Marathon divests oil sands business, picks up Permian Basin assets
Marathon Oil Corp. has agreed to sell its Canadian subsidiary, which includes the company's 20% non-operated interest in the Athabasca Oil Sands Project (AOSP), to Shell and Canadian Natural Resources Ltd. for $2.5 billion in cash, excluding closing adjustments. Marathon Oil also signed an agreement to acquire approximately 70,000 net surface acres in the Permian basin from BC Operating Inc. and other entities for $1.1 billion in cash, excluding closing adjustments. The acquisition includes 51,500 acres in the Northern Delaware basin of New Mexico, and current production of approximately 5,000 net boe/d. Under the terms of the Canadian divestiture, $1.75 billion will be paid to Marathon upon closing and the remaining proceeds will be paid in first quarter 2018. The sale is expected to close in mid-2017 with an effective date of Jan. 1, 2017, and concurrent with a related transaction between Shell and Canadian Natural Resources. Proceeds will be used to fund resource capture, organic investment, to reduce gross debt and for general corporate purposes. The Permian acquisition adds 70,000 total net acres with 51,500 net acres in the Northern Delaware basin for a total implied acreage cost of approximately $13,900 per acre, adjusting for existing production. The northern Delaware inventory produces greater than 90% before-tax IRRs at $55 WTI flat and competes for capital allocation at top of Marathon Oil's portfolio with primary targets in the Wolfcamp and Bone Spring. The BC acquisition is expected to close in second quarter 2017 with an effective date of Jan. 1, 2017. Goldman, Sachs & Co. and TD Securities served as advisors on the divestiture transaction, and Evercore served as advisor on the acquisition transaction. Jefferies acted as sole financial advisor to BC Operating, Inc. in the company's $1.1 billion sale to Marathon Oil Corp.
Gastar Exploration completes STACK leasehold acquisition
Gastar Exploration Inc. has completed the acquisition of additional working and net revenue interests in approximately 66 gross (9.5 net) producing wells and 5,670 net acres of additional STACK oil and gas leasehold in Kingfisher County, Oklahoma. Prior to the acquisition, Gastar held an interest in the majority of the acquired producing wells and leasehold. Current net production associated with the acquired well interests is approximately 330 boe/d (49% oil) and 57% of the acreage is currently held-by-production. The acquisition price of $51.4 million is subject to customary final closing adjustments. The acquisition was funded through a tack-on issuance, to funds managed by Ares Management LP, of an additional $75 million principal amount, priced at par, of Gastar's previously issued convertible notes due 2022, which increases the convertible notes issued to funds managed by Ares to $200 million. Upon the approval of the conversion rights of the convertible notes by Gastar's shareholders at a special shareholders meeting currently scheduled to be held on May 2, 2017, $37.5 million principal of the recently issued convertible notes will be repurchased and retired by the company in exchange for the issuance of 25,456,521 shares of Gastar's common stock, issued at a price of $1.4731 per share, the 10-day volume weighted average price for Gastar's common stock as of March 17, 2017. The remaining $162.5 million of the convertible notes will be eligible for conversion into Gastar common shares according to the terms of the indenture at an initial conversion price of $2.2103 per share. If the requisite shareholder approval of the conversion rights is not obtained on or before July 3, 2017, the convertible notes will not become convertible nor will they be repurchased, the notes will not be redeemable prior to their maturity except by payment of a "make whole" premium, and the interest rate on the notes will increase in increments to 15% per annum.
Brigham Resources closes $2.55B Permian sale to Diamondback
Brigham Resources Operating LLC and Brigham Resources Midstream LLC (collectively "Brigham Resources") has closed the sale of substantially all of its southern Delaware Basin assets for $2.55 billion to Diamondback Energy Inc. The sale included the following assets: 80,185 net leasehold acres in Pecos and Reeves counties, 48 Brigham-operated producing horizontal wells accounting for the bulk of its southern Delaware Basin production, 170 miles of natural gas and water gathering and water recycling infrastructure, and 5,745 net mineral acres (assuming an average 23% royalty) underlying Brigham Resources' operated leasehold acres or where its ownership will give Diamondback the right to operate. Post divestiture, Brigham's portfolio includes 32,500 net mineral acres in the Permian Basin, SCOOP/STACK, the DJ Basin and the Williston Basin.
RSP Permian completes second part of Silver Hill Energy Partners transaction
RSP Permian Inc. has completed the second part of its previously announced acquisitions of Silver Hill Energy Partners LLC (SHEP I) and Silver Hill E&P II LLC (SHEP II, and together with SHEP I, "Silver Hill"). The company closed the acquisition of SHEP II for an aggregate purchase price of approximately $646 million of cash and 16 million shares of RSP common stock, subject to certain customary post-closing adjustments. As previously announced, on February 24, 2017, RSP stockholders approved the issuance of the approximately 16 million shares of RSP common stock as partial consideration for the acquisition of SHEP II. RSP closed the acquisition of SHEP I on November 28, 2016 for a purchase price of approximately $604 million of cash and approximately 15 million shares of RSP common stock. Silver Hill owns approximately 68,000 gross, 41,000 net acres in northeast Loving and northwest Winkler Counties, Texas, and at the time of the acquisition announcement had approximately 15 MBoe/d of net production (69% oil, 86% liquids) from 58 wells (49 horizontals) producing from seven horizontal zones.
