Apache to sell $4B in assets in 2013

Apache Corp. (NYSE: APA) plans to sell $4 billion in assets before the end of the year and use the proceeds to pay down debt and buy back shares.

In a conference call with investors, Apache chief executive Steve Farris said the company now plans to double its sale of assets through 2013. Earlier this year, Apache retained Jefferies LLC to sell off as much as $2 billion in assets in the Gulf of Mexico.

The latest announcement sent the company's shares up nearly 5%. The company gave few details about which assets would be put on the block.

Apache said it would use initial proceeds of $2 billion to reduce debt and enhance financial flexibility. The company will use the rest to repurchase about 30 million of its shares, or about 7.5% of its outstanding shares.

Farris said, “We are showing strong results from the strategic shift that we outlined in 2012, with production from onshore North American liquids plays of 165,000 bbl. per day in the first quarter. We expect our onshore drilling programs will continue to contribute significantly to meeting our production targets.”

Apache has been relatively active over the last three years, buying about $17 billion in assets as opportunities arose. The company purchased Cordillera Energy Partners in January 2012 for about $2.85 billion. It also purchased about $7 billion in assets from BP Plc in Alberta, British Columbia, Texas and New Mexico.

In December 2011, Apache purchased North Sea assets from Exxon-Mobil for $1.25 billion. And it merged with Mariner Energy Inc. in November 2010 for $3.9 billion in cash and assumed debt.

Inergy, Crestwood form midstream partnership

Crestwood Midstream Partners LP and Crestwood Holdings LLC and Inergy LP (NYSE: NRGY) and Inergy Midstream LP (NYSE: NRGM) announced they would merge to create a fully integrated midstream partnership with a total enterprise value of approximately $7 billion.

The combination, to be called Inergy LP, will hold a diverse platform of midstream assets in the major shale plays in North America.

Through a series of transactions, Crestwood Holdings will acquire the general partner and control of Inergy LP. Crestwood's chairman, president and chief executive, Robert G. Phillips, will lead Inergy LP and will serve as chairman, president and chief executive of the combined company.

In the merger, Crestwood Midstream unitholders will receive 1.070 common units of Inergy Midstream for each unit of Crestwood Midstream they own, representing a 5% premium to the 20-day volume weighted average price of Crest-wood Midstream's common units.

Additionally, all Crestwood Midstream public unitholders other than Crestwood Holdings will receive a onetime cash payment at closing of approximately $35 million in the aggregate, or $1.03 per unit, $25 million of which will be payable by Inergy Midstream and approximately $10 million of which will be payable by Crestwood Holdings. The final transaction is expected to close in the third quarter.

Crestwood is based in Houston. Inergy is headquartered in Kansas City, Mo.

Contango Oil & Gas, Crimson to merge

Contango Oil & Gas Co. (NYSE MKT: MCF) and Crimson Exploration Inc. (NasdaqGM: CXPO) agreed to merge in an all-stock transaction pursuant to which Crimson would become a wholly owned subsidiary of Contango. Upon consummation of the merger, each share of Crimson stock will be converted into 0.08288 shares of Contango stock resulting in Crimson stockholders owning 20.3% of the post-merger Contango.

Upon closing, the combined company will be a Houston-based independent with a balanced offshore Gulf of Mexico and onshore Texas production profile and a deep inventory of high-impact GOM prospects complemented by Crimson's onshore oil and natural gas liquids-focused, lower-risk unconventional resource positions in several prolific plays, the companies said.

Pro forma for the merger, Contango's net daily production for the quarter ending March 31, 2013, would be approximately 101 MMcfe (31% oil and natural gas liquids) and the combined company's total proved reserves are estimated to be approximately 312 Bcfe (31% oil and natural gas liquids).

Pro forma PV-10 of the estimated proved reserves of the combined company would be approximately $932.5 million.

The enhanced size and scale of the combined company and its conservatively capitalized balance sheet will position it to implement an accelerated oil and natural gas liquids-focused drilling program. This transaction is expected to be immediately accretive to cash flow per share for Contango.

Based on Contango's closing stock price on April 29, 2013, this transaction represents an implied price per share for Crimson of $3.19, a premium of approximately 8% to the most recent closing price.

