotiations with investors on behalf of the proposed WaterCo.

Quicksilver Resources files $250M IPO to reduce debt

Quicksilver Production Partners LP (QPP), a wholly-owned subsidiary of Fort Worth-based natural gas and oil exploration and production company Quicksilver Resources Inc., filed a registration statement February 10, 2012, on Form S-1 with the US Securities and Exchange Commission related to the proposed initial public offering of common units representing limited partner interests. In connection with the initial public offering, Quicksilver will contribute certain of its Barnett Shale assets and related derivatives to QPP. Overall, Global Hunter Securities (GHS) analysts put the proved reserves at 430 bcf ($0.89/Mcfe multiple), and 2012E production at 64.3 MMcfe/d ($3.89/MMcfe/d). QPP intends to use the net proceeds of the initial public offering and borrowings under a planned new bank credit facility (along with the issuance to Quicksilver of common and subordinated units) as consideration for the contribution by Quicksilver of such assets.