INDUSTRY BRIEFS
RESOLUTE TO MARKET POWDER RIVER BASIN ASSETS
Resolute Energy Corp., a Denver, Colorado-based independent oil and gas company, plans to market Powder River Basin properties as it looks to sell non-core assets to reduce leverage and enhance liquidity. Petrie Partners LLC has been retained to market for sale the Hilight Field property located in the Powder River Basin of Wyoming that the company acquired in 2008. The asset includes Q1:15 production of 1,725 boe/d, proved reserves at 12/31/14 of 5.9 MMboe (80% developed, 28% oil, 24% NGL, 48% gas), proved PV-10 of $76MM (based on $91.48/bbl WTI and $4.35/Mcf) and 45.4K net acres, noted analysts with Global Hunter Securities after the announcement. Resolute shifted field activity from enhanced oil recovery to horizontal drilling in the Turner and Parkman formations. The three horizontal Turner wells drilled to date have garnered 30-day IP rates of 885 boe/d (86% oil), 304 boe/d (84% oil) and 425 boe/d (85% oil), the analysts detailed. "We estimate that current production of 1,725 boe/d (10.4 MMcfe/d) could be worth $52MM-$72MM at production multiples of $5K/Mcfe/d-$7K/Mcfe/d. REN estimates 77 gross (65 net) horizontal drilling locations in the Turner and Parkman, which we estimate could be worth ~$80MM with a one-rig program at current strip type prices. This results in a total potential valuation for the asset of approximately $130MM-$150MM," they continued. Resolute noted also that the company has regained compliance with the NYSE's continued listing standards
GULFPORT ACQUIRES ADDITIONAL UTICA ACREAGE
Gulfport Energy Corp. has agreed to acquire additional acreage in the Utica shale play, associated assets and incremental firm transportation commitments from American Energy -- Utica LLC (AEU). Acquisition highlights include contiguous bolt-on acreage acquisitions totaling 35,325 net acres in Monroe, Belmont, and Jefferson counties, Ohio; an 11-mile gas gathering system currently in-place and operational in Monroe County to support near-term development; and incremental 287,000 MMbtu per day of firm transportation commitments provide access to favorable pricing points outside of the Appalachian Basin. As of June 8, Gulfport purchased 6,198 gross (6,198 net) acres in Belmont and Jefferson counties, Ohio, from AEU for $68.2 million. This acreage is located near, or adjacent to, the acreage included in Gulfport's previously and still pending acquisition of Paloma Partners III LLC. The newly acquired Belmont and Jefferson county acreage is undeveloped and is expected to fit into the company's development plan for the Paloma acreage area. Also as of June 8, Gulfport entered in to a definitive purchase agreement with AEU to acquire 38,965 gross (27,228 net) acres located in Monroe County, Ohio; 14.6 MMcfd of net production estimated for April; 18 gross (11.3 net) drilled but uncompleted wells; one fully constructed four well pad location; and an 11-mile gas gathering system for a total purchase price of $319 million, of which $52 million has been allocated to the existing production and the drilled but uncompleted wells and $20 million has been allocated to the gathering system. Gulfport also agreed to acquire an additional 4,950 gross (1,900 net) acres in Monroe County for an additional $19.4 million from AEU if AEU completes the acquisition of such acreage within 30 days of the closing of the Monroe acquisition. The Monroe County acreage has an NRI of 84% and is 85% held by production by a 10-well-per-year drilling commitment. The Monroe acquisition is expected to close by mid-June. Gulfport intends to add one rig to operate on this acreage beginning in the first quarter of 2016.
Pro forma for the full 35,325 net acres contemplated in the Belmont/Jefferson acquisition and the Monroe acquisition, including the additional Monroe acreage, and the full 24,000 net acres subject to the pending Paloma acquisition, Gulfport's holdings of Utica Shale leasehold are expected to total 262,000 gross (243,000 net) acres under lease. Gulfport will become the operator of all the acreage acquired in these transactions with AEU and anticipates that this acreage will add 200 net locations to its existing drilling inventory, based on 160-acre spacing.
