INDUSTRY BRIEFS
Clayton Williams enters $350M term loan
Clayton Williams Energy Inc. has entered into a credit agreement with certain funds managed by Ares Management LP providing for the lenders to make secured term loans to the company in the principal amount of $350 million. The company also has agreed to issue to the lenders warrants to purchase 2.25 million shares of the company's common stock at a price of $22.00 per share with rights to appoint two members to the company's board of directors. Proceeds will be used to fully repay the company's outstanding indebtedness under its revolving credit facility and provide additional liquidity to fund the company's operations and future development. Closing of this transaction is expected to occur on or before March 31, 2016. Concurrently, the company announced an amendment to its bank revolving credit facility to reduce lender commitments to $100 million and ease financial covenants, among other changes. The amendment will be effective upon closing of the secured term loan transaction. Goldman Sachs served as sole arranger and bookrunner, and Stephens Inc. advised the Lenders. Vinson & Elkins served as legal advisor to the company, and Kirkland & Ellis LLP served as legal advisor to the lenders.
Emerald Oil files voluntary Chapter 11
Emerald Oil Inc. filed voluntary Chapter 11 petitions in the US Bankruptcy Court for the District of Delaware. Emerald obtained $20 million in post-petition debtor in possession financing, which, subject to bankruptcy court approval, will provide the company with liquidity to maintain its operations in the ordinary course of business during the Chapter 11 process. Prior to the Chapter 11 filing, Emerald executed a non-binding term sheet with Latium Enterprises Inc. pursuant to which Latium has proposed to purchase all of Emerald's assets and, subject to lender and bankruptcy court approval, would serve as a "stalking horse" in a sale process under Section 363 of the Bankruptcy Code. The term sheet is non-binding and such transaction is subject to, among other things, Latium's performance of certain due diligence analysis and the parties negotiating mutually acceptable terms of definitive transaction agreements. Emerald intends for such a sale, if consummated, to ensure a smooth and swift transition of the business and operations to Latium, which would be supported by a stronger balance sheet due to a lower debt burden. If acquired by Latium as part of the anticipated transaction, the Emerald business would expect to be able to remain committed to continued operations in North Dakota. Intrepid Partners LLC is serving as investment banker for Emerald, while Kirkland & Ellis LLP is serving as legal counsel. Opportune LLP is serving as financial advisor, with Wade Stubblefield, of Opportune, serving as chief restructuring officer.
Tailwater Capital closes $218M E&P Opportunity Fund II LP
Energy-focused private equity firm Tailwater Capital LLC has closed its fourth fund, Tailwater E&P Opportunity Fund II LP with total commitments of $218 million. The fund will invest in E&P operators in non-operated working interest investment opportunities within the "core" of the country's premier basins. Dallas-based Tailwater Capital has executed more than 35 energy transactions representing over $11 billion in transaction value. Tailwater currently manages $1.7 billion in equity capital, over $700 million of which is available for new investments. Tailwater is focused on acquiring and growing midstream assets as well as participating in non-operated upstream opportunities in select basins.
Terra Energy ceases operations
Terra Energy Corp. has shuttered all of its wells and facilities in Alberta and British Columbia, Canada, and has now terminated certain officers of the company and all of its remaining non-executive employees. Terra has notified its lender, Canadian Western Bank, and both the Alberta Energy Regulator and the British Columbia Oil and Gas Commission, of the shutting-in by Terra of its operated/licensed wells and facilities in both Alberta and British Columbia and that Terra no longer has the financial capability to carry on its operations. The directors have determined that Terra's business is no longer viable. The directors and officers of Terra have resigned.
Clearlake Capital leads recapitalization of Globe Energy Services
Clearlake Capital Group LP has led the recapitalization of Globe Energy Services LLC in partnership with Globe's management team and other existing stakeholders. Terms of the transaction were not disclosed. Globe provides oilfield services with more than 50 operating locations throughout Texas, New Mexico, and Oklahoma - with the majority of its operations in the Permian Basin. The company offers a range of services primarily focused on production activities and the maintenance of existing wells, with capabilities that include fluid services, completion services, artificial lift, well services, fishing and rental, production chemicals, water infrastructure solutions, and other environmental services.
Ascent Resources begins $500M equity raise
Ascent Resources LLC has entered into agreements to sell 2.2 billion common units in a private placement transaction, which is expected to result in net proceeds to Ascent of $500 million, bringing the total amount of equity raised by Ascent so far in 2016 to $712 million. The common units will be sold to the investors at a purchase price of $0.224 per common unit. The proceeds of the sale are expected to be funded on or about March 24, and Ascent is expected to contribute $500 million in net cash proceeds to Ascent Resources - Utica LLC (ARU) within three business days of the funding date. Upon the completion of the contribution, ARU and ARU Finance Corp. will have satisfied the conditions necessary to exercise their right to redeem their outstanding 3.50% convertible subordinated notes due 2021 issued on Feb. 24 for incremental junior secured loans due 2019 and common units and/or the Class A shares of a newly formed entity. The redemption is expected to take place no earlier than 30 days and no later than 60 days following the funding date. Ascent Resources was created in December 2014 through the combination of Ascent Resources Utica Holdings LLC (formerly known as American Energy Ohio Holdings LLC) and Ascent Resources Marcellus Holdings LLC (formerly known as American Energy Marcellus Holdings LLC), which respectively own Ascent Resources - Utica LLC and Ascent Resources - Marcellus LLC (formerly known as American Energy - Marcellus LLC).
