Marathon to sell Angola stake, add Eagle Ford acres

Marathon Oil Corp. (NYSE: MRO) agreed to sell its 10% working interest in the production-sharing contract and joint operating agreement in Block 32 offshore Angola to Angolan national oil company Sonangol EP. Total transaction value of approximately $590 million excludes any purchase price adjustments. It is expected to close in fourth-quarter 2013 with an effective date of Jan. 1, 2013.

In an unrelated transaction, the Houston company announced the acquisition of approximately 4,800 net acres in the core of its South Texas Eagle Ford position for approximately $97 million, including carried interest of approxi mately $23 million. At year-end, the company held 330,000 net acres in the Eagle Ford, with an average working interest of 80%. About 230,000 acres are in the core of the play.

Pengrowth closes sale of Saskatchewan assets

Calgary-based Pengrowth Energy Corp. (NYSE: PGH) closed the divestiture of its noncore southeast Saskatchewan assets, effective June 1, for $510 million. The assets sold had production of 5,700 bbl. of oil equivalent (BOE) per day with 93% liquids and proved plus probable reserves of 21.3 million bbl. assigned to them at Dec. 31, 2012, according to the independent reserve evaluators GLJ Petroleum Consultants Ltd.

Including this transaction, year to date Pengrowth has sold $1 billion of non-core assets in 2013.

Linn adds Permian assets for $525MM

Linn Energy LLC (Nasdaq: LINE) signed a definitive purchase agreement to acquire oil and natural gas properties in the Permian Basin for $525 million, the company and LinnCo LLC (Nasdaq: LNCO) announced. The deal will close during the fourth quarter.

The properties include more than 300 proved, low-risk infill drilling opportunities as well as future waterflood potential, 124 producing wells and more than 6,250 net acres.

The transaction will be immediately accretive to cash available for the Houston-based MLP's distribution.

Estimated first 12 months' net production of 4,800 bbl. of oil (BOE) per day will come primarily from the Clear-fork formation (63% oil). Operating expenses are estimated at $15 per BOE. Linn will operate with 98% working interest. The proved reserves added are 30 million BOE with 70% oil; and a reserves-to-production ratio of 17 years. The additional future waterflood reserve potential is 24 million BOE.

Linn intends to finance the deal with a committed $500-million senior secured term loan with certain participants in its lender group and borrowings under its revolving credit facility.

Diamondback to buy $440MM of Permian interests

Diamondback Energy Inc. (Nasdaq: FANG), Midland, has agreed with an unrelated third-party seller to purchase mineral interests in Midland County, Texas, for $440 million.

The acquisition includes mineral interests under 15,000 gross (12,500 net) acres. More than half of these minerals are operated by Diamondback. The company intends to finance the acquisition with debt and cash on hand. Wexford Capital LP advised Diamondback during negotiations for the deal.

The assets should add approximately 1,500 BOE per day of production. They yielded free cash flow of approximately $3.5 million in June 2013. Netbacks per BOE were approximately $76 in June.

“Given what we know about the continued pace of development of this acreage, we forecast 2014 free cash flow from these mineral interests of $70- to $80 million based on current prices,” Travis Stice, Diamondback's chief executive officer, says

Harvest Natural Resources to sell Venezuelan assets

Harvest Natural Resources Inc. (NYSE: HNR) has entered into exclusive negotiations with Pluspetrol Venezuela SA to sell the outstanding shares of Harvest for $373 million.

Under the proposed transaction, at closing Pluspetrol would retain Harvest's 32% interest in Petrodelta SA, while Harvest's non-Venezuelan assets would be contributed to a new company, SpinCo, that would be spun off to Harvest's shareholders. SpinCo will be managed by Harvest's current management team.

The remaining assets to be spun-off include Harvest's interests in Gabon, Indonesia, Colombia and China.

Harvest Natural Resources Inc. is headquartered in Houston.

Sanchez antes $220MM in new Eagle Ford deal

Houston-based Sanchez Energy Corp. (NYSE: SN) has snared another big deal, adding to its Eagle Ford shale holdings with a purchase of McMullen County, Texas, acreage for $220 million cash.

The deal adds 11 million BOE of proved reserves and 2,000 BOE per day of current production on about 3,600 net acres.

In May, Sanchez spent $280.4 million for Hess Corp.'s (NYSE: HES) Eagle Ford shale assets, including proved reserves of 13.4 million BOE, 4,500 BOE per day of current production and roughly 43,000 net acres. The reserves are 81% oil and 8% natural gas liquids (NGLs). The deal also follows a $78-million purchase in August of 40,000 Tuscaloosa Marine shale acres.

Sanchez Energy's acquisition has an average working interest of 60% with development potential in approximately 3,600 net contiguous acres in McMullen County.