Aggregate consideration in the transaction is approximately $390 million based on the assumed issuance of approximately 3.9 million shares of Contango common stock and the assumption by Contango of approximately $244 million of long-term debt of Crimson.

MarkWest buys Granite Wash midstream assets

MarkWest Energy Partners LP (NYSE: MWE), Denver, has bought multiple midstream assets in the Anadarko Basin from a wholly owned subsidiary of Chesapeake Energy Corp. (NYSE: CHK), Oklahoma City, for $245 million in cash.

The acquired assets consist of a 200-million-cu.-ft.-per-day cryogenic gas processing plant (the Buffalo Creek Plant), 22 miles of gas-gathering pipeline in Hemphill County, Texas, and 30 miles of rights-of-way associated with the future construction of a high-pressure trunk line.

Additional assets consist of an amine treating facility and a five-mile gas gathering pipeline in Washita County, Okla. The high-recovery Buffalo Creek Plant and associated trunk line are currently under construction and are expected to be placed into service in early 2014. Producing formations in the Anadarko Basin associated with these assets include the Granite Wash and Hogshooter formations and multiple other liquids-rich zones.

In conjunction with the acquisition, MarkWest has signed a long-term, fee-based agreement with Chesapeake for gas-gathering, compression, treating and processing services. As part of the gas-processing agreement, Chesapeake has dedicated 130,000 acres throughout the Anadarko Basin.

MarkWest anticipates initial gas volumes from Chesapeake of 50 million cu. ft. (MMcf) per day, increasing to more than 250 MMcf per day by 2017.

QEP to sell assets for $145 million

QEP Resources Inc. (NYSE: QEP) plans to sell some of its noncore producing properties for about $145 million. Chief financial officer Richard Doleshek said that the company expected the sales to close before the end of the second quarter.

Few details were given during a first-quarter earnings call with investors other than the fact that there were “several agreements” for noncore acreage in its northern region.

Earlier this year, QEP Energy Co. retained BMO Capital Markets to sell its Powder River Basin assets, which are primarily located in Converse County, Wyo. The assets include about 47,000 net acres, 45% of which is held by production. The remaining land has an average five-year term.

In addition, the assets include a large inventory of about 1,000 gross undeveloped locations.

Separately, QEP Midstream Partners LP, a wholly owned subsidiary of QEP Resources Inc., plans to launch its initial public offering of common units representing limited partner interests. An application will be made to the New York Stock Exchange to list the common units under the symbol “QEPM.”

Wells Fargo Securities is sole book-running manager and structuring agent. QEP Midstream Partners LP provides gas-gathering and processing services in the Rockies and Northwest Louisiana.

EQT to buy acreage, wells from Chesapeake

EQT Corp. (NYSE: EQT), Pittsburgh, plans to buy about 99,000 net acres in southwestern Pennsylvania and 10 horizontal Marcellus wells from Chesapeake Energy Corp. (NYSE: CHK) for about $113 million.

The acreage includes 67,000 Marcellus and 32,000 dry-gas Utica acres. Of the total purchase price, $60 million is allocated to the undeveloped acreage, while the remaining $53 million is for the existing Marcellus wells.

The purchase includes about 25,000 acres within EQT's core Marcellus development areas of Washington, Greene, and Allegheny counties. This Marcellus core acreage is conducive to development through the company's use of multiwell pad drilling and extended laterals.

The remaining 42,000 Marcellus acres are unlikely to be developed due to near-term lease expirations or a scattered footprint. Three of the 10 Marcellus wells are currently producing and the remaining seven will be turned in line by year-end 2013, adding about 1 billion cu. ft. equivalent (Bcfe) of sales volume. These existing wells have an average lateral length of 4,200 feet and represent about 54.0 Bcfe of proved developed reserves.

After the transaction closes, EQT said it expects to drill four wells on the new acreage in late 2013.

Wells Fargo Securities said the price works out to just above $1,000 per acre, a price which it sees as “very attractive” for undeveloped acreage in western Pennsylvania.

Tallgrass to IPO, list on NYSE

Tallgrass Energy Partners LP launched its initial public offering of some 13.1 million common units representing limited partner interests. The midstream company will trade on the New York Stock Exchange under the symbol “TEP.” After the offering, Tall-grass Development LP and its affiliates will indirectly own common units and subordinated units representing approxi-

mately 66% of Tallgrass' outstanding units (approximately 62% if the underwriters exercise their option to purchase additional common units in full) and general partner units representing a 2% general partner interest in Tallgrass.