Accompanying these transactions are incremental firm transportation commitments totaling 287,000 MMbtu per day to be phased in over a multi-year period beginning in mid-2015.Pro forma for the incremental 287,000 MMbtu per day of firm transportation commitments contemplated by this transaction, Gulfport has secured firm commitments covering 1,262,000 MMbtu per day of natural gas production by year-end 2017. Global Hunter Securities commented: "Ex-infrastructure and existing production value, we calculate that GPOR paid ~$1.67MM/well based on 160-acre spacing (better than the $2MM paid to Paloma); this translates to an 'acreage-burdened' IRR at $3.50 gas at 20% in our model vs. an unburdened project IRR at 33%. However, we expect returns to improve as well costs come in and EURs potentially exceed our 15 bcfe estimate. With only one rig running, we estimate GPOR recouping its undeveloped acreage cost of $335MM in the form of NAV creation in six years (we estimate the NPV of one well at $4MM and assume GPOR drills 14 wells per year with each rig). This can be meaningfully improved upon an increase in activity levels. Net/net, we think higher gas prices and/or higher activity levels will ultimately justify this transaction."
CARLYLE GROUP COMMITS UP TO $500M TO MAGNA ENERGY
The Carlyle Group will extend an equity line up to $500 million to Magna Energy Ltd., an upstream oil and gas company co-founded and led by two former Cairn Energy executives, Mike Watts and Jann Brown. Magna is targeting the building of acreage positions in the Indian subcontinent, with the objective of creating a full-cycle oil and gas company through acquisitions and local licensing rounds. Magna's primary focus will be development and production with a secondary focus on exploration. Funding for the investment will come from Carlyle International Energy Partners (CIEP), a fund that focuses on oil and gas exploration and production, midstream, and refining and marketing in Europe, Africa, Latin America, and Asia. Carlyle said June 22 that the CIEP investment in Magna Energy was its first large-scale energy commitment in India.
LOYZ TO ACQUIRE PEH ENERGY FOR $145.7M
Loyz Energy Ltd., a Singapore-based upstream energy group, has entered into a binding memorandum of understanding (MOU) for the acquisition of Primeline Energy Holdings Inc. (PEH) by way of a scheme of arrangement for a consideration of $145.7 million (SGD 197.0 million). PEH, a company listed on TSX Venture Exchange in Canada, is an independent oil and gas exploration and production company focusing exclusively on upstream opportunities in China. It owns exploration and development rights in the East China Sea, China, via two petroleum contracts, namely Block 25/34 and Block 33/07.
CRU OPENS THIRD SOUTH TX FRAC SAND FACILITY
CRU Logistics LLC has opened its third frac sand transloading facility in South Texas. The terminal, known as its "light model" is located at the Alamo Junction Rail Park (a dual-served industrial park) in Elmendorf, Texas, placing it within 50 miles of the Eagle Ford's core counties. The "light model" will provide the efficiencies of a silo facility (such as a three-minute truck load-out) while decreasing capital costs; thus lowering the per tonnage cost of transloading. The facility includes 2,500 feet of track over two separate under-rail pits, a bucket elevator rated at 400 ton/hr, and a covered truck scale. The design of the facility lends itself to the addition of silos and 5,000 feet of track within 60 days. Currently, CRU owns and operates two silo facilities in Victoria, Texas, and one light model facility in Elmendorf, Texas.
ATLAS SELLS ARKOMA ASSETS TO ARP
Atlas Resource Partners LP and Atlas Energy Group LLC have confirmed the completion of the acquisition of natural gas producing properties in the Arkoma basin by ARP from its parent company, ATLS, for $35.5 million. The transaction has an effective date of Jan. 1.
