INDUSTRY BRIEFS

TPH Partners invests in Laurel Mountain Energy

TPH Partners, a middle-market energy private equity funds manager, has partnered with a management team led by Clark and David Nicklas to form Laurel Mountain Energy LLC, an independent upstream company headquartered in Pittsburgh, Pennsylvania. Laurel Mountain is focused on the acquisition and development of oil and gas properties across the Appalachian Basin, with a primary focus on the Marcellus, Upper Devonian, and Utica formations in Western Pennsylvania. Laurel Mountain is led by Clark Nicklas (CEO) and David Nicklas (president). Over the past 26 years, Vista has managed numerous development programs and has drilled over 1,000 wells, primarily in the Appalachian Basin. Additionally, Vista has been active in assembling, developing, and monetizing two shale plays in the region. TPH Partners, based in Houston, Texas, is the private equity arm of Tudor, Pickering, Holt & Co. LLC.

Lilis Energy secures credit facility with Heartland Bank

Denver-based Lilis Energy, a domestic oil and gas exploration and production company focused in the Denver-Julesburg Basin, has secured a credit facility with Heartland Bank in Little Rock, Arkansas as administrative agent for up to $50 million. The agreement provides for a three-year senior secured term loan in an initial aggregate principal amount of $3,000,000, which principal amount may be increased to a maximum principal amount of $50,000,000, subject to certain conditions, including lender approval of additional advances. The credit facility will bear interest at the Prime Rate plus an applicable margin ranging from 6.25% to 8.5%. The credit facility has a maturity date of January 8, 2018, with all outstanding principal due at maturity, subject to a 3% prepayment premium on prepayments made prior to January 8, 2016. All of Lilis Energy's assets, including all of its properties, have been designated as collateral under the arrangement. The company paid a nonrefundable commitment fee to Heartland Bank in the amount of $75,000 in connection with the loan, and agreed to issue to Heartland Bank 75,000 five-year warrants at $2.50 per share, for every $1 million funded. An initial warrant to purchase up to 225,000 shares of the company's common stock was issued in connection with closing. Roth Capital Partners sourced the credit facility and acted as exclusive financial advisor to Lilis Energy in the transaction.

American Eagle Energy to suspend drilling until oil prices improve

Given plummeting crude oil prices, American Eagle Energy Corp. has suspended its 2015 operated drilling budget and does not anticipate resuming drilling operations until crude oil prices improve. The company expects to conduct completion operations in the first quarter of 2015 on two gross (1.9 net) wells (Byron 4-4 and Shelley Lynn 4-4N) that were drilled during the fourth quarter of 2014. These operations are estimated to require a capital expenditure of approximately $4.5 million in 2015. Based in Denver, American Eagle Energy is focused on acquiring acreage and developing wells in the Williston Basin of North Dakota, targeting the Bakken and Three Forks shale oil formations.

Private equity veterans launch Riata Capital

Riata Capital Group, a Dallas, Texas-based private equity investment firm focused on sponsoring investments in privately held companies in the consumer, energy, healthcare, and business and industrial services sectors, has launched. Riata is led by Jeff Fronterhouse, co-founder and co-CEO of Brazos Private Equity Partners LLC, and by Barron Fletcher, founder and managing partner of Parallel Investment Partners. Fronterhouse and Fletcher are joined at Riata by senior executives from Brazos who will lead the firm's investment origination and portfolio company operational execution, and executives from Parallel who will focus on the firm's finance, accounting, and operations. Riata will sponsor both control and non-control investments of $10 million to $50 million of equity capital. The firm will invest throughout North America but will continue to invest actively in the Southwest region.

Companies cut jobs amid oil price slide

Apache, Schlumberger, ConocoPhillips, and BP are all implementing job cuts in the midst of slumping oil prices. Their actions follow oilfield companies like Halliburton, which began layoffs from its global operations in December 2014. Halliburton chairman and CEO Dave Lesar has indicated that additional job cuts would be made in 2015. Apache plans to lay off 5% of the company's approximately 5,000 employees worldwide. Schlumberger will be cutting 9,000 of its employees; these job cuts, which began in 4Q14, represent 7.5% of Schlumberger's global workforce. In the North Sea region, with oil prices below $50 a barrel, ConocoPhillips plans to cut 230 jobs in the UK by March, reducing its workforce there to just over 1,400. BP has also announced that it will cut 200 onshore staff and 100 contractors in the region, where the company employs approximately 4,000 people in the North Sea and another 11,000 across the UK. Also in the UK, Talisman Sinopec Energy UK plans to eliminate 300 jobs. The Aberdeen, Scotland-based company has a total workforce of 3,000, and the job cuts would involve 100 regular employees and 200 contractors.