Barclays, Citigroup, BofA Merrill Lynch, and Deutsche Bank Securities are joint book-running managers. Credit Suisse, Morgan Stanley, RBC Capital Markets, Wells Fargo Securities, Baird and Stifel are co-managers of the offering.

Tallgrass Energy Partners LP is a growth-oriented limited partnership that provides natural gas transportation and storage services in the Rocky Mountain and Midwest regions. The company is headquartered in Overland Park, Kan., with operations based in Lakewood, Colo.

Quicksilver sells Barnett assets to Tokyo Gas sub

Quicksilver Resources Inc. (NYSE: KWK) closed on its previously announced sale of 130,000 Barnett shale acres to TG Barnett Resources LP, a subsidiary of Tokyo Gas Co. Ltd., and has amended its credit facility as a result of the agreement. Quicksilver received net proceeds of $463 million for the sale of 25% of its Barnett assets.

Quicksilver chief executive Glenn Darden said “Our newly amended credit facility has created significant financial flexibility to execute our refinancing plan, as we bring value to our Horn River and other projects.”

The company also closed an amendment to its combined credit agreements. The global borrowing base was redetermined at $350 million, which includes the effects of the TG transaction.

Quicksilver Resources is based in Fort Worth, Texas.

Additional M&A news

  • Hess Corp. (NYSE: HES), New York, has closed on the sale of its Russian subsidiary, Samara-Nafta, to OAO Lukoil for $2.05 billion. Prior to the sale, Hess owned 90% of the Russian subsidiary, which has operations in the Volga-Urals region, including exploration and production rights in 23 license areas. The region includes more than 50 fields and two oil treatment plants.

Once working capital adjustments and taxes are deducted from the transaction, Hess will collect around $1.9 billion from the sale. The company will use proceeds to repay short-term debt and strengthen its balance sheet in an effort to give itself additional flexibility for future growth.

So far this year, Hess has sold around $3.5 billion in assets as part of a corporate restructuring program announced two years ago. Hess is also looking to sell its upstream assets in Indonesia and Thailand and its remaining downstream business, including terminals, retail, energy marketing and trading. Most of the proceeds from these additional sales will be used to return capital to shareholders.

Hess anticipates that it will begin to repurchase shares under its existing $4-billion authorization in the second half of this year.

  • Regency Energy Partners LP (NYSE: RGP), Dallas, closed its acquisition of Southern Union Gathering Co. LLC, the owner of Southern Union Gas Services Ltd. (SUGS), from Southern Union Co., an affiliate of Energy Transfer Equity LP (NYSE: ETE) and Energy Transfer Partners LP (NYSE: ETP), for $1.5 billion.

Regency financed the acquisition by issuing 31.4 million new common units and 6.3 million of newly created class F common units to Southern Union Co. The cash portion of the consideration, which was $600 million, less $107 million of estimated closing adjustments, was funded from the proceeds of senior notes issued by Regency.

SUGS assets include a 5,600-mile gathering system and 500 million cu. ft. per day of processing and treating facilities in West Texas and New Mexico for natural gas and natural gas liquids. These assets significantly expand Regency's presence in the Permian Basin.

  • Atlas Pipeline Partners LP (NYSE: APL), Pittsburgh, the midstream subsidiary of Atlas Energy LP (NYSE: ATLS), has closed on its previously announced purchase of TEAK Midstream LLC, a private midstream company, for $1 billion.

Based on the forecasted earnings and cash flow from the TEAK assets, Atlas Energy expects to receive an additional $25 million to $40 million of annual distributable cash flow as the acquired assets grow and mature. This represents $0.45 to $0.75 per Atlas Energy common unit of additional distributable cash flow on an annualized basis.

  • Clayton Williams Energy Inc. (Nasdaq: CWEI), Midland, Texas, has closed on the sale of its Wolfberry oil and gas reserves, leasehold interests and facilities in Andrews County, Texas, to an undisclosed buyer for $215.2 million.

The transaction was with an unidentified financial investor that bought a 95% limited partnership interest in the assets.