The purchase comes with 12 producing wells, 40 identified proved undeveloped locations based on 60-acre spacing, and the potential to further downspace to 40 acres.

Sanchez announced a preliminary 2014 operating capital plan of $700 million to spud 76 net wells and complete 79 net wells along with related facilities, leasing, and geologic and geophysical activities. Sanchez plans to direct 94% of operating capital to drilling and completion activities, mostly in the Eagle Ford.

Carrizo breaks free of Barnett in $268MM deal

Houston-based Carrizo Oil & Gas Inc. (Nasdaq: CRZO) has sold its remaining Barnett shale properties as well as other non-core assets in East Texas and the Marcellus shale for $268 million. The divestiture includes 9,000 net acres primarily in Southeast Tarrant County with year-end 2012 proved reserves of 303.5 billion cu. ft. (Bcf). Current net production from the assets is 44 million cu. ft. (MMcf) per day. Closing of the transaction is expected by late October, with an effective date of July 1.

KeyBanc Capital Market analysts consider the Barnett deal attractive, selling for around seven to eight times cash flow and almost $5,355 per thousand cu. ft. equivalent (Mcfe) per day of production. The deal's value is in line with Carrizo's sale in the Barnett to Atlas Energy in early 2012, though below more recent Barnett transactions of $7,500 to $11,000 per flowing Mcfe per day that also included an oil/NGL component, the analysts said.

The transaction is positive as it closes the funding gap for 2013 and 2014, as well as improves the balance sheet, said David Tameron, senior analyst for Wells Fargo Securities.

Carrizo also agreed to sell all of its interest in Camp Hill Field in East Texas and certain undeveloped acreage in the Marcellus shale. The company intends to use net proceeds to repay borrowings under its revolving credit facility and to fund a portion of the remainder of its 2013 capital expenditure program, largely in the Eagle Ford shale.

The Camp Hill divestiture includes year-end 2012 proved reserves of 1 million bbl. and current net production of about 160 bbl. per day of oil. The Marcellus divestiture primarily includes 2,850 net undeveloped acres in non-core areas of the play and is expected to close in the fourth quarter.

Evercore Partners acted as the company's financial advisor for the Barnett sale and Baker Botts LLP acted as outside legal counsel.

Whiting signs $260MM deal for Williston properties

Whiting Petroleum Corp. (NYSE: WLL) has agreed to add Middle Bakken and Three Forks acreage to its Williston Basin holdings in a deal for $260 million. The seller is a private party.

The transaction gives Whiting producing oil and gas wells and development acreage in Williams and McKenzie counties, North Dakota; and Roosevelt and Richland counties, Montana. The properties primarily target the Middle Bakken and Three Forks zones and include 17,282 net (39,310 gross) acres in and around Whiting's existing acreage in the Missouri Breaks and Hidden Bench prospects in its Western Williston Basin area.

The properties include 13 operated 1,280-acre Bakken/Three Forks drilling spacing units with an average working interest of 58% and net revenue interest of 48%. Some 92% of the acreage is held by production.Net oil and gas production from the properties averaged 2,420 BOE per day in August 2013. Whiting estimates proved reserves total 17.1 million BOE with 85% of reserves being oil. Whiting also estimates 24% of the reserves are proved developed producing and 76% are proved undeveloped.

Denver-based Whiting plans to finance the acquisition with borrowings under its existing bank credit facility.

Bellatrix closes $200MM JV, $53MM asset sale

Bellatrix Exploration Ltd. (NYSE: BXE) closed its asset sale and joint venture with the Canadian subsidiaries of Daewoo International Corp. and Devonian Natural Resources Private Equity Fund.

Under the terms of the agreements, Bellatrix sold, effective July 1, an aggregate 50% of its working interest share of its producing assets, an operated compressor station and gathering system, and related land acreage in the Baptiste area of west-central Alberta for gross consideration of C$52.5 million. The sold assets are producing 268 BOE per day, 67% gas and 33% oil and liquids net to the sold assets, and include 3,858 net acres of Cardium rights and 1,119 net acres of Mannville rights.

The joint venture, effective as of July 1, is a multiyear commitment to jointly develop the aforementioned acreage in Ferrier and Willesden Green in Alberta. Included are 70 gross wells with anticipated total capital expenditures to the joint venture of $200 million.

Upon closing of these deals, Bellatrix increased its net capital expenditure for 2013 to $235 million, and will use net proceeds to reduce debt and fund continued development of its Cardium and Mannville asset base.

Bellatrix Exploration is headquartered in Calgary.