Anadarko prices $3 billion of senior notes
Anadarko Petroleum Corp. has priced its registered public offering of $3 billion aggregate principal amount of senior notes comprising $800 million 4.85% senior notes due 2021, $1.1 billion 5.55% senior notes due 2026, and $1.1 billion 6.60% senior notes due 2046. Anadarko expects to close the offering on March 17, and intends to use the net proceeds from the offering to refinance its 5.95% senior notes prior to or at maturity in September and the remaining net proceeds to refinance a portion of its 6.375% senior notes prior to or at maturity in September 2017, and in the interim may use such net proceeds for general corporate purposes. Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Mizuho Securities USA Inc., Deutsche Bank Securities Inc., JP Morgan Securities LLC, Morgan Stanley & Co. LLC, and Wells Fargo Securities LLC are acting as joint book-running managers for the offering. Mid-March, Fitch Ratings affirmed the long-term Issuer Default Rating (IDR) for Anadarko at "BBB." Anadarko's short-term IDR and commercial paper rating has been downgraded to "F3" from "F2." The company's rating outlook has been revised from Stable to Negative. Approximately $12.7 billion of debt, excluding non-recourse debt at Western Gas Partners, is affected by this March 11 rating action.
Williams Partners, Shell, Nexen reach agreement on deepwater Gulf project
Williams Partners LP has reached an agreement with Shell Offshore Inc. and Nexen Petroleum Offshore USA Inc. to provide deepwater gas gathering services to the Appomattox development, located 80 miles offshore from the nearest shoreline in Louisiana, in 7,200 feet of water. Shell is 79% owner in the Appomattox development and is the operator; Nexen is 21% owner. Williams Partners will provide offshore gas gathering services to its existing Transco lateral, which will provide transmission services onshore to its Mobile Bay processing facility. Williams Partners also plans to make modifications to its Main Pass 261 Platform and to install an alternate delivery route for customers from the platform to the existing Destin Pipeline for transportation to another onshore processing facility.
Stone Energy provides borrowing update
Stone Energy Corp. has borrowed $385 million under its bank credit facility, which represents all of the remaining undrawn amount that was available under the credit facility. The company intends to use the funds for general corporate purposes. As of March 10, following the funding of this borrowing, the aggregate principal amount of borrowings under the credit facility was $477 million. This is in addition to $19 million of outstanding letters of credit. The bank borrowings will initially bear an interest rate of 5%. On March 10, the banks provided notice to Stone under the credit facility of a request for a borrowing base redetermination. Stone expects that the borrowing base will be reduced to an amount below the current borrowings. Stone has retained Lazard as its financial advisor and Latham & Watkins LLP as its legal advisor to assist the company in analyzing and considering financial, transactional, and strategic alternatives. Vinson & Elkins LLP will continue to provide ongoing corporate and finance representation.
W&T Offshore sees borrowing base decrease
W&T Offshore Inc.'s borrowing base under its revolving bank credit facility has been reduced to $150 million from $350 million, effective March 23. In February, the company drew $340 million on its revolving bank credit facility and now has borrowings of $191 million in excess of the redetermined borrowing base. Excess borrowings are required to be repaid in three equal monthly installments. W&T currently has a cash balance of $431 million. The decrease is a 57% cut and the company faces "substantial near-term liquidity concerns" with pro-forma liquidity at $240 million and the company slated to provide $260.8 million in supplemental bonding to BOEM with limited access to the surety bonding market, noted Seaport Global Securities analysts.
KLR completes $80M IPO
KLR Energy Acquisition Corp. has closed its initial public offering (IPO) of 8,000,000 units. The offering was priced at $10 per unit, resulting in gross proceeds of $80,000,000 before deducting underwriting discounts and commissions and other offering expenses by the company. KLR's units began trading on the NASDAQ Capital Market under the ticker symbol "KLREU" on March 11. Each unit consists of one share of the company's Class A common stock and one warrant, enabling the holder thereof to purchase one share of the Class A common stock at a price of $11.50 per share. EarlyBirdCapital served as sole book-running manager for the offering. The company consummated the sale of an additional 185,320 units that were subject to the underwriters' over-allotment option in the IPO. The additional units were sold at $10 per unit, generating additional gross proceeds of $1,853,200 to the company and bringing the total gross proceeds of the IPO to $81,853,200.