INDUSTRY BRIEFS
RYSTAD ENERGY OPENS STAVANGER OFFICE
Rystad Energy has opened its new offices in Stavanger, Norway. Tore Guldbrandsøy will head the Stavanger office. Guldbrandsøy has more than 25 years of E&P experience in both technical and managerial positions, including corporate strategy, commercial and business development in Statoil and Talisman. In a statement about Rystad's newest office, Guldbrandsøy noted: "In terms of oil sector revenue, Stavanger is even more dominant as 97% of the oil and gas sales of NOK 675 billion (2014) was from companies with headquarters in Stavanger. On the oil service side, the Stavanger area companies generated NOK 120 billion in revenues, while Oslo had NOK 65 billion and Bergen NOK 60 billion," he said. Headquartered in Oslo, Rystad has an international presence in Houston, New York, London, Moscow, and Stavanger.
NEWFIELD REORGANIZES REGIONAL OPERATING UNITS, CLOSING TWO OFFICES
In a push for cost efficiencies to improve margins in the lower oil price environment, Newfield Exploration Co. plans to combine its Onshore Gulf Coast and Rocky Mountain business units into one operating region located in The Woodlands, Texas. Newfield plans to close offices in Denver, Colorado, and in North Houston. The company will continue to manage its operations in the Mid-Continent from its regional office in Tulsa, Oklahoma. Newfield expects that the one-time costs associated with the restructuring plan will approximate $20 million and will be recorded primarily in the second half of 2015. Following Newfield's 1Q15 report, Oppenheimer analysts rated the company Outperform. The company plans to continue its near-term plan to drill in the Anadarko Basin's Basin's SCOOP and STACK plays where STACK wells continue to meet expectations, noted the analysts. "We believe a strong hedge position and bolstered balance sheet will enable NFX to execute, accelerate, and potentially add to its inventory, and maintain our Outperform rating." The company has 70% of 2015 and 56% of 2016 estimated oil hedged at close to $90/bbl.
GASTAR TO SELL CERTAIN OK ASSETS FOR $46.2M
Gastar Exploration Inc. has agreed to sell 19,000 net non-core assets in Kingfisher County, OK to an undisclosed private third party for approximately $46.2 million. J. Russell Porter, Gastar's president and CEO, said, "The sale of these assets will allow us to continue focusing on our Hunton Limestone exploration and development programs in our core Oklahoma acreage within and around our West Edmond Hunton Lime Unit and AMI joint venture area while retaining a substantial acreage position with STACK Play potential. Following the completion of this transaction, in our Mid-Continent area, we will have approximately 103,600 net acres with Hunton Limestone Oil Play reserves or potential, approximately 41,500 net acres with Meramec Shale/Mississippi Lime potential and 44,200 net acres with Woodford Shale potential." Global Hunter Securities analysts view the deal positively, noting that the sale's "attractive valuation (~$2K/acre backing out production at $40K/boepd) boosts liquidity and helps the balance sheet (keeps debt/EBITDA comfortably below 4x at YE15), giving the company a better platform to develop the remaining acreage (104K net acres). We think GST could use the incremental capital to add a Meramec test later this year, as the data coming out of this emerging play continues to look good."
AWE SECURES $326 MILLION LOAN FACILITY
Australia's AWE Ltd. has closed a new four-year, $326 million (AUD 400 million) secured multicurrency syndicated bank loan facility to replace its existing $244.5 million (AUD 300 million) unsecured loan facility. Over the past 12 months, AWE has added two projects to its development portfolio: the Senecio/Waitsia gas project in the onshore Perth Basin and the Lengo gas project offshore Indonesia. The Perth Basin project, together with BassGas, Sugarloaf, and Ande Ande Lumut, are core elements of AWE's growth strategy. The loan syndicate includes Australian and international banks, with Westpac Banking Corp. as the mandated lead arranger and bookrunner.
TRILANTIC, TRP FORM OIL AND GAS PARTNERSHIP
Trilantic Capital Management LP (Trilantic North America) has confirmed a $250 million equity commitment to invest in TRP Energy LLC, a newly formed, Houston, TX-based E&P company seeking to acquire and finance the development of direct, non-operated working interests across US onshore plays TRP will be led by Trent Foltz as CEO and Randy Dolan as president. The two petroleum engineers previously led JP Morgan's technical upstream acquisitions and divestitures practice. Trilantic was advised by Latham & Watkins LLP. TRP was advised by Sidley Austin LLP.
WASHINGTON GAS TO INVEST $126M FOR NATGAS RESERVES
Washington Gas, a subsidiary of WGL Holdings Inc., signed a conditional agreement with Energy Corp. of America (ECA) to acquire natural gas reserves through working interests in producing natural gas wells in Pennsylvania's Appalachian Basin. The investment of approximately $126 million in physical natural gas reserves enables Washington Gas to secure a long-term supply of natural gas that is expected to generate savings for Virginia customers over the 20-year investment period. The purchase is conditional upon approval by the Virginia State Corporation Commission. The agreement with ECA is the first announced transaction to be filed under a 2014 Virginia law that allows natural gas utilities to recover investments in strategic natural gas facilities that provide cost savings, reduce price volatility or reduce supply risk to utility customers. The acquired assets include 22 producing wells in Greene County, PA, and three producing wells in Clearfield County, PA, all of which will be operated by ECA. KeyBanc Capital Markets acted as exclusive financial advisor to Washington Gas.