Post Oak Energy Capital leads capital commitment to Saxet II Minerals
Post Oak Energy Capital LP, through investment partnerships it manages, led a $100 million equity commitment to Saxet II Minerals LLC. The management team will co-invest alongside Post Oak. Saxet is a Houston-based company focused on the acquisition of mineral and royalty interests in the United States. Saxet II Minerals LLC is the second partnership with Post Oak; the first iteration has aggregated a position of mineral and royalty interests primarily in the SCOOP/STACK play in Oklahoma and the Midland Basin in West Texas.
Cheniere Energy closes $750M revolving credit facility
Cheniere Energy Inc. has closed on a new four-year $750 million revolving credit facility with nine financial institutions. Borrowings under the revolving credit facility will bear interest at a rate of London Interbank Offered Rate plus 325 basis points per annum. Undrawn commitment fees are 75 basis points per annum. Borrowings under the Revolving Credit Facility may be used by Cheniere to fund equity capital contributions to Cheniere CCH HoldCo II LLC, a wholly-owned subsidiary of Cheniere, and for general corporate purposes, subject to certain restrictions. Societe Generale is Administrative Agent, and Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc. and SG Americas Securities, LLC are Joint Lead Arrangers and Joint Bookrunners. The participating banks are Bank of America, N.A., Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Bank USA, HSBC Bank USA, National Association, Mizuho Bank, Ltd., Morgan Stanley Senior Funding, Inc., Royal Bank of Canada, Societe Generale and Sumitomo Mitsui Banking Corp.
EEX set to acquire 100% ownership of US Nodal Exchange
The European Energy Exchange (EEX) and the owners of US-based Nodal Exchange Holdings LLC have reached an agreement under which EEX will acquire 100% of the equity in Nodal Exchange for a low triple digit million US-Dollar investment. Nodal Exchange will become part of EEX Group. Nodal Exchange, headquartered in Virginia, is a regulated futures exchange which offers a variety of electricity and natural gas contracts to hedge against price risks in the US. All of the transactions on Nodal Exchange are cleared through its clearinghouse, Nodal Clear, a derivatives clearing organization under the Commodity Exchange Act that is regulated by the US Commodity Futures Trading Commission (CFTC). Through the acquisition, EEX Group will enter the North American energy trading markets. The closing of the agreement is subject to certain approvals and notifications, particularly with US authorities, and other customary closing conditions and is expected to occur in 2Q17. EEX Group provides the central market platform for energy and commodity products. The Group offering comprises contracts for Power, Natural Gas, Coal, Oil, Environmental Products, Freight, Metals and Agricultural Markets. The European Energy Exchange (EEX), EPEX SPOT, Powernext, CLTX, Gaspoint Nordic and Power Exchange Central Europe (PXE) are part of EEX Group. Clearing and settlement of transactions concluded or registered on the exchanges is provided by the central clearing house of the Group, European Commodity Clearing (ECC).
SM Energy closes sale of non-operated Eagle Ford assets, including midstream
SM Energy Co. closed the previously announced sale of its third party operated assets in the Eagle Ford, including ownership interest in midstream assets, for $800 million gross or $754 million net cash proceeds adjusted for post-effective date revenue and expenses, before final customary purchase price adjustments. The buyer is Venado EF LP, an affiliate of KKR. Fourth quarter 2016 production associated with these assets was 24,250 Boe per day (33% oil). SM Energy plans to apply proceeds from this divestiture towards its 2017 capital program, general debt reduction and general corporate purposes.
Canyon Creek Energy partners with Vortus Investment Advisors
Canyon Creek Energy - Arkoma LLC (CCEA) has partnered with an investor group, led by Fort Worth-based Vortus Investment Advisors LLC, which also includes management and other private industry investors. Based in Tulsa, Oklahoma, CCEA currently focuses on acquiring, leasing and developing oil and natural gas assets in Oklahoma. Canyon Creek is led by President and CEO R. Luke Essman. Prior to forming CCEA, Essman co-founded Canyon Creek Resources and Canyon Creek Energy both Mid-Continent focused E&P companies based in Tulsa, Oklahoma.
MPK Equity Partners invests in EnergyNet
EnergyNet, an online marketplace for buying and selling oil and gas assets, has received an investment from MPK Equity Partners of Dallas. The funding will support EnergyNet's efforts to expand its position in oil and gas acquisition and divestiture services and the online energy marketplace. The company's proprietary platform provides sellers the opportunity to reach nearly 20,000 unique bidders stretching across the US. Over the last year, the EnergyNet platform has facilitated the sale of almost $1 billion in oil and gas properties. EnergyNet is the exclusive online provider for the US Bureau of Land Management and seven other state land agencies to market their oil and gas leases and other minerals using EnergyNet's auction and sealed bid platforms. MHT Partners LP, a national investment bank focused on high-growth, niche-market leading innovators, served as exclusive advisor to EnergyNet.
