Apache inks $2.95B Egypt partnership with Sinopec
Apache Corp. (NYSE, Nasdaq: APA) completed the sale of a one-third minority participation in its Egypt oil and gas business to Sinopec International Petroleum Exploration and Production Corp. for $2.95 billion in cash.
Apache will continue to operate the Egypt upstream oil and gas business.
“With this transaction, Apache has completed $7 billion in asset sales in the process of rebalancing our portfolio toward assets with predictable growth rates and attractive rates of return,” G. Steven Farris, Apache's chairman and chief executive, said.
Pro forma for the partnership with Beijing-based Sinopec, the previously completed sale of Gulf of Mexico shelf assets and previously disclosed asset sales in Canada, Apache's third-quarter 2013 production from North American onshore assets would have comprised 56% of total production, up from 32% in 2009. Also on a pro forma basis, Egypt's contribution would have declined from 26% to 16% during the same interval.
Apache Corp. is based in Houston.
Hess parts with Indonesian assets for $1.3B
Hess Corp. (NYSE: HES) continued its blistering 2013 sales pace, parting with assets located offshore Indonesia for total after-tax proceeds of $1.3 billion.
For months, Hess has been running a de facto asset mart, and as of November had closed $6.5 billion in asset sales—not including the Indonesia sale. Other assets remain, including its Thailand holdings that Tudor, Pickering, Holt & Co. values at about $600 million.
In the latest deal, Hess entered into separate agreements to sell its interests in the Pangkah and Natuna A assets to a joint venture between Jakarta-based PT Pertamina and Bangkok-based PTT Exploration and Production Co. Ltd.
Hess' two assets produced an average of 15,000 bbl. of oil equivalent (BOE) per day net to Hess in the first three quarters of 2013.
Hess will use the proceeds from the sale to continue repurchasing shares under its existing $4-billion authorization.
Hess has an additional 16,000- to 17,000 BOE per day of assets remaining on the market in Southeast Asia. Total proceeds could exceed Global Hunter Securities' estimate of $2 billion, says Sameer Uplenchwar, a senior analyst.
Hess finalized its last major deal in November, completing the sale of its energy marketing business to Direct Energy for total consideration of $1.2 billion. The energy marketing business supplies natural gas and electricity to 23,000 commercial, industrial and small-business customers in the eastern half of the US
For the company to perform better in the eyes of analysts, however, Hess needs to deliver on its production growth targets in 2014 and beyond in the Bakken, Utica and Gulf of Mexico, Uplenchwar says.
QEP grabs Permian assets for $950MM from EnerVest
Denver-based QEP Resources Inc. (NYSE: QEP) continues to amass crude oil supplies, picking up proved resources of 47 million BOE (MMBOE) in the Permian Basin for $950 million. The company announced the deal in early December.
The acquisition of Houston-based EnerVest Ltd.'s acreage in Martin and Andrews counties in Texas' Midland sub-basin adds at least 10 years of drilling opportunities, QEP said. It also puts the company in two of the nation's best plays, the other being the Williston Basin, according to QEP.
The company plans to exit “selected noncore assets” such as the Granite Wash and Woodford Cana by the first half of 2014 in order to help finance the deal.
Currently, the Permian assets' net production is 6,700 BOE per day, consisting of 68% crude oil. But total estimated net recoverable resources are up to 300 MMBOE, QEP said. The development is expected to be self-funding post-2015.
The purchase keeps the company on the path toward rapidly increasing the margin of oil and natural gas liquids (NGLs) it can produce. Crude oil comprised 8% of QEP's production in 2011 and 12% in 2012.
Combining the acquisition and exploitation of QEP's current asset base, the production mix will shift to nearly 50% oil/liquids production by the end of 2015, said Bill Herbert, managing director, co-head of securities for Simmons & Co.
The acquisition is expected to be initially funded by QEP's revolver, cash on hand and then by asset sales.
The transaction is expected to close on or before Jan. 31.
Forest Oil closes $944MM Texas Panhandle divestiture
Forest Oil Corp. (NYSE: FST) closed the sale of its properties in the Texas Panhandle area to Oklahoma-based Templar Energy and Le Norman Fund I LLC for $944 million.