WPX ENERGY TO MONETIZE ADDITIONAL MARCELLUS HOLDINGS
WPX Energy has signed an agreement to sell a package of Marcellus shale marketing contracts and to release certain related firm transportation capacity to an undisclosed buyer for more than $200 million cash. The sale includes various long-term natural gas purchase and sales agreements, along with 135 MMbtu/d of firm transportation capacity on Transco's Northeast Supply Link project. This is WPX's second transaction monetizing its holdings in the Marcellus shale play. Earlier this year, WPX completed a $300 million sale of its Northeast Pennsylvania assets. The parties expect to close the transaction in the second quarter of 2015. Upon closing, WPX will be released from various long-term natural gas purchase and sales obligations and approximately $390 million in future demand payment obligations associated with the transport position. WPX's only remaining assets in the Marcellus shale play primarily consist of its physical operations in Westmoreland County in southwestern Pennsylvania. These assets remain targeted for divestiture.
MRC ENTERS $363M AGREEMENT WITH CORNELL CAPITAL
MRC Global Inc., a distributor of pipe, valves, and fittings (PVF) and related products and services to the energy industry, has entered into an agreement to issue $363 million of 6.50% Series A convertible perpetual preferred stock to an affiliate of Cornell Capital LLC. MRC expects to use the proceeds to pay down its term loan and asset based lending facility. A summary of the key terms includes: Conversion price of $17.88, which represents a 10.6% premium to the closing price of MRC Global's common stock as of May 18, and a 15.1% premium to the 20-day volume weighted average price; convertible into approximately 20.3 million shares of MRC Global common stock, representing approximately 16.6% of common shares on an "as if converted" basis; 6.5% preferred dividend per annum. Prior to entering into the transaction, Henry Cornell, the founder of Cornell Capital, resigned from the board of directors of MRC Global, effective May 18. The transaction is expected to close in the second quarter of 2015. Barclays acted as financial advisor to MRC Global. Kirkland & Ellis LLP acted as legal counsel to the company, and Davis, Polk & Wardwell LLP acted as legal counsel to Cornell Capital.
SSO CLOSES $100M TERM LOAN FINANCING
Seventy Seven Energy Inc.'s wholly-owned subsidiary, Seventy Seven Operating LLC (SSO), has closed an incremental $100 million junior lien financing under its term loan facility with BlueMeridian Capital LLC, an affiliate of investment funds managed by BlueMountain Capital Management. Borrowings under the incremental term loan agreement bear interest at an interest rate equal to 9.00% plus the LIBOR rate. Headquartered in Oklahoma City, SSE provides a range of wellsite services and equipment to US land-based exploration and production customers operating in unconventional resource plays.
LUCAS, VICTORY TERMINATE MERGER AGREEMENT
On May 11, the non-binding letter of intent previously entered into between Lucas Energy Inc. and Victory Energy Corp. was terminated. The LOI provided that either party could terminate the agreement by written notification to the other party for any reason. The LOI contemplated the combination of the businesses of the company and Victory by way of a merger. Lucas and Victory are currently in the process of negotiating a mutually agreeable unwinding of the steps previously taken in anticipation of the proposed merger.
OTC ATTENDANCE HITS 94,700
Experts from the offshore energy industry around the world came together May 4-7 for the 2015 Offshore Technology Conference (OTC) at NRG Park in Houston. With more than 94,700 attendees from 130 countries gathered at the annual conference, this year's conference was the sixth largest attendance in OTC's 47-year history. The sold-out exhibition was the largest in show history at 695,005 square feet, including outdoor exhibits, up from 680,025 square feet in 2014. This year's conference also had 2,682 companies exhibiting, up from 2,568 in 2014, representing 37 countries. International companies made up 42% of exhibitors.
JFLCO ACQUIRES SPRINT ENERGY SERVICES
JF Lehman & Co. (JFLCO), a middle-market private equity firm focused on the maritime, defense and aerospace sectors, said May 14 that certain of its investment affiliates have acquired a majority stake in Houston, TX-based Sprint Energy Services LP in partnership with company management. Sprint is a provider of specialized, technical environmental services to the upstream energy industry. The company offers services and related rental equipment for waste management, environmental, and safety solutions at customer wellsites. Jones Day provided legal counsel to JFLCO. Debt financing for the transaction was arranged by IBERIABANK.
W&T OFFSHORE CLOSES $300M TERM LOAN FINANCING
W&T Offshore Inc. has closed its $300 million five-year second-lien term loan priced with a 9% fixed coupon at 99 to yield 9.25%. Net proceeds have been used to repay a portion of the outstanding borrowings under the company's revolving credit facility. Pro forma for the new issue, the company's liquidity under the borrowing base plus cash on hand as of March 31 would have been over $285 million. The borrowing base under the company's revolving bank credit facility is now set at $500 million. An entity controlled by Tracy W. Krohn, W&T Offshore's chairman and CEO, participated in the term loan for a $5 million principal commitment on the same terms as other lenders.