INDUSTRY BRIEFS

SYNERGY ADDS WATTENBERG ACREAGE FOR $78M

Denver-Julesburg Basin-focused Synergy Resources Corp. has agreed to purchase interests in producing wells and leasehold in the Wattenberg Field from K.P. Kauffman Company Inc. for $78 million, comprised of $35 million in cash and roughly 4.4 million shares of Synergy common stock. The assets include leasehold rights for 4,300 net acres in the Wattenberg Field and non-operated working interests in 25 gross (approximately 5 net) horizontal wells in the Niobrara and Codell formations. Current net production associated with the purchased assets is approximately 1,200 boe/d. The price was fair, noted Wunderlich Securities analysts after the announcement. "Using ~$52,000 per flowing barrel and netting out ~500 net producing acres, the company paid ~$4,100 per net acre for the undeveloped land, a fair price, in our view," the analysts said, adding that the company "has a contrarian style" that Wunderlich believes "does its best work when things are bleak," offering up a Buy rating as "one of the most iron-clad names in our universe." Stifel analysts noted the deal was "not cheap," but the acquisition "is a strategic fit with high quality legacy assets and bulks up the company's Wattenberg Middle Core position by approximately 25%." "New well costs are positive and suggest management's projections and our NAV estimate could be conservative. Despite SYRG's well-telegraphed plan to add acreage and forego the addition of a second rig, Street consensus FY16 estimates were too high although we suspect most of our competitors will view the acquisition positively. The company is well positioned for further consolidation as YE16 debt/EBITDA remains below 1.0x," according to Stifel.

KKR HELPS LAUNCH TRANS EUROPEAN OIL & GAS

KKR, a global investment firm, is backing Roland Wessel, Colin Judd, and Melvyn Horgan, founders and former management team of Star Energy, to launch Trans European Oil & Gas Ltd.

Trans European Oil & Gas intends to build a portfolio of conventional onshore oil and gas properties in proven hydrocarbon plays in Europe, and apply its experience in enhanced oil recovery (EOR) techniques to optimize production. The investment in Trans European Oil & Gas will be made primarily by the KKR European Fund IV. Established in 1999, Star Energy made several acquisitions of producing assets and applied EOR techniques. Star Energy grew to encompass 25 producing oil and gas fields and a commissioned 10 bcf gas storage facility. Star Energy listed on AIM in 2004 and was acquired by Petronas in 2008.

RESOLUTE TO SELL POWDER RIVER BASIN ASSETS

Resolute Energy Corp. has entered into a definitive agreement to sell its Hilight Field assets in Wyoming's Powder River Basin to an undisclosed private party for $55 million. Upon closing, expected on or about Oct. 6, the company will have completed close to $100 million in asset sales this year, said Resolute Chairman and CEO Nicholas J. Sutton in a company statement. Global Hunter Securities analysts, in a note to investors Thursday, said, "The assets include Q2:15 production of 9.9 MMcfe/d (~70% gas), largely from legacy conventional operations, and 47.8K net acres prospective for horizontal drilling in the oily Turner and Parkman formations. Based on production multiples of $2K/MMcfe/d-$4K/MMcfe/d, we estimate PDP value of $20MM-$40MM, resulting in an undeveloped acreage multiple range of $315/acre-$730/acre," noting that Resolute would prefer to use proceeds to pay borrowings under its revolving credit facility (estimated $160 million outstanding at the end of June under $260 million borrowing base), "but must request the ability to do so from the holder of its 2nd lien term loan," the analysts continued. Petrie Partners LLC acted as financial advisor to Resolute on the transaction.

ELEMENT III RECEIVES $200M COMMITMENT FROM ARCLIGHT AND MANAGEMENT TEAM

ArcLight Energy Partners Fund VI LP, a private equity fund managed by ArcLight Capital Partners LLC, alongside the Element Petroleum LP management team have agreed to form Element Petroleum III LLC (Element III) with a $200 million aggregate equity commitment. The capital will be used to find, develop, and acquire oil and gas reserves and production, primarily in the Permian Basin. Headquartered in Midland, Texas, Element III will be led by President and CEO Todd Gibson, as well as Eric Hopper, Jamie Small, and Jiri Klubal. Element III marks the third partnership between ArcLight and this management team, dating back to affiliates of Element Petroleum founded in 2006. During the first two ventures, the management team focused on finding and developing acreage prospective for vertical Wolfberry exploitation and, more recently, horizontal exploration and development of the Wolfcamp and Spraberry shales.

ENSCO REDUCES ONSHORE SUPPORT JOBS BY 14%

Ensco plc has taken additional steps to reduce expenses, including streamlining global operations and reducing onshore support positions by an additional 14%. In a company statement, Ensco president and CEO Carl Trowell noted that, in total, the action taken year to date "to reduce onshore support positions should generate a combined savings of $57 million on an annual basis. Steps taken to adjust discretionary compensation plans will reduce offshore unit labor costs by a total of 15% compared to 2014 levels."

