OGFJ100P company update
Independent research firm IHS Herold Inc. has provided OGFJ with updated production data for our periodic ranking of US-based private E&P companies. The ranking provided by IHS are based on operated production only within the United States.
Acquisitions and divestitures
The merger and acquisition market in the oil and gas industry is heating up as of late, and the activity is occurring in the private company space as well. In fact, the heated market, being driven in part by Asian buyers willing to shell out big bucks, may entice more private companies to consider selling assets, especially those holding Niobrara assets. In a recent IHS special report, the company noted that an estimated 550,000 acres in the Niobrara belong to private companies.
"While our recent assessment clearly shows that more time and data is needed to better understand the potential of the Niobrara, Asian buyers are keeping the Niobrara deal values at roughly $5,000 per acre, which we believe is lofty relative to risked intrinsic value," said Sven Del Pozzo, author of two related studies and senior principal energy equity analyst at IHS. For that reason, noted Del Pozzo, "we believe private E&Ps may consider selling their Niobrara assets" in the heated market. Based on the limited disclosure from private companies, IHS identified a number of private E&P companies with acreage in the play and others operating wells. Some of the largest include Cirque Resources LP (240,000 total net acres in the DJ and Hanna basins), Laramie Energy II (110,000 total net acres in the DJ and North Park basins), and Bonanza Creek Energy Co. (63,000 total net acres in the DJ and North Park basins reporting 92 MMboe of net resource potential).
While no Niobrara-focused transactions were reported for this particular installment of the OGFJ100P, certain privately held companies did monetize assets, and some to large companies.
Supermajor ExxonMobil secured an increased position in the Marcellus Shale by acquiring two privately held oil and gas operators, Phillips Resources Inc. and TWP Inc., for roughly $1.69 billion.
Warrendale, PA-based Phillips Resources was formed in 1975 and holds roughly 250,000 net acres and operates more than 4,000 producing natural gas wells in Pennsylvania—targeting both shallow conventional formations as well as the Marcellus Shale.
Through the acquisition of both private companies, ExxonMobil will acquire an additional 317,000 net acres, increasing its Marcellus leasehold to nearly 707,000 net acres. Additional proved reserves uptick by 228 bcfe.
According to a report by Global Hunter Securities, on an acreage basis, the transaction is valued at approximately $5,331 per acre and $7.41 per Mcfe on a proved reserve basis. The mix of proved developed to undeveloped reserves is unknown, but assumptions of a 50/50 mix and proved reserves worth $342 million put the estimated transaction value at roughly $4,250 per acre.
Second in terms of price paid is the transaction between Laredo Petroleum Inc. and Broad Oak. Laredo Petroleum, ranked No. 32, agreed to acquire Dallas-based Broad Oak for roughly $1 billion. After the aggregate consideration consisting primarily of newly issued units of Laredo, No. 50-ranked Broad Oak will become a wholly-owned subsidiary of Tulsa, Okla.-based Laredo.
Laredo has also agreed to pay off the Broad Oak's existing debt with funds from a revised $1 billion credit facility from Wells Fargo and BofA Merrill Lynch. This facility has an initial borrowing base of $650 million. Both Laredo and Broad Oak were formed in partnership with affiliates of Warburg Pincus LLC.
Tudor, Pickering, Holt & Co. Securities, Inc. served as financial advisor to Laredo. JP Morgan Securities LLC served as financial advisor to Broad Oak.
Elsewhere, Houston-based Black Elk Energy closed on a transaction to expand its holdings in the Gulf of Mexico.
Black Elk Energy Offshore Operations LLC closed on its agreement with a private equity company to acquire 40 fields with current production of nearly 8,200 net boe/d. The purchase includes 399 wells with an estimated 20 net million barrel equivalent of proven reserves.
As the transaction occurred subsequent to the data pull for this OGFJ100P ranking, the company's No. 40 ranking may be a thing of the past when the new numbers arrive. According to Black Elk's president and CEO John Hoffman, the acquisition moves the company into the "next level" in the industry. "Black Elk has once again doubled in size within a very short time frame and this acquisition moves us into the top Quartile of Private E&P producers within the United States."
Click here to download the pdf of the "2010 Year-to-date production ranked by BOE"
Click here to download the pdf of the "2010 Year-to-date production — alphabetical listing"
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