RING ENERGY RAISES $51M IN STOCK OFFERING
Ring Energy Inc. has completed the sale of 4,500,000 shares of its common stock resulting in gross proceeds of $51.75 million and estimated net proceeds of approximately $49 million, after deducting underwriting commissions and offering expenses payable by the company. Ring Energy intends to use the net proceeds from this offering to fund a portion of its acquisition of producing wells and leaseholds in Culberson and Reeves counties, Texas, and for general corporate purposes. In connection with the offering, SunTrust Robinson Humphrey, Inc. acted as sole bookrunner, Seaport Global Securities LLC and Euro Pacific Capital Inc. acted as senior co-managers, and IBERIA Capital Partners LLC, Northland Capital Markets, Roth Capital Partners, and Ladenburg Thalmann acted as co-managers.
DEJOUR REGAINS NYSE MKT LISTING COMPLIANCE
Dejour Energy Inc. received notification on June 1 from the NYSE MKT that it has regained compliance with Section 1003(a)(iv) of the exchange's company guide as of the end of the maximum 18-month cure period that ended on May 22. The company noted that the exchange is continuing to actively monitor its liquidity position on an ongoing basis, including its progress on several near term milestones communicated to the exchange in connection with its business plan.
SARATOGA TO BE DELISTED FROM NYSE MKT
NYSE Regulation Inc. has started proceedings to delist the common stock of Saratoga Resources Inc. (NYSE MKT: SARA) from NYSE MKT LLC. Trading in Saratoga Resources' common stock was suspended prior to the open of the market on June 19. NYSE MKT determined that the company was no longer suitable for listing in light of the filing by the company and certain of its subsidiaries of voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the Western District of Louisiana. Saratoga Resources does not anticipate exercising its right to appeal the delisting determination. At presstime, the company's common stock was quoted on the OTC Pink market under the symbol "SARAQ."
FREEPORT-MCMORAN SUBSIDIARY FILES FOR IPO
Freeport-McMoRan Inc.'s wholly owned subsidiary, Freeport-McMoRan Oil & Gas Inc. (FM O&G), has filed a registration statement on Form S-1 with the US Securities and Exchange Commission related to its potential initial public offering (IPO) of Class A common stock representing a minority interest in FM O&G. FM O&G intends to apply to list the common stock on the New York Stock Exchange under the ticker "FMOG." Barclays will act as book-runner for the proposed IPO.
TITAN ENERGY JOINS OTCQX MARKETPLACE
Titan Energy Ltd., an Australian oil and gas exploration and production company, has qualified to have its American depositary receipts (ADRs) trade on the OTCQX marketplace. Ltd. Titan Energy began trading June 23 on OTCQX under the symbol "TTENY," where each ADR represents 200 ordinary shares. BNY Mellon serves as Titan Energy's principal American liaison (PAL) on OTCQX, responsible for providing guidance on OTCQX requirements. Titan Energy has oil production from the Allen Dome oil field in Texas, and has a US$75 million joint development agreement to fund in-field development oil exploration. The three-year funding package will allow the company to explore its key assets: the Allen Dome salt dome in Brazoria County, TX, and the recently acquired Boling Dome in Wharton County, TX.
CLAYTON WILLIAMS ENERGY SELLS UNDEVELOPED EAGLE FORD RIGHTS
Clayton Williams Energy Inc. has sold approximately 3,700 net acres in Burleson County, Texas, for cash consideration of $22.1 million. The acreage, located east of the company's contiguous acreage block, was sold under a term assignment that terminates on Oct. 27 unless the buyer begins a 90-day continuous development program on the acreage. The company retained its rights to all depths and formations other than the Eagle Ford formation and also retained its interest in acreage and production associated with the Porter E Unit #1, the company's only Eagle Ford well situated on the acreage. Proceeds from the sale were used to reduce outstanding borrowings on the company's bank credit facility. The company plans to resume drilling operations in the third quarter of 2015, with one rig drilling horizontal Wolfcamp wells on the company's 66,000-net-acre position in the southern Delaware Basin in Reeves County, and one rig drilling horizontal Eagle Ford wells on the company's 170,000-net-acre block in Robertson, Burleson, Lee, and Bastrop counties. Drilling and completion costs associated with these rigs for the remainder of 2015 are expected to total approximately $35 million and will be financed by incremental borrowings on the company's bank credit facility.