Energen's CBM sale should ramp Permian drilling

Energen Corp. (NYSE: EGN) has agreed to sell its Black Warrior Basin coalbed methane assets in Alabama to an undisclosed buyer for $160 million, a valuation in line with analyst expectations of $150- to $200 million.

The deal should allow EGN to accelerate activity in its high-rate-of-return horizontal projects in the Permian Basin, said Gabriele Sorbara, an analyst for Topeka Capital Markets.

“While a small asset sale, we believe management is becoming more receptive to selling other assets within its portfolio (the utility business and San Juan Basin, in our view) and trending towards a pure-play Permian company with more than 300,000 net acres in the basin,” Sorbara said in a report.

The sale is expected to close in early October and have an effective date of July 1. Energen plans to use proceeds to reduce short-term debt.

At Dec. 31, 2012, proved reserves associated with Energen's Black Warrior Basin properties totaled 97 billion cu. ft. In addition to the coalbed methane properties, the buyer, a limited liability corporation, will assume Energen's third-party operating agreements.

After adjusting fourth-quarter production by 0.4 million BOE for the sale of these assets, Energen's revised production guidance range from all operations for 2013 is 25.7- to 26.1 million BOE.

Energen is headquartered in Birmingham, Ala.

Gastar to acquire WI in Hunton Lime

Houston-based Gastar Exploration Ltd. (NYSE: GST) signed a purchase and sale agreement to acquire working interests in the West Edmund Hunton Lime Unit in Oklahoma for $187.5 million. Gastar will acquire a 98.3% working interest (80.5% net revenue interest) in 24,000 acres of the WEHL Unit in Kingfisher, Logan, Oklahoma and Canadian counties, Okla.

All of the acreage in the unit is held by production and located nearly adjacent to a portion of the Hunton limestone assets that Gastar acquired earlier this year from Chesapeake Energy Corp. (NYSE: CHK) in an $84-million deal. The transaction is expected to close in late November and has a purchase effective date of Aug. 1.

The asset currently produces at a daily net sales rate of 1,200 bbl. of oil, 2.7 MMcf of natural gas and 428 bbl. of natural gas liquids (NGLs) or 2,078 BOE. Based on Gastar's internal estimates, total proved reserves are 11.1 million BOE, of which 66% is oil and 43% is proved developed. The estimated present value of proved reserves is $191.3 million, which was discounted at 10% using Nymex futures pricing as of Aug. 28.

The transaction is expected to be funded from the potential issuance of additional long-term debt, the potential issuance of perpetual preferred stock, borrowings under the existing revolving credit facility, cash on hand and the expected proceeds from the sale of its East Texas assets. Gastar will seek a partner to help develop the acreage.

More M&A news

  • Energy Transfer Partners LP (NYSE: ETP) completed the sale of the assets of Missouri Gas Energy (MGE) to Laclede Gas Co., a subsidiary of The Laclede Group Inc. (NYSE: LG), for $975 million.
    MGE is a division of Southern Union Co., a wholly owned subsidiary of ETP. The sale was effective Sept. 1.
    Energy Transfer Partners LP is based in Dallas. The Laclede Group is based in St. Louis, Mo.
  • Quicksilver Resources Inc. (NYSE: KWK) closed the sale of its Montana asset on Aug. 30 to Synergy Offshore LLC for $46 million. Quicksilver is headquartered in Fort Worth, Texas.
  • Abraxas Petroleum Corp. (NASDAQ: AXAS) has sold its Bakken-Three Forks nonoperated assets for $38.3 million.
    Abraxas said sale proceeds will be used to fund capital programs in the Eagle Ford and Williston Basin.
    The buyer, Natural Resource Partners LP (NYSE: NRP), said it took control of about 13,500 net acres that are held by production with an estimated average working interest of 11% in the Bakken-Three Forks.

Additional news

  • NGP Capital Resources Co. (Nasdaq: NGPC) has engaged Keefe Bruyette & Woods (KBW), a Stifel company, as financial advisor in the evaluation of strategic alternatives to enhance stockholder value.
    The board of directors, with the assistance of KBW, will consider a range of options: the sale or merger of the company, the acquisition of existing investment portfolios, or a combination, joint venture or other strategic alliance with another company.

People news

  • Russ Johnson is joining Capital One Securities as head of energy investment banking, having most recently served as a managing director and co-head of Barclays' oil and gas leveraged finance group. Bob Mertensotto, previously a managing director in JP Morgan's oil and gas leveraged finance group, joins as head of energy debt capital markets at Capital One Securities.
    In addition, Capital One Securities' Scott Joyce has been promoted to managing director of energy origination.
  • Westlake Securities announced that Christopher D. Casey has joined the firm's investment-banking team as a managing director. He is based at West-lake's Austin headquarters.

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