Proceeds will be used to reduce the amount outstanding on its revolving bank credit facility. Under the terms of the agreement, Clayton Williams Energy will contribute 5% of the assets to a newly formed limited partnership in exchange for a 5% general partner interest, and the partnership will purchase the remaining 95% of the assets from the company. The partnership will obtain the proceeds from the investor in exchange for a 95% limited partner interest.

The assets accounted for 21% of the company's total proved reserves at Dec. 31, and 16% of its total oil and gas production for the quarter ended Dec. 31.

  • Penn Virginia Corp. (NYSE: PVA) has closed on its previously announced purchase of producing properties and undeveloped leasehold interests in the Eagle Ford shale from Magnum Hunter Resources Corp. (NYSE: MHR), for about $360 million in cash and 10 million shares of its common stock.

The acquisition has an effective date of Jan. 1. The 19,000 acres include seven drilled wells and four drilling wells.

Penn Virginia, based in Radnor, Pa., will fund the cash portion of the purchase price from private debt. RBC Capital Markets was the company's exclusive financial advisor on the transaction.

To hedge production from the purchase, the company sold a swap for 2,000 bbl. of West Texas Intermediate per day at $90.43 per barrel from May 1 through Dec. 31.

Penn Virginia Corp. has assets in Texas, Oklahoma, Mississippi and Pennsylvania.

  • SemGroup Corp. (NYSE: SEMG), Tulsa, executed a definitive agreement to acquire the equity interests of Mid-America Midstream Gas Services LLC, a wholly owned subsidiary of Chesapeake Energy Corp. (NYSE: CHK), Oklahoma City, which is the owner of gas-gathering and processing assets in the Mississippi Lime play, for $300 million in cash.

The transaction is expected to close by the third quarter. Included in the deal are 200 miles of gathering pipeline; the Rose Valley 1 and II cryogenic processing plants; about a 540,000 net acre dedication in the core of the Mississippi Lime play, supported by a recently announced joint venture between Chesapeake Energy Corp. and Sinopec International Petroleum Exploration and Production Corp. (NYSE: SHI); and the commitment by Chesapeake to a 20-year, 100% fee-based, gas gathering and processing agreement.

Rose Valley plants I and II require $125 million of additional capital expenditures for completion, as well as additional capital related to future well connects.

Combined with the company's existing facilities, SemGroup will have a

total processing capacity of 600 million cu. ft. per day in Northern Oklahoma, and with 655,000 net acre dedications within the core of the Mississippi Lime play, opportunity to grow as production increases.

SemGroup will fund the acquisition under existing committed credit facilities. LCT Capital LLC and Citi are financial advisors to SemGroup.

  • BNK Petroleum Inc. (Toronto: BKX) closed the previously announced sale by its indirect wholly owned subsidiary, BNK Petroleum (US) Inc., to XTO Energy Inc., a subsidiary of Exxon Mobil Corp. (NYSE: XOM), of assets in Tishomingo Field, Okla., for US$147.5 million.

The sale puts the company in a strong debt-free financial position to advance its ongoing exploration and development efforts in Oklahoma and Europe. The sale was structured to preserve the company's rights in the relatively undeveloped Caney and Upper Sycamore formations in Tishomingo Field. It is now looking forward to results from its next planned Caney/Upper Sycamore wells, one of which is being drilled. The company is also making progress on obtaining drilling permits in Europe and anticipates being able to drill a lateral out of its Gapowo B-1 well in Poland later this year, according to Wolf Regener, BNK's president and chief executive.

BNK Petroleum Inc. is headquartered in Camarillo, Calif.

  • Affiliates of Apollo Global Management LLC (NYSE: APO) and Apex Energy LLC formed a strategic partnership to invest in oil and gas properties in the Appalachian Basin with a primary focus on the Marcellus shale.Apex's executive management team is led by Mark Rothenberg, chief executive, and Ed Long, chief operating officer. Prior to Apex, Rothenberg and Long were part of the leadership team for the Exco Resource Inc. (NYSE: XCO) joint venture in the Appalachian Basin. Prior to Exco, Rothenberg was at Vantage Energy LLC, a private-equity-backed E&P company formed in December 2006.

Apex is an oil and gas company focused on developing unconventional assets in the Appalachian Basin. The company is based in Pittsburgh.

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