INDUSTRY BRIEFS

PennWell expands Oil & Gas Journal

Oil & Gas Financial Journal's parent company, PennWell Corp., a diversified global media and information company, will publish Oil, Gas & Petrochem Equipment (OG&PE) as part of its Oil & Gas Journal beginning in May to serve a consolidated audience of 137,000 oil and gas professionals worldwide. OG&PE grew out of Oil & Gas Journal in 1954 and has since been published monthly to cover industry equipment. Oil & Gas Journal, known as the industry's leading weekly international news and technology magazine, began life in 1902 to focus on upstream, midstream, and downstream operations. While leaving both brands intact, the reunion combines Oil & Gas Journal's news, technology, and statistics with OG&PE's coverage of equipment and services. The product-rich OGPE.com website and weekly Equip-Alert e-Newsletter will continue in their present formats, with daily postings and social media. Oil & Gas Journal retains its weekly frequency, with OG&PE to be included in its printed issue the first week of each month. Based in Tulsa, veteran editor J.B. Avants will continue to lead OG&PE in collaboration with Oil & Gas Journal editor Bob Tippee.

Apache to sell Australian operations for $2.1 B

Apache Corp. has an agreement to sell its Australian subsidiary Apache Energy Ltd. to a consortium of private equity funds managed by Macquarie Capital Group Ltd. and Brookfield Asset Management Inc. for cash payment of $2.1 billion. Assets of Apache Energy Ltd. and its subsidiaries averaged production of approximately 49,000 boe/d in March. With the deal, Apache exits its E&P E&P business in Australia, but retains its 49% ownership interest in fertilizer producer Yara Pilbara Holdings Pty Ltd. Earlier, Apache completed the sale of its Wheatstone LNG project and related oil and natural gas properties to Woodside Petroleum Ltd. for $2.8 billion. Over the past five years, Apache has executed on approximately $17 billion of asset purchases and $17 billion of asset sales. Selling its remaining Australian E&P assets is a positive for Apache, noted Global Hunter Securities analysts in a recent note to investors. The deal generates an "attractive multiple (~$7K/flowing Mcfe) given the gassy nature of the assets and APA's current corporate valuation of $7.9K/flowing Mcfe. The deal enables APA to narrow its focus on its core NA onshore program, which is now estimated at ~70% of APA's production. We now estimate pro forma liquidity of ~$10B vs. APA's previously announced 2015 capex program of $3.6B-$4.0B (note that this program included ~$450MM-$510MM for Australia and GOM)," the analysts said. The transaction is expected to close mid-year 2015.

DW: Subsea hardware spend to remain high

Global subsea hardware CAPEX is will total $145 billion between 2015 and 2019, representing growth of more than 27% compared to the preceding five-year period, said Douglas-Westwood in a new report. "The 350 subsea tree installations in 2014 represent the highest volume of installed units on record, a trend expected to continue until 2018 when lower orders in the current commercial environment will drive a decline in trees installed for that year," the report noted. "The crude oil price decline, apparent since June 2014, presents a major challenge for operators of subsea developments. Subsea projects are typically among the most capital intensive and technologically challenging in the industry. As operators (and their investors) have increased focus on cash flow, the higher upfront costs associated with these projects have left them vulnerable to deferrals and cancellations. Tree orders in 2014 totaled 233, the lowest volume for a decade."Despite short-term concerns, the long-term fundamentals of the subsea hardware industry are strong, the report said. "Over the next five years, development activity in the established deepwater provinces, coupled with the start of field development in frontier areas, such as the Eastern Mediterranean and East Africa, will support expenditure," the report noted. Subsea hardware spend will be the highest in Africa, Asia, and Latin America, with the three regions combining to form almost half of the global total. Expenditure continues trending toward deeper waters with around 42% of total spend in the next five years targeting projects in water depths greater than 1,000 meters.

Riverstone invests up to $500M in Three Rivers

Three Rivers Natural Resource Holdings III LLC, a newly-formed, Austin-based oil and gas company, has received an equity commitment of up to $500 million from funds managed by Riverstone Holdings LLC and additional amounts from the Three Rivers management team. The Riverstone commitment comprises up to $333 million from Riverstone Global Energy and Power Fund VI and up to $167 million from Riverstone Energy Limited (REL). Three Rivers III represents the third partnership between Riverstone and Three Rivers III's management team after the sales of substantially all of the assets of Three Rivers Natural Resource Holdings LLC and Three Rivers Natural Resource Holdings II LLC. The Three Rivers III team will continue its focus acquisition opportunities in the Permian Basin and will be led by Mike Wichterich.

Warburg Pincus invests in oil and gas start-up

Warburg Pincus has agreed to invest up to $500 million in start-up oil and gas exploration and production company Independence Resources Management (IRM). Houston-based IRM intends to target onshore oil and gas acquisition and play extension opportunities in known producing basins in the Mid-Continent and Rockies regions, with an initial focus on the Anadarko Basin. Mike Van Horn, formerly vice president of geoscience at Newfield Exploration, serves as CEO of IRM. The founding team members include John Nicholas, COO, who was formerly general manager for the Appalachia Division at Southwestern Energy; Rod Steward, chief corporate officer, who previously served as manager of exploitation, capital planning and analysis for Sheridan Production Partners; and Charles Minero, PhD, chief geosciences officer, who previously was a senior staff geologist at Shell Oil Company. Equity for the investment will come from Warburg Pincus Private Equity XI LP and Warburg Pincus Energy LP.

