Private company update

With a 70% working interest in the field, LLOG is evaluating regional hosts, including its recently-installed Delta House floating production system (FPS), regarding subsea development options for the discovery. Delta House FPS, located in Mississippi Canyon 254, 130 miles southeast of New Orleans.

M&A

An affiliate of Tulsa, OK-based Kaiser-Francis Oil Co. recently sold non-operated working interests in oil and gas properties in the Bakken/Three Forks play to Natural Resource Partners LP (NRP) for $339 million. Kaiser-Francis Oil came in at No. 19 in this installment of the OGFJ100P ranking. The assets, located in the Sanish Field in Mountrail County, North Dakota, are all held by production and operated by Whiting Petroleum. NRP funded the transaction with debt and equity capital market transactions completed in October and through borrowings from a credit facility upsized to $137 million.

Adding properties in November was J-W Operating Co. The No. 23 company acquired oil and gas assets in Northern Louisiana from BHP Billiton. Terms were not disclosed.

The properties are located in the Elm Grove and Caspiana fields and include interests in 1,200 wellbores and associated gathering lines and compressor facilities. The addition of 700 active wells producing in the Cotton Valley formation, a conventional oil and gas field, should have an immediate impact on the company's production numbers, potentially lifting it higher in the rankings come July. The acquisition does not include any of BHP's unconventional Haynesville shale assets.

On December 16, the business combination of Forest Oil Corp. and privately-held Sabine Oil & Gas LLC officially closed. The combined entity intends to change its name to Sabine Oil & Gas Corporation.

After selling multiple assets to ease its financial position, Denver, CO-based Forest is betting the combined company will prove better-capitalized and with a broader portfolio of assets. In addition to a 207,000 net acreage position in East Texas, the combination of assets is expected to create a 65,000 net acreage position in the Eagle Ford as well a position in the Haynesville in North Louisiana and a liquids rich position in the Granite Wash. The combined company will have estimated proved reserves of 1.4 trillion cubic feet equivalent (71% gas) (as of September 30, 2014), and estimated daily production of approximately 305 million cubic feet equivalent (66% gas) for 2014.

At closing, the owners of Sabine contributed their interests in Sabine to Forest, in exchange for common stock and non-voting convertible preferred stock of Forest representing an aggregate 73.5% economic interest in the combined company. Existing Forest common shareholders retained their Forest shares, which now represent, in the aggregate, a 26.5% economic interest in the combined company. Under the revised terms, the Sabine Investor Entities' will hold approximately 40% of the voting power of the combined company (with Forest's existing shareholders retaining approximately 60% of the voting power). The preferred stock issued to the Sabine Investor Entities will not be convertible to the extent conversion would cause the combined voting power of the Sabine Investor Entities to exceed 49.9% of the outstanding voting power of the company.

In connection with the combination, the existing Sabine and Forest revolving credit agreements will be refinanced with a new reserve-based lending credit agreement with a borrowing base of $1 billion at closing. The combined company expects to incur an additional $50 million of second lien term loans under its existing second lien term loan facility in connection with the closing. As a result of the revised transaction terms, the $850 million of bridge commitments previously obtained to finance the repurchase of the Forest bonds under the prior transaction terms are no longer necessary.

After failing to meet the continued listing standard requiring a minimun average closing price of $1.00 per share for 30 consecutive trading days, shares of Forest were suspended in December. Management says the company is "committed to having the common stock listed on an active exchange and we expect to seek relisting on an exchange as soon as we meet the listing requirements."