Templar Energy financed the acquisition with a combination of equity from its financial sponsors First Reserve, Trilantic Capital Partners, Cohesive Capital Partners and the company's management team, and borrowings from its new first lien and second lien debt facilities. Le Norman Fund I financed the acquisition with proceeds from Le Norman Properties LLC, David D. Le Norman, and Carlyle Energy Mezzanine Opportunities Fund LP.
Forest will use the proceeds to fund the previously announced cash tender offer of its 7.5% senior notes due 2020 and its 7.25% senior notes due 2019, to reduce outstanding borrowings under its credit facility, and for other general corporate purposes. In connection with the closing of this transaction, the borrowing base under Forest's credit facilities has been reduced to $400 million.
Forest Oil Corp. is headquartered in Denver.
Azure completes $910MM buy of TGGT Midstream
Houston-based Azure Midstream Holdings LLC completed its acquisition from Exco Resources Inc. and BG Group Plc of 100% of the equity interest in TGGT Holdings LLC for $910 million.
As part of this transaction, Energy Spectrum Partners VI LP, a group of co-investors affiliated with Energy Spectrum and an affiliate of Tenaska Capital Management LLC, contributed cash for an ownership stake in Azure. In a related transaction, the East Texas Gathering System, an asset managed by Tenaska Capital, is being contributed for an additional ownership interest. As partial consideration for the transaction, Exco and BG will collectively own 7% of Azure.
With the combination of TGGT and ETG, Houston-based Azure will operate more than 1,300 miles of gathering pipelines that move natural gas from North Louisiana and East Texas supply basins to 20 or more existing major intrastate and interstate pipelines in the region. The pipelines have a combined
delivery capacity of 4 billion cu. ft. per day (Bcf/d) including 2.7 Bcf/d of treating capacity. The systems are currently gathering and delivering 1.3 Bcf/d. TGGT is based in Dallas.
True Oil Co. secures $500MM for Permian
True Oil Co. LLC announced it has secured $500 million in commitments for equity capital from an investor group led by Los Angeles-based Ares Management. Funds from the investor group, made up of institutional investors and including True Oil management, will be used to acquire and develop oil and gas assets in the Permian Basin.
Based in Midland, Texas, True Oil is a newly formed company with a management team led by industry veteran Ronnie Scott. Prior to forming True Oil, Scott was president and chief operating officer of several Midland-based oil and gas companies, including Henry Petroleum, Henry Resources and HPC Energy.
The True Oil management team has an extensive track record of acquiring, developing and selling oil and gas assets in the Permian, where they have drilled approximately 1,000 wells over the past decade. In addition to Scott, management includes Keith Maberry, Michael Rhoads, Will Kiker and Jamie Rhoads.
True Oil's management team has been responsible for nearly $3 billion of transactions in the Permian over the past few years.
Jones Energy buys $195MM of Anadarko Basin assets
Jones Energy Inc. (NYSE: JONE) has agreed with a privately held company to acquire producing and undeveloped oil and gas assets in the Anadarko Basin for $195 million.
The assets acquired include about 26,000 net acres in the Cleveland, Tonkawa and Marmaton plays in the Texas Panhandle and western Oklahoma. The Austin, Texas-based company has built itself through production and acquisitions in the Anadarko and Arkoma basins in Texas and Oklahoma and has 25 years of operational experience in the area.
The acquisition is a bolt-on to the company's Cleveland play and adds an additional 186 locations. Overall, it adds 40% to Jones' Cleveland acreage and a 35% increase in Cleveland locations.
The acquisition is a positive for the company, as it adds both production visibility and inventory in the company's highest-return asset, said David Tameron, Wells Fargo Securities analyst.
The announcement of the acquisition was slightly offset by the news that Southridge Energy LLC had rejected Jones' proposal to acquire all of its interest, which is covered by the farm-out agreement. Since the bid was unsuccessful, Jones lost the rights to 3,310 net acres and PUDs with 15.5 MMBOE. The company took a $14.4-million non-cash charge as a result.
The acquired assets will bring Jones' identified Cleveland drilling locations to 680, providing more than seven years of drilling in the Cleveland formation alone at the current pace of eight rigs.In addition, the acquired properties add significant drilling locations in the Tonkawa and Marmaton plays.
The company confirmed its previously announced plans to test the Tonkawa in the first half of 2014. As a result of this acquisition, the company plans to add two rigs to accelerate its overall development program, bringing the total company rig count from 10 to 12 rigs in 2014.
The company expects to finance the acquisition under its existing revolving credit facility.
Quanta sells equity interest in Howard Midstream
Quanta Services Inc. (NYSE: PWR) has sold an equity ownership interest in Howard Midstream Energy Partners LLC for $221 million in cash. Quanta and its wholly owned subsidiary, Quanta Capital Solutions Inc., closed the sale, which will result in a pre-tax gain to Quanta of $113 million in fourth-quarter 2013, or $0.32 per diluted share. Certain affiliated investment funds managed by Alinda Capital Partners acquired the interest previously held by Quanta.
The after-tax net proceeds from the sale are expected to be $175 million. Quanta intends to use the proceeds to support its ongoing strategic growth and other corporate initiatives, including acquisitions and similar investments.
Quanta Services is a specialized contracting services company, delivering infrastructure solutions for the electric power and natural gas and pipeline industries. The company is based in Houston.
Cabot sells conventional Midcon assets for $123MM
Cabot Oil & Gas Corp. (NYSE: COG) is continuing its string of noncore property sales, letting go of its legacy conventional Midcontinent assets for $123 million.
Cabot agreed with an undisclosed buyer to sell oil and gas properties in the Midcontinent. Current production from the properties is 15 MMcfe per day with 94% gas.
“To date we have announced approximately $325 million of noncore asset sales, with proceeds being reinvested into our higher-return projects through the drillbit and through share repurchases at prices materially below our intrinsic value,” Dan O. Dinges, chairman, president and chief executive, said.
Cabot announced in mid-October that it had sold its assets in Oklahoma and Texas for $160.1 million to Chaparral Energy and its West Texas legacy conventional properties to an undisclosed buyer for $28 million. The assets include current production of 260 BOE per day and proved reserves of 1.5 MMBOE, as of year-end 2012.
The company plans to use proceeds from its previously announced Marmaton and West Texas divestitures to fund share repurchases. During the fourth quarter, the company repurchased some 4.8 million shares, representing 25% of the 19.2 million shares authorized under its current share repurchase program.
Evercore acted as financial advisor to Cabot for its Midcontinent transaction. Cabot is headquartered in Houston.
Consol acquires rights in Marcellus/Upper Devonian
Consol Energy Inc. (NYSE: CNX) is moving ahead with plans to increase its gas production, acquiring rights to nearly 90,000 contiguous acres in the Marcellus and Upper Devonian formations for $190 million.
Pittsburgh-based Consol and Dominion Transmission, a unit of Dominion Resources, announced the deal in early December. The $190 million will be paid in two installments. At close, about half of the money will be paid to Dominion, based in Richmond, Va. The $95-million balance will be paid over nine years.
As part of the deal, Consol has committed to be Dominion's anchor shipper on its gas transmission system. Under the 15-year term, Consol has a 250-MMcf/d contract with Dominion. The transport contract starts in November 2016.
Tudor, Pickering, Holt & Co. said not all details were disclosed, but the deal appears to have much potential with little upfront money.
“From a transaction-specific basis at $2,111 per acre, CNX's transaction appears attractive, especially in light of the recently improved natural gas prices,” says Bill Herbert, managing director, co-head of securities, for Simmons & Co.
Houston's Noble Energy (NYSE: NBL), Consol Energy's JV partner in the Marcellus shale, is exercising its right to participate at a 50% level in the transaction. The JV covers 628,000 gross acres, which now increases to 718,000 acres or 359,000 net. Due to low gas prices, NBL's one-third carry has not been triggered.
The majority of the acreage lies in the northern portion of Lewis County and the southern portion of Harrison County.
Additional M&A news
Abraxas Petroleum Corp. (Nasdaq: AXAS) agreed to sell its Eagle Ford interests at WyCross in McMullen County, Texas, to an undisclosed buyer for $73 million. The assets to be sold consist of approximately 1,200 net acres, 3.7 million bbl. of proved reserves (2.8 million bbl. of oil, 3 Bcf of gas and 0.5 million bbl. of NGLs) and produced 655 BOE/d (597 bbl. of oil per day, 154 MMcf/d and 32 bbl. of NGLs per day) net to Abraxas during September 2013. Abraxas plans to use proceeds from this sale to immediately pay down its bank line, before ultimately redeploying funds into additional operated lease blocks in the Eagle Ford and Bakken.
With the removal of the WyCross production volumes and two additional WyCross well completions in 2013, Abraxas revised its 2013 production and exit rate guidance, and expected 2013 production to average 4,300 to 4,350 BOE/d with an exit rate of approximately 4,500 BOE/d.
Abraxas is based in San Antonio.
Miller Energy Resources Inc. (NYSE: MILL) has agreed to acquire the North Fork Unit and natural gas field in Cook Inlet, Alaska, for $60 million in cash and $5 million worth of Miller's preferred stock.
Miller's subsidiary, Cook Inlet Energy LLC (CIE), agreed to purchase the North Fork Unit and all affiliated assets from Armstrong Cook Inlet LLC and the other working interest owners in the unit.
Current production in the North Fork Unit is some 7 MMcf/d or 1,167 BOE/d and is expected to increase as CIE assumes operations, performs well optimizations, and commences full field development of up to 24 additional wells. Included in the acquisition is a multiyear firm natural gas sales contract with Enstar, the largest natural gas utility in Alaska. There is 4.8 Bcf remaining of a 10-Bcf commitment to Enstar at a price of $7 per Mcf.
The sale includes six natural gas wells, 15,464 acres, and production and processing equipment. The North Fork Unit and gas field is located on the southern Kenai Peninsula, east of the community of Anchor Point. The transaction will also include the acquisition of Anchor Point Energy LLC, the owner and operator of nine miles of twin four-inch natural gas transmission pipelines and a multiyear natural gas sales contract. The acquisition of Anchor Point is expected to occur after the closing on the North Fork Unit.
Miller is headquartered in Knoxville, Tenn.
Norwegian IOC Statoil ASA (NYSE: STO) and Russian NOC Rosneft (MCX: ROSN) have signed a shareholders and operating agreement for a joint venture to assess the feasibility of commercial production from the Domanik shale formation in the Samara region of Russia.
The companies will set up a JV company to run a three-year pilot program and assess the potential for commercial production. The JV will be established with equity interests of 51% for Rosneft and 49% for Statoil. Both companies will contribute technology and professionals into the JV.
In accordance with the agreement, Statoil will provide carry-based funding to perform the pilot survey program on 12 license blocks. The pilot program will include data acquisition, and the drilling and hydraulic fracturing of pilot wells.
Upon completion of the pilot program, Rosneft and Statoil will jointly select license blocks in the Samara region for commercial development.
Westbridge Energy Corp. (OTC: WEGYF; TSXV: WEB) has entered into an option agreement with Black Pearl Holdings LLC for a proposed merger.
Black Pearl granted Westbridge the exclusive option to acquire 100% of the assets or shares of Black Pearl in exchange for 100% of Westbridge's current issued and outstanding shares to Black Pearl or its shareholders.
The combined entity would hold domestic US assets in Texas and Louisiana, international assets in Namibia, and full access to 100,000 linear miles of 2-D seismic data licensed from ExxonMobil Corp. (NYSE: XOM). The 2-D data spans seven states in the US Gulf Coast region.
Black Pearl Holdings LLC is based in Houston. Westbridge Energy Corp. is based in Vancouver, British Columbia.
Endeavour International Corp. (NYSE: END) closed the sale of 50% of its upstream and midstream assets in the Pennsylvania Marcellus and formed a JV with Samson Exploration LLC.
The JV agreement provides for the development of the Marcellus assets, with a “cash and carry” component. The JV delivers the capital necessary for the next phase of development in the core Daniel Field area in Cameron County, Pennsylvania.
Initially, the partnership plans to complete three previously drilled and cased horizontal Marcellus wells. These wells will be tied into a new third-party pipeline being constructed by EQT Corp. that allows firm capacity of up to 10 MMcf/d, with potential for future expansion.
Endeavour will operate the initial phase of activity, which is to be completed by mid-2014.
Endeavour International Corp. is based in Houston.
Samson Exploration, a wholly owned subsidiary of privately held Samson Energy Co., is headquartered in Tulsa, Okla.
Innocent Inc. (OTC: INCT) has signed an exploration agreement with Evergreen Petroleum of Dallas focusing in the Powder River Basin of Wyoming.
Evergreen, which is based in Melbourne, Fla., will be the general manager of the exploration project. The operator of the drilling venture will be L & J Operating Inc. of Gillette, Wyo.
Eagle Energy Trust (TO: EGL-UN) closed its acquisition of producing petroleum properties in Hardeman County, Texas, for $26.3 million.
The acquisition was fully funded under Eagle's credit facility. In conjunction with the closing of the acquisition, Eagle has also received final approval from its lenders with respect to an increase in the borrowing base under its revolving credit facility to $80 million from $70 million, plus a new one-year nonrevolving credit facility of $10 million.
Eagle Energy Trust was created to provide investors with a publicly traded, oil- and natural gas-focused, distribution producing investment with favorable tax treatment relative to taxable Canadian corporations. The company is based in Calgary.
Rango Energy Inc. (OTC: RAGO) has signed a definitive letter of intent to acquire Innex Energy Inc., a Dallas-based energy company with oil and gas leases covering 50,000 acres in the San Joaquin Valley, Northern California's Sacramento Basin and Oklahoma.
The transaction calls for three separate closings in order to accommodate and not interfere with existing contracts that Innex currently has in place with drilling partners.
Rango Energy is based in Vivian, La.
Calgary-based Raging River Exploration Inc. (TO: RRX) closed its acquisition of operated producing oil and gas assets in southwest Saskatchewan from a senior energy producer for $105 million. The acquisition adds significant reserves, production and undeveloped land in its core Dodsland resource light-oil play.
With the closing of the acquisition, Raging River also entered into a new syndicated credit facility agreement of $225 million comprised of a $20-million operating facility and a $205-million revolving facility.
Magellan Midstream Partners LP (NYSE: MMP) closed on its acquisition of Rocky Mountain pipeline assets from Plains All American Pipeline LP (NYSE: PAA) for $135 million.
The pipeline system includes 550 miles of common carrier pipeline that distributes refined petroleum products in Colorado, South Dakota and Wyoming. The system includes four terminals with nearly 1.7 million bbl. of storage.
Magellan funded the purchase price primarily with proceeds from the partnership's recent debt offering.
Magellan Midstream Partners LP is headquartered in Tulsa, Okla.
Calgary-based Birchcliff Energy Ltd. (TO: BIR) closed its $59-million disposition of noncore Progress Doe Creek assets.
The sale included some 520 BOE per day of light-oil production, 2.7 million BOE of proved reserves and 4.5 million BOE of proved plus probable reserves. The net proceeds of $55 million were used to reduce debt.
Birchcliff will realize a significant one-time gain in net income. The sale of these assets will not result in any reduction of Birchcliff's credit facilities.
Calgary-based Surge Energy Inc. (TO: SGY) closed the previously announced acquisition of an operated crude oil producing asset near Wainwright in its core area of Central Alberta.
The assets include more than 980 bbl. per day of primarily medium-gravity crude oil production with a historical 9% annual decline, producing from the Sparky formation.
Additional news
ConocoPhillips (NYSE: COP) announced a 2014 capex budget of $16.7 billion for continuing operations. Investments during 2014 will target the company's diverse portfolio of global opportunities. Some 55% of the budget is allocated toward North America and 45% toward Europe, Asia Pacific and other international businesses.
Among other plans, the company will increase investment in its successful development drilling programs in the Eagle Ford, Bakken and Permian; allocate more capital to Alaska compared to 2013, reflecting increased spending on the CD-5 development and higher activity resulting from improved fiscal terms from the passage of the More Alaska Production Act (SB21); and pursue peak spending at its Australia Pacific LNG (APLNG) project and at Surmont Phase 2 in anticipation of first production from both projects in 2015.
It also said it will increase exploration and appraisal activity in several North American unconventional plays, including the Permian, Niobrara and Duvernay, and ramp up in operated conventional exploration drilling programs in the deepwater Gulf of Mexico and Angola.
ConocoPhillips said it is on track to achieve its previously stated 2014 annual average production target of 1.6 MMBOE per day from continuing operations, including 50,000 BOE/d from Libya. The company expects to achieve growth in its Lower 48, Canada, Europe and Asia Pacific regions.
“2014 is an important year for ConocoPhillips,” Ryan Lance, chairman and chief executive, said in the release. “Since becoming an independent E&P company, we have set out to deliver a unique value proposition of 3% to 5% volume and margin growth with a compelling dividend. To position the company for these goals, we generated proceeds of more than $12 billion from the disposition of nonstrategic assets since the start of 2012, while investing in programs to drive future profitable growth.
“Today, we have an unparalleled inventory of opportunities that will enable us to deliver organic growth from continuing operations in 2014 and beyond.”
GE (NYSE: GE) selected a site in downtown Oklahoma City for the company's first-ever Global Research Center dedicated to oil and gas technology. It said the new center will create 130 high-tech jobs and is expected to have a direct and indirect economic impact of $13 million on the state and local economies.
“New technological breakthroughs in oil and gas are transforming the world's energy landscape in ways unimagined just a decade ago,” said Michael Ming, general manager of GE's center.
Construction on the 95,000-squarefoot facility will begin in the spring of 2014, with the building expected to be completed and operational in 2015.
People news
- Baker Hughes Inc. (NYSE: BHI) announced that its senior vice president and chief financial officer, Peter A. Ra-gauss, intends to retire by the end of next year. Ragauss has said he will work with the company to assist in identifying his successor before he departs.
Cairn India Ltd. announced the appointment of Mike Yeager, former chief executive of the global petroleum business at BHP Billiton, as chairman, operations review board.
Yeager brings more than 38 years of experience. In his last assignment, he was the chief executive of the petroleum business at BHP Billiton, which he joined after a 25-year stint with Exxon Mobil. He is currently executive chairman and chief executive of Maverick Drilling & Exploration, headquartered in Houston.
- Saratoga Resources Inc. (NYSE: SARA) announced that Michael Aldridge has submitted his resignation as executive vice president and chief financial officer. Saratoga Resources is based in Houston.
Exco Resources Inc. (NYSE: XCO) announced Douglas H. Miller has resigned from his positions as chairman of the board, chief executive and director.
The board of directors has appointed Jeffrey D. Benjamin, a long-time investor in Exco and an independent member of Exco's board, to serve as nonexecutive chairman of the board of directors.
Exco Resources is based in Dallas.
Double Eagle Petroleum Co. (Nasdaq: DBLE), Denver, has elected Roy Cohee, a company director since 2001, as chairman of the board of directors, replacing Richard Dole. Dole will continue to serve as the company's president and chief executive and on the board. The board determined that separating the offices will assist in setting the strategic direction of the company.
Cohee is president of C&Y Transportation Co., based in Casper, Wyo., a privately held company focused on the transportation and storage of oilfield equipment and supplies.
Community Trust Bank, Dallas, has established an energy finance group to provide specialized financing solutions to the US domestic oil and gas industry. The group will focus on relationship banking for firms seeking $2.5 million to $100 million in a revolver or term facility secured by oil and gas assets.
Leading the team is managing director Christina Kitchens. Patrick Leznicki joins as a vice president of energy lending. Jerry Horton joins as vice president of energy lending. Carlton Cornelius is portfolio manager.
Community Trust Bank has 35 banking centers throughout North Louisiana, North Texas and the Houston area, and north and central Mississippi.
Angelo, Gordon & Co. announced the hiring of the new Angelo, Gordon Energy Team, comprised of four professionals with decades-long debt and equity investing experience across all energy industry sectors.
The team, which will focus on making loans ranging from $20 million to $60 million. Angelo, Gordon's newest office will be in Houston, and will be led by Todd Dittmann, who has more than 20 years of experience as an investment and finance professional focusing on the energy industry. Dittmann's team includes Damon Putman, managing director; David Taylor, managing director; and Paul Gottheim, associate.
- Kendal Milne has joined the Wells Fargo Energy Group as managing director. Based in Aberdeen, he leads the expansion of the group into the UK to serve the banking needs of the company's energy industry customers. Milne joins the Wells Fargo Energy Group with almost 40 years of experience in banking, of which the past 15 have been in the energy sector in Aberdeen. He formerly spearheaded the growth of DNB Bank's energy business in the UK Previously, he led the oil and gas group for Barclays Bank.
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