Siemens opens oil & gas hQ in Houston

Siemens is opening a new oil and gas headquarters in Houston. Managing board member Lisa Davis, who leads Siemens' oil and gas and power generation businesses, will be based in the new Houston office, which will also include Siemens' oil and gas and marine business unit. Siemens is acquiring Houston-based Dresser-Rand Group Inc. for $7.6 billion. The deal is expected to be completed later this year, although the European Union is scrutinizing the transaction to ensure that it does not reduce competition so much that prices rise. Siemens says that it intends to retain the Dresser-Rand brand name and its executive leadership team.

GE anticipates $90B from GE Capital assets sale

Reshaping the company and focusing on industrial businesses as the main source of its earnings, GE is selling most of its GE Capital assets by 2018. In announcing the plan, GE chairman and CEO Jeff Immelt noted that the company will retain its "vertical" financing businesses, including GE Capital Energy Financial Services, which directly relate to its core industrial businesses. Immelt expects GE's industrial businesses will generate approximately 90% of the company's operating earnings by 2018, compared to the 58% generated last year. The estimated $90 billion expected earnings on the sale are expected to be returned to shareholders through share buybacks, dividends and an exchange of Synchrony Financial shares. The new plan will also reduce GE's share count from 10.1 billion to 8-8.5 billion. Already, GE has sold the bulk of GE Capital Real Estate assets for approximately $26.5 billion. Other assets to be sold include most of the commercial lending and leasing segment, and all consumer platforms, including all US and international banking assets.

Halliburton to market certain assets

Halliburton, in a move related to its pending acquisition of Baker Hughes, plans to separately market for sale the company's fixed cutter and roller cone drill bits, directional drilling, and logging-while-drilling/measurement-while-drilling businesses. The merger was recently approved by the stockholders of both companies, but the Halliburton anticipates obtaining regulatory approvals will require the divestiture of some overlapping businesses. Halliburton will operate as one company, including the businesses held for sale, until the sale of the identified businesses is complete. While news of a potential sale is no surprise, said Oppenheimer analysts, "the timing suggests that things may be moving along quicker than we expected. Nevertheless, we still see the potential for plenty of speed bumps along the way, and we continue to forecast an end-of-year closing." Auction of the directional drilling/MWD/LWD is the most important as Halliburton (and Schlumberger) seek to preserve a de facto duopoly in international markets," the analysts continued. Oppenheimer expects Halliburton to market additional assets, including offshore stimulation vessels (estimated by Oppenheimer to fetch $50M-$250M) and potentially some combination of completion equipment ($0.5B-$2B). "We forecast drill bits will fetch ~$1.5 billion from National Oilwell Varco [NOV], Superior Energy Services, private equity, or large industrials such as GE. Directional drilling and MWD/LWD businesses could bring in roughly $5 billion from land drillers, industrials, Superior Energy, NOV, Weatherford, or private equity."

Citizens Financial launches Houston-based oil and gas finance team

Citizens Financial Group has purchased a $400 million portfolio of reserve-based loans from The Royal Bank of Scotland. Additionally, Citizens has hired a Houston-based oil and gas banking team from RBS. Citizens will combine the acquired portfolio with its existing energy business to form a new national oil and gas finance team that will serve the full spectrum of the oil and gas industry. Citizens Financial Group holds approximately $132.9 billion in assets as of December 31, 2014.

CohnReznick services to oil and gas sectors

CohnReznick Capital Markets Securities LLC has expanded its investment banking services to the oil and gas sector. Sam Xu and Evan Turner have been named to the firm's energy group, which is led by Alex Chehansky as managing director. Xu joins from the oil and gas investment banking firm KLR Group. Turner previously worked at Canaccord Genuity.

CGG Acquires Taurus Reservoir Solutions

The geoconsulting business line of CGG has acquired Calgary-based Taurus Reservoir Solutions Ltd. Taurus offers reservoir and geomechanical simulation and engineering technology along with consulting services to the global petroleum industry. CGG is a fully integrated geoscience company providing geological, geophysical and reservoir capabilities to its broad base of customers primarily from the global oil and gas industry.

Vanguard to acquire LRR Energy for $539M

Vanguard Natural Resources LLC and LRR Energy LP have entered into a purchase agreement and merger. A subsidiary of Vanguard will merge into LRR Energy LP and, at the same time, Vanguard will acquire LRE GP LLC, the general partner of LRR Energy LP (collectively, LRR Energy, or LRE) for a total consideration of $251 million in Vanguard common units and the assumption of LRE's net debt of $288 million. LRR Energy and its general partner will become wholly owned subsidiaries of Vanguard. The transaction has been approved by the boards of directors of both companies.