Houston-based Pogo Producing Co. is trying to make a name for itself in Canada. The company is buying Unocal’s Calgary-based Northrock Resources Ltd. for $1.8 billion - a move that will increase Pogo’s reserves by 45 percent. Pogo intends to finance the Northrock acquisition with $200 million in cash on hand, $820 million in proceeds related to international asset sales and excess capacity under its existing revolving credit facility, and capital market transactions.
The Northrock transaction is subject to customary regulatory approvals. It is expected to close during the third quarter of 2005.
Unocal has been in talks with Chevron Corp., which is bidding $16.6 billion for the company. It was known that Unocal would be selling Northrock as a separate entity and that the Canadian assets would not be part of any deal. Pogo is paying Unocal $14.91/bbl of reserves, about 50 percent more than Chevron is offering for the rest of the company.
The transaction is part of a growing trend among US exploration and production companies; Houston-based Burlington Resources Inc. (an independent oil and gas exploration and production company) and Forest Oil Corp. (an oil and gas company engaged in acquisition, exploration, development, and production) have both changed directions and started focusing their energy on Canada instead of the more common Gulf of Mexico. However, some analysts believe Pogo may be shelling out too much money for Unocal’s Canadian assets. Pogo chairman Paul Van Wagenen disagrees and blames the field’s flat production numbers on a lack of money being spent on the Canadian properties. He said that when you buy for $2.80 and sell for no less than $6/Mcf and $50/bbl, the rate of return is good.
Northrock Resources, a wholly owned subsidiary of Unocal, is a Canadian oil and gas exploration and production company with operations in British Columbia, Alberta, Saskatchewan, and the Northwest Territories. Northrock owns interests in approximately 2.7 million gross acres. The company has 900 potential drilling sites that produce 16,000 b/d of crude oil, and 85 MMcfd of natural gas, while the Canadian reserves contain 644 bcf of gas equivalent. The reserves are 45 percent natural gas and 55 percent oil.
Pogo Producing explores for, develops, and produces oil and natural gas. Pogo owns interests in 90 federal and state Gulf of Mexico lease blocks offshore from Louisiana to Texas. Pogo owns about 705,000 gross leasehold acres in major oil and gas provinces in the US and 1,043,000 acres in New Zealand.
Quorum Business Solutions to deploy software at NGL
NGL Supply Inc. has agreed to the terms of a deal with Quorum Business Solutions Inc. to deploy Quorum’s Liquids Marketing and Core Financials software products. The two software products will be deployed on an integrated basis.
NGL - a supplier of propane and other natural gas liquids in the Midwest, Gulf Coast, and Northeast regions of the US - serves more than 800 customers in 23 states and provides about 27 million barrels of propane annually to multi-state marketers and petrochemical manufacturers.
Quorum Liquids Marketing is an integrated contracting and contract administration, scheduling, accounting, and risk management software solution for natural gas liquids trading and marketing. The software tracks and manages both physical and financial transactions providing real-time position management and analysis for traders, schedulers, and credit/risk managers.
Quorum Core Financials is financial accounting software designed specifically for energy companies. Key functions include payments, receipts, journal entries, online query and reporting, internal transactional control, and workflow.
Quorum Business Solutions is a product-centered consulting company that develops, implements, and supports a suite of business software solutions for the energy industry with a unique approach to providing a longer product life span. Founded in 1998, Quorum now has over 170 staff operating out of offices in Houston, Dallas, and Calgary.
Foresight Research Solutions acquires assets of Langenberg & Co.
New York-based Foresight Research Solutions LLC, an independent financial research firm, has acquired the assets of Langenberg & Co. LLC, and hired its principals and employees to join its firm.
Foresight provides the industrial investment community with perspective and analysis through the combination of Langenberg industry analysts and proprietary models. Foresights’s industrial investment methodology remains centered on full-cycle return on invested capital analysis, in-depth valuation work, and thorough M&A evaluation.
Langenberg’s team of professionals covers diversified industrials, machinery, and electronic components, and will begin publishing as part of Foresight under the direction of Brian Langenberg, CFA.
Foresight provides investment ideas and client value to institutional money managers in energy, special situations, economic research, and proprietary analytics. Foresight offers its clients access to a full suite of research tools and resources and publishes stock-specific research and industry perspective on the latest trends in its focus areas.
FMC Technologies will provide subsea equipment to Statoil and Norsk Hydro
FMC Technologies’ Subsea Riserless Light Well Intervention alliance party, Island Offshore Management, has signed an agreement with Statoil ASA under which FMC Technologies has agreed to provide Subsea RLWI equipment and services for Statoil’s subsea installations. Statoil operates 245 subsea wells, the majority of which employ FMC Technologies’ equipment, including about 150 horizontal subsea trees.
The initial term of FMC Technologies’ contract is six years, beginning April 2006, and has a multi-year value to FMC Technologies of at least $46 million in revenue. This revenue projection is based on the guaranteed minimum usage of 150 days of Subsea RLWI activities per year, as specified in the contract. The contract also has an option for three additional years beyond the initial term.
Subsea RWI technology, developed by FMC Technologies in conjunction with Statoil, has been employed successfully over the past two and one-half years in various projects in the Norwegian and UK sectors of the North Sea. Based on this experience, Statoil anticipates realizing considerable cost savings by employing Subsea RLWI in its multi-year campaign, rather than using conventional intervention methods.
On a related note, FMC Kongsberg Subsea AS, a subsidiary of FMC Technologies, has signed a contract with Norsk Hydro ASA to supply subsea systems for the Oseberg Delta field in the North Sea. The contract is valued at about $25 million.
The contract scope includes two horizontal subsea trees, a template manifold, and a production control system. Deliveries are scheduled to commence in July 2006 and to be completed by year-end 2006. Oseberg Delta is a satellite field that will be connected to the Oseberg-D platform. Oseberg Delta is in water depths of approximately 102 meters (335 feet).
OpenSpirit releases updated software with expanded capabilities, functionality
Upstream software provider OpenSpirit has released the latest version of its application and data integration software. OpenSpirit Version 2.8 provides support for non-seismic grids and 2D seismic interpretation, more data moving and synchronization functionality via the CopySync utility, and enhanced GIS integration through the Scan utility and ArcGIS extension. New data store connections are also included.
“Our release of version 2.8 is yet another step on our path to infinite integration that we started five years ago,” said Dan Peitee, president and CEO of OpenSpirit. “We now have support for two new data types and four new data stores. We have more applications that we are supporting and more companies are using our product.”
End users can now read, write, update, and delete non-seismic mapping grids in OpenSpirit-enabled applications and associated viewers. In addition, the enhanced GIS integration in version 2.8 allows users to automate the creation of a spatial catalog of sub-surface data, including non-seismic horizon grids, which can then be viewed in GIS applications. Non-seismic grids and 2D interpretation are now available though the OpenSpirit Developer’s Kit, allowing upstream application developers to access these data types and speed the development of their applications.
Also included in the release is the availability of four additional data store connectors, currently in Beta: PPDM, Petra® from GeoPLUS, SDE Culture, and Seismic Micro-Technology’s KINGDOM. In addition, a data server for Recall is under development. These connections eliminate export/import procedures and increase the utility of all OpenSpirit-enabled applications by allowing them to read, create, update, and delete data throughout the network.
The OpenSpirit Corp., based in Sugar Land, Tex., began operations in July 2000 as an independent software company focused on providing integration solutions for upstream applications and data. The company’s application integration framework allows interoperability between multiple vendors’ applications and data.
Big Sky signs consulting agreements with Schlumberger and Landmark
Calgary-based Big Sky Energy Corp. has signed master consulting service agreements with Schlumberger Logelco Inc. and Landmark Consulting (a Halliburton company) to provide geological, geophysical, and engineering support for its efforts to develop its holdings in Kazakhstan.
Under these agreements, Big Sky will present specific assignments to Schlumberger and Landmark at preferred fees and have access to their proprietary software. These contracts help support and confirm Big Sky’s existing geology and geophysics consultancy agreements with local institutes and enterprises such as Caspian Energy Research, Centre Consulting Group, KazNigri, Geostan, and Paradigm Geophysics.
Big Sky is an international oil and gas company currently operating in Kazakhstan’s pre-Caspian basin.
Clayton Williams Energy plans to raise $200 million via private placement notes
Midland, Tex.-based Clayton Williams Energy Inc. plans to raise up to $200 