INDUSTRY BRIEFS
Chesapeake signs $470M STACK sale
Chesapeake Energy Corp. agreed to sell nearly 42,000 net acres in the Anadarko Basin STACK play for $470 million to Newfield Exploration Co. The acquisition expands Newfield's footprint in the play to approximately 265,000 net acres offering overlap with the company's existing acreage in Oklahoma's Kingfisher, Blaine, Dewey, and Canadian counties. More than 90% of the acreage to be acquired is held-by-production. Of the total consideration, approximately $50 million is associated with proved developed producing (PDP) reserves and reimbursement for recent STACK wells which are currently drilling or have been drilled and are planned for completion. Excluding PDP and reimbursement allocations, the undeveloped acreage value equates to approximately $10,000 per acre. Current net production from the assets is approximately 3,800 boe/d (55% liquids). Including this transaction, Newfield estimates that its cumulative investments in STACK acreage to date total less than $3,000 per acre. Newfield's average working interest across the 265,000 net acres in STACK would be approximately 50%. Newfield expects to fund the transaction with cash on hand. The sale puts Chesapeake at the low end of its full-year goal for non-core divestitures of $1.2-$1.7 billion. The transaction will have an effective date of April 1, 2016 and closing, expected in the second quarter of 2016, is subject to customary adjustments.
LINN Energy enters RSA, files Chapter 11
LINN Energy LLC, LinnCo LLC, and Berry Petroleum Company LLC filed voluntary petitions for restructuring under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. LINN has entered into a restructuring support agreement with holders of at least 66.67% by aggregate outstanding principal amounts of LINN's amended and restated credit agreement, dated as of April 24, 2013, as amended, and Berry's Second Amended and Restated Credit Agreement, dated as of November 15, 2010, as amended. The company expects its operations across its asset base to continue in the ordinary course throughout the Chapter 11 process. Under the restructuring support agreement, the parties agreed to support a plan of reorganization for the company that would include: (1) a new LINN $2.2 billion reserve based and term loan credit facility on the terms set forth in the restructuring support agreement, (2) the consensual use of LINN and Berry's cash collateral to fund the Chapter 11 Cases under negotiated terms and conditions, and (3) the broad terms of a comprehensive restructuring of the company's indebtedness. The company anticipates that the cash available to it during its Chapter 11 cases will likely provide sufficient liquidity to support the business during the financial restructuring process. As such, the company does not currently intend to seek debtor in-possession (DIP) financing. Kirkland & Ellis LLP is serving as legal advisor to LINN, Lazard is serving as its financial advisor, and AlixPartners is its restructuring advisor.
Synergy Resources inks Wattenberg deal
Denver, CO-based Synergy Resources Corp. entered into a definitive agreement with Noble Energy to acquire Wattenberg Field assets in Colorado for $505 million in cash, subject to purchase price adjustments. With the deal, Synergy gains approximately 72,000 gross (33,100 net), largely contiguous acres located in Weld County Colorado, primarily in and around the city of Greeley. Over 80% of the acquired lands are held by production from vertical wells, allowing for orderly horizontal development. Drilling locations will target the Niobrara A, Niobrara B, Niobrara C and Codell zones which all produce in the acquired lands. For the first quarter of 2016 estimated net daily production of 800 boe/d from non-operated properties and 1,600 boe/d from operated properties. The acquisition is expected to close on two separate dates, with the undeveloped lands and non-operated production expected to close in the second quarter of 2016, followed by the operated producing properties (assuming regulatory approval is obtained) later in 2016. The closings are subject to the completion of customary due diligence and closing conditions. Synergy intends to finance the purchase price of the acquisition with cash on hand and proceeds from financing transactions, including a private placement of $80 million in notes for which it has a commitment letter in place. In addition, the company announced that in two separate transactions, it has entered into definitive purchase and sale agreements with two private entities to divest approximately 3,700 net undeveloped acres and 107 vertical wells primarily in Adams County, Colorado for total consideration of approximately $27 million in cash. The divested assets had associated production of approximately 200 boe/d. The vertical well transaction recently closed and the undeveloped acreage transaction is expected to close in the second quarter of 2016. The deal is a game-changer for the company, said Seaport Global Securities analysts in a note May 4. "While SYRG was driving strong results out of its legacy acreage, its position was relatively scattered and wasn't amenable to a large-scale long-lateral development program; we think both issues are solved with this transaction. In terms of the price paid (roughly $13K/undeveloped acre), it isn't cheap on Wattenberg standards, but we still see acquisition-burdened project returns >30% on our long-term WTI price target of $55/bbl."