NGP closes $5.325B private equity fund

NGP Energy Capital Management reports that, on Jan. 15, it hit its hard cap with a final closing of NGP Natural Resources XI LP (NGP XI) with total commitments of $5.325 billion. NGP XI will continue NGP's 26-year history as a provider of private capital and sponsorship to the natural resources industry, focusing on the oil and gas production, oilfield services, and energy midstream sectors through its Natural Gas Partners investment platform. NGP XI will be managed by NGP, bringing the cumulative committed capital under management since 1988 to $16.5 billion.

Range Resources reduces 2015 capital budget

Range Resources Corp. has reduced its capital budget for 2015 to $870 million from the previously reported $1.3 billion, which already represented an 18% cut compared with the 2014 budget. Almost 95% of the revised capital budget targets the Marcellus shale. Range expects 24% total production growth for 2014 at 1.16 bcfd of gas equivalent. Fourth-quarter production volumes were 1.27 bcfed, of which 31% were liquids. The fourth-quarter production varied from guidance as a result of the early propane line fill and operational flow on Mariner West in November and December. Construction delays on several compressor startups scheduled for late in the quarter also pushed 80 MMcfed of fourth-quarter production to the first quarter. Range expects no further delays in building compressor stations scheduled for the year.

Locke Lord, Edwards Wildman merge

Locke Lord LLP and Edwards Wildman Palmer LLP have merged, creating Locke Lord Edwards. The two firms first announced the intent to merge in September, and in early December announced that the partners of each predecessor firm approved the merger. With the combination, the firms plan to provide broader representation of private equity and venture capital clients across a spectrum of industries including energy and technology.

BHP Billiton to reduce US shale rigs by 40%

In response to lower oil prices, BHP Billiton will reduce its US shale drilling spending by reducing the number of rigs by 40%.In its operational review for the second half of 2014 released recently, BHP Billiton CEO Andrew Mackenzie detailed latter half 2014 production and set the stage for the company's plan to maintain shareholder dividends while facing price slumps in iron ore, copper, coal, and now oil and gas. For the second half of 2014, the company saw a 71% increase in onshore US liquids volumes to 24.4 MMboe, boosting the company's overall petroleum production to a record 131 MMboe in the December 2014 half year. Spurred by a 60% drop in oil prices, the company plans to reduce its US onshore rig count from 26 to 16 by mid-2015. A revision to the company's $4 billion shale drilling budget is expected, but was not released as of presstime. For now, the company will focus on its liquids-rich acreage in the Black Hawk region of the Eagle Ford, noting further changes could be made if needed to "create more value," Mackenzie noted. Activity in the company's Permian and Hawkville "will be limited to the retention of core acreage," he said.

Encana completes C$605M Clearwater sale

Encana Corp. has completed the sale of certain Clearwater assets in Alberta, Canada, to Ember Resources Inc. for a purchase price of C$605 million. The sale includes about 1.2 million net acres of land, over 6,800 producing wells, and 180 million cubic feet equivalent per day (mmcfe/d) of natural gas production. Encana retains 1.1 million net acres in Clearwater, including 480,000 net acres along the eastern edge of the Horseshoe Canyon Fairway.

Hunton & Williams launches Energy Sector Security team

Hunton & Williams LLP has formed a multidisciplinary Energy Sector Security team to assist clients with the legal complexities associated with growing cyber and physical threats facing energy companies. This new team is being led by cyber security partner Paul Tiao, energy partner Kevin Jones, and energy regulatory partner Linda Walsh, as well as lawyers from a wide range of practice groups within the firm. The team will advise energy companies on legal and regulatory compliance, physical and cyber security risk minimization, strategic engagement with key government agencies, comprehensive incident response, insurance coverage, and dispute resolution arising from law enforcement investigations, government enforcement actions, and private litigation.

Schlumberger to acquire minority share in Eurasia Drilling

Schlumberger Ltd. has secured an agreement to acquire a minority equity interest in Eurasia Drilling Co. Ltd. (EDC). The agreement extends the companies' relationship forged with their strategic alliance signed in 2011, which has enabled deployment of a range of drilling and well engineering services to customers in the Russia land conventional drilling market. In connection with the agreement, the principal shareholders of EDC will take the company private. Upon delisting of the company from the London Stock Exchange, Schlumberger, through one or more subsidiaries, will acquire a minority equity ownership interest of 45.65% in EDC, in exchange for consideration of $22 per share. The total cost of acquiring this minority interest, including the cost of a call option and various non-competition agreements, is approximately $1.7 billion. The call option will allow Schlumberger, at its election, to purchase the remaining shares in EDC during a two-year period commencing three years from the closing of the transaction. The transaction is expected to close during the first quarter of 2015.