WPX ENERGY ADDS ACREAGE IN GALLUP OIL PLAY
WPX Energy has completed the purchase of another 14,300 net acres in the San Juan Basin's Gallup oil window from an undisclosed seller for $26 million. The acreage purchase represents an estimated 100 gross drilling locations, boosting WPX's tally in the San Juan Gallup to approximately 500. WPX now owns or controls approximately 100,000 acres in the core of the Gallup oil play where it has spud more than 100 wells following a discovery in early 2013. WPX's overall drilling and completion costs are down 24% on its Gallup wells this year compared to its average in 2014. The company reported first quarter Gallup oil volumes of 8,100 barrels per day. WPX also is increasing its returns in the oil development through the construction and operation of its own oil, gas, and water gathering systems, and has taken steps to lower the basis differential on its Gallup oil sales from roughly $13 per barrel to $8 to $10 per barrel.
WILLIAMS REJECTS $48B BUYOUT OFFER FROM ENERGY TRANSFER EQUITY
At press time, Williams Co. rejected a $48 billion buyout offer from Energy Transfer Equity LP. Williams' board of directors has retained Barclays and Lazard to explore a range of strategic alternatives following receipt of Energy Transfer Equity's unsolicited proposal to acquire Williams in an all-equity transaction at a stated per share price of $64.00. The unsolicited proposal was also contingent on the termination of Williams' pending acquisition of Williams Partners LP. That acquisition, announced in May, has parent company Williams acquiring its asset-holding subsidiary Williams Partners LP in an all-equity deal worth $13.8 billion. William said June 21 that the acquisition of Williams Partners LP was moving forward. On June 21, Jefferies analysts examined the offer. "With a current share price of $48.34 (June 19 close), we note the ~$64/share unsolicited bid implies a ~32% premium." Commenting on the formal offer rejection, the analysts quoted Williams's board, saying the deal "significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a stand-alone basis and through other growth initiatives, including the pending acquisition of WPZ." The analysts hold their buy rating on WMB, but said they "await more information with respect to the timetable set for Williams to conclude its exploration of strategic alternatives."
SEVENTY SEVEN ENERGY CLOSES SALE OF HODGES TRUCKING
Seventy Seven Energy Inc. has completed the sale of Hodges Trucking Co. LLC to a wholly owned subsidiary of Aveda Transportation and Energy Services Inc. At the closing, SSE received aggregate consideration of $42 million, subject to a customary post-closing working capital adjustment, consisting of $15 million in cash and a $27 million principal amount junior secured fixed rate note due June 15, 2020. The note is secured by a second lien on substantially all of Aveda's fixed assets and accounts receivable. Hodges currently operates and owns approximately 900 pieces of rig moving and heavy haul equipment, including approximately 200 haul trucks, 400 trailers, 70 bed/pole trucks, 35 cranes, 40 forklifts/loaders, and 160 service vehicles. The sale did not include the real estate used in Hodges' operations. Headquartered in Oklahoma City, Oklahoma, SSE provides wellsite services and equipment to US land-based exploration and production customers operating in unconventional resource plays. SSE's services include drilling, hydraulic fracturing, and oilfield rentals.
EXXONMOBIL SELLS SHARE OF CHALMETTE REFINING IN LOUISIANA
ExxonMobil has reached an agreement with PBF Energy Inc. for the sale and purchase of its 50% interest in Chalmette Refining LLC in Chalmette, Louisiana. PBF Energy will purchase 100% of Chalmette Refining LLC, which is a joint venture between affiliates of Petróleos de Venezuela SA (PDVSA) and ExxonMobil. The agreement includes the Chalmette refinery and chemical production facilities near New Orleans, Louisiana, and the company's 100% interests in MOEM Pipeline LLC and 80% interest in each of Collins Pipeline Co. and T&M Terminal Co. ExxonMobil operates Chalmette Refining LLC, while Mobil Pipeline Co., an ExxonMobil affiliate, operates the logistics infrastructure.