PARAGON BORROWS REMAINING CREDIT CAPACITY

Paragon Offshore plc, a global offshore drilling rig provider, has borrowed $332 million under its senior secured revolving credit facility with JPMorgan Chase Bank NA, as administrative agent, and the lenders and other parties party thereto, which represented substantially all of the remaining undrawn amount that was available to Paragon under the senior secured revolving credit facility. Following the completion of this borrowing, Paragon's aggregate principal amount of borrowings under the senior secured revolving credit facility was $697 million, in addition to $93 million of letters of credit, and Paragon's current cash balance was $734 million. Paragon intends to use these funds to preserve and enhance Paragon's liquidity and financial flexibility.

SCHLUMBERGER ACQUIRES NOVATEK COMPANIES

Schlumberger has acquired Novatek Inc. and Novatek IP LLC, US-based companies that specialize in synthetic diamond technology primarily for the oil and gas industry. "Novatek's synthetic diamond manufacturing technology is already a key component of our drillbit offering," said Khaled Al Mogharbel, president, Schlumberger Drilling Group. "With the addition of Novatek, we will enhance our research, engineering, and manufacturing capabilities, and will continue to work with our customers to accelerate field adoption of these innovative drilling technologies." Novatek has a 60-year history of product development with a portfolio of more than 600 patents. Core development of synthetic diamond technology and other technologies will continue at the company's lab in Provo, Utah, where most of the employees are based.

WEXPRO ENTERS INTO JV WITH PICEANCE ENERGY

Questar Corp.'s subsidiary, Wexpro Co., has entered into a joint venture to develop natural gas-producing properties in western Colorado's Piceance Basin. Wexpro will partner with Piceance Energy LLC, a subsidiary of Laramie Energy II LLC.Wexpro expects to spend $60 million to $70 million on an 80-well drilling program targeting the Mesaverde formation. The partners will begin drilling in the Collbran Valley in Mesa County in early October, and continue through early 2017. The joint-development agreement also provides Wexpro options to acquire development rights for deeper formations and, with mutual consent, to extend and expand the drilling program up to 300 wells, depending on commodity prices.

TOTAL SELLS 10% INTEREST IN FORT HILLS OIL SANDS MINING PROJECT TO SUNCOR

In Canada, Total has signed an agreement to sell a 10% interest in the Fort Hills oil sands mining project to the operating partner Suncor Energy. The total aggregate consideration at the time of the announcement is C$310 million (US$230 million). In a statement, Total said it has decided to reduce exposure to Canadian oil sands projects after reviewing its global asset portfolio in the context of lower oil prices. In the statement, Arnaud Breuillac, president of exploration and production, said: "Following the suspension of the Joslyn project at the beginning of 2015, the sale of this minority interest will reduce our CAPEX outlay in the Fort Hills project by over C$700 million (US$530 million) from now until the end of 2017, and help us deliver on our global CAPEX reduction target." Upon closing, expected in the fourth quarter of 2015, Total will hold a 29.2% interest in the Fort Hills project, alongside Suncor Energy (50.8%, operator) and Teck Resources (20%). The sale also includes the transfer of a 10% interest in associated logistics in Alberta. Located in Alberta, Canada, some 90 kilometers north of Fort McMurray, Fort Hills has a planned capacity of 180,000 barrels per day. Construction activities are approximately 40% complete. The operator's target is to start up the project by the end of 2017.

IDE EXITS RIG CONSTRUCTION BUSINESS

Integrated Drilling Equipment Inc. (IDE) has exited the rig construction business to focus on its origins as a provider of power and control solutions. Effective Sept. 21, the company will once again operate under the name Integrated Electrical Control Systems (IEC Systems). Jim Terry, CEO, Integrated Drilling Equipment Holdings Corp., noting that operators are still seeking upgrades on power and control systems for maximum efficiencies on drilling rigs. The company has relocated its corporate sales office in The Woodlands, Texas, to IEC Systems' facility in Houston.

HALLIBURTON AGREES TO PAY $18.3M IN OVERTIME TO 1,000 EMPLOYEES NATIONWIDE

Halliburton has agreed to pay $18,293,557 to 1,016 employees nationwide following an investigation by the US Department of Labor. The recovery of overtime wages comes as part of an ongoing, multi-year compliance initiative by the department's Wage and Hour Division focused on the oil and gas industry.

Investigators found Halliburton incorrectly categorized employees in 28 job positions as exempt from overtime. The company did not pay overtime to these salaried employees - working as field service representatives, pipe recovery specialists, drilling tech advisors, perforating specialists, and reliability tech specialists - when they worked more than 40 hours in a workweek, in violation of the Fair Labor Standards Act (FLSA). The company also failed to keep accurate records of hours worked by these employees, the DOL said.

RYAN ACQUIRES ENERTAX CONSULTANTS

Ryan, a global tax services firm, has acquired EnerTax Consultants LP, a severance tax consulting firm based in Houston, Texas. This acquisition adds a team of tax specialists with experience reducing severance tax liabilities for large oil and gas exploration and production companies.

SGH OPENS HOUSTON OFFICE

Simpson Gumpertz & Heger Inc. (SGH) has opened an office in Houston, Texas. From Houston, SGH will provide its full range of structural and building technology services, with special emphasis on risk assessment and design associated with blast, seismic, hurricane, and other hazards for the petrochemical industry.