EQT signs $407M deal with Statoil
EQT Corp. subsidiary EQT Production Company has signed a definitive agreement to acquire 62,500 net acres and current natural gas production of 50 MMcfe/d from Statoil USA Onshore Properties Inc. for $407 million. Primarily located in Wetzel, Tyler, and Harrison Counties of West Virginia, the acquisition adds acreage within EQT's core development area and complements the company's adjacent operations in Wetzel County, West Virginia. The 62,500-acre acquisition includes existing Marcellus production and approximately 500 undeveloped locations that are expected to have an average lateral length of 5,600 feet. Much of this acreage is contiguous with EQT's existing development area; therefore, the lateral length of 106 existing EQT locations can now be extended from 3,000 to 6,500 feet, which, the company says, will reduce overall costs and deliver stronger well economics. Baker Botts is representing EQT Corp. and EQT Production Company in the transaction. Subject to customary closing conditions, the transaction is expected to close on or about July 8, 2016.
Chaparral files for Chapter 11 protection
Oklahoma City, OK-based Chaparral Energy LLC voluntarily filed petitions for relief under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court of Delaware. The Chapter 11 filing will facilitate the restructuring of the company's balance sheet, as it continues to work through negotiations of a debt to equity exchange with its bondholders and lenders with the objective of reducing its bondholder debt by approximately $1.2 billion.Chaparral has filed a series of motions with the court that, when granted, will enable the company to maintain its operations as usual, without interruption throughout the restructuring process. The company has also filed motions seeking authority to pay expenses associated with production operations and drilling and completion activities, as well as costs associated with gathering, processing, transportation, marketing and those related to joint interest billing for non-operated properties. Latham & Watkins LLP is serving as legal counsel and Evercore has been engaged as financial advisor to Chaparral. Opportune LLP is the company's restructuring advisor.
Nanometrics to deploy earthquake monitoring system in Texas
Canada's Nanometrics, which provides seismic monitoring solutions and equipment for studying manmade and natural seismicity, has signed a US$1.98 million contract to provide equipment and assist in deploying an earthquake monitoring system across the state of Texas. The TexNet Seismic Monitoring Program will allow for more precise determination of the location of earthquakes and increase the ability for researchers to investigate potential causes. Under the agreement, Nanometrics will supply and assist in installing the instrumentation for TexNet, which is operated by the University of Texas' Bureau of Economic Geology (BEG). Nanometrics also will help maintain network equipment after installation, allowing the BEG staff to focus on network management, scientific products, and research activities related to the resulting data. Nanometrics will supply TexNet with 22 new permanent seismograph stations, which will be added to the existing backbone of 17 stations. Nanometrics will also supply 36 portable stations that will be maintained and deployed by the Bureau to target and respond to seismic events as necessary. The data produced will be delivered in near-real time to state databases and to the Incorporated Research Institute for Seismology. Some monitoring stations are expected to be online by early summer with the majority of the system deployed by the end of the year. TexNet will allow oil and gas operators, university researchers, regulators, city planners, and others to access a catalogue of regional data about the level of seismicity of an area. TexNet will provide valuable baseline data to ensure that planning will be based on reliable, up-to-date information. Nanometrics has offices in Ottawa and Calgary in Canada, in Beijing, and in Houston.
Morgan Stanley Capital Group reaffirms BNK Petroleum credit facility
BNK Petroleum Inc. has had its commitment amount under its credit facility reaffirmed at US$24,400,000 by Morgan Stanley Capital Group Inc. (MSCGI). The other terms of the US$100,000,000 facility remain the same. BNK currently has US$22,600,000 outstanding under the facility, with US$1,800,000 available to utilize. The facility bears interest at a per annum rate equal to then three month LIBOR plus an applicable margin ranging from 2% to 7% based on a number of factors including the ratio of outstanding borrowings to a calculated borrowing base level and individual well value concentration. The facility provides for interest only payments until the July 2018 maturity date.
Noble, Freeport-McMoRan terminate drilling contracts
Noble Corp. plc has reached an agreement with its client, Freeport-McMoRan Oil & Gas LLC (FMOG), and FMOG's parent company, Freeport-McMoRan Inc. (Freeport), in connection with the drilling contracts for the drillships Noble Sam Croft and Noble Tom Madden, which were scheduled to terminate in July and November 2017, respectively. Pursuant to the agreement, the contracts will be terminated, with operations ceasing as soon as practicable, and Freeport will make a payment to Noble of $540 million. In addition, Noble can receive additional contingent payments from Freeport of $25 million and $50 million, respectively, depending upon the average price of oil over a 12-month period. Noble also expects to realize over $100 million in direct cost savings as a result of the contract terminations through crew reductions and stacking procedures. Freeport recently announced a restructuring of its oil and gas business, which is operated through FMOG. Freeport can make the $540 million payment through a combination of cash, Freeport shares and up to $200 million in near-term Noble bonds. Through this arrangement, Noble expects to realize the full value of such payment.
Rubicon Oilfield International acquires Tercel Oilfield Products
Rubicon Oilfield International has acquired Tercel Oilfield Products from Lime Rock Partners. Terms of the transaction were not disclosed. Rubicon Oilfield International is an oilfield products and services company with operational headquarters in Houston, Texas. Rubicon is backed by Warburg Pincus. Founded in 2010, Tercel is a globally diversified oilfield products with regional headquarters in Houston, Aberdeen, Dubai, and Kuala Lumpur. The company has 22 sales and support offices worldwide including local offices in Abu Dhabi, Bogota, Brussels, Cairo, Calgary, Khobar, Luanda, Perth and Stavanger.
Och-Ziff affiliates commit $75M to Fortuna Resources
Certain affiliates of Och-Ziff Capital Management Group LLC have committed $75 million to Houston, TX-based Fortuna Resources Holdings LLC, with an option to increase to $150 million. The investment is focused on expanding Fortuna's activities in the West Texas Permian Basin and related areas through acreage and asset acquisitions and subsequent development. Aaron Davis, a co-founder of Fortuna and its president and CEO, is a petroleum engineer and most recently served as subsurface manager at Occidental Oil & Gas where he oversaw multiple Permian Basin drilling and leasing programs. Established in January, 2016, Fortuna's current operations are focused on the Permian Basin with an emphasis on the Delaware Basin and Central Basin Platform. Targets include the Bone Spring, Delaware Mountain Group and Wolfcamp formations.
Schneider Electric Achieves exida Security Development Lifecycle Certification
Schneider Electric has been certified by exida, a globally recognized ISO 17065 accredited Certification Body in cybersecurity, for compliance with its Security Development Lifecycle certification based on IEC 62443-4-1. exida's first industry certificate for SDL applies to Schneider Electric's Process Automation business product development centers in Foxboro, Massachusetts, Worthing, UK, and Hyderabad, India. It is based on international cybersecurity standards and was developed to accelerate industry-wide cybersecurity improvement for industrial automation and control systems. The new exida certification applies to Schneider Electric's Foxboro Evo process control system and Foxboro SCADA systems.
EXCO forms special committee, retains legal advisor to explore strategic alternatives
The board of directors of EXCO Resources Inc. has formed a special committee to, among other things, assess the company's operating and financial situation and to evaluate, develop and recommend one or more strategic alternatives. The special committee will assist EXCO as it continues to execute its strategic plan that is focused on improving its capital structure and providing structural liquidity, and seeking to optimize EXCO's asset portfolio. The Special Committee will evaluate various strategic and restructuring alternatives, including exchanges of existing indebtedness for common stock (including privately negotiated exchanges), the renegotiation or repurchase of existing indebtedness, the issuance of equity, divestitures of assets, the issuance of additional indebtedness, in court and/or out of court restructurings, and the restructuring of its gathering, transportation and certain other contracts. EXCO, at the direction of the special committee, has retained Akin Gump Strauss Hauer & Feld LLP as its legal advisor and will retain a financial advisor(s) to assist in the exploration of strategic and financial alternatives.
Energy & Exploration Partners emerges from Chapter 11 restructuring
Fort Worth, TX-based Energy and Exploration Partners LLC and its debtor affiliates have concluded their Chapter 11 financial reorganization after completing all required actions and satisfying the remaining conditions to effectiveness of their Plan of Reorganization, which was confirmed by the US Bankruptcy Court for the Northern District of Texas (Fort Worth) by order dated April 26, 2016. ENXP emerges from Chapter 11 having reduced its total debt by $1.1 billion and with a new capital structure. In conjunction with its emergence from Chapter 11, ENXP also closed on its new $90 million senior secured credit facility, which will provide liquidity for ENXP after satisfying the company's debtor-in-possession obligations and other restructuring related expenses. All interest expenses related to this credit facility will be payable in kind. Dr. Peter Hill has been appointed to the role of interim CEO of ENXP. He succeeds B. Hunt Pettit, who left the company in April 2016, after founding ENXP in 2006. Dr. Hill has over 40 years of experience in the international oil and gas industry. Since starting his career, Dr. Hill has worked for British Petroleum in various senior positions, including chief geologist, chief of staff for BP Exploration, and regional director for Central and South America, and subsequently held chief executive roles with and served on the boards of directors of a number of exploration and production companies. Dr. Hill has a BSc (Honors) and a PhD in Geology. ENXP was advised throughout the process by Bracewell LLP, investment bank Evercore, financial advisor AP Services LLC, as well as Prime Clerk LLC and EnerCom Inc.
Post Oak Energy Capital fund with $600M
Post Oak Energy Capital LP has closed its third fund, Post Oak Energy Partners III LP at its hard cap of $600 million. Post Oak Energy Partners III will pursue the same strategy as the first two funds with equity investments in North American oil and gas companies, oilfield services, and related infrastructure. Funding from Post Oak will continue to be used for growth capital, development acceleration, acquisitions and recapitalization purposes. The composition of Post Oak's initial funds includes 16 investments: 14 regionally focused oil and gas companies, one oilfield service company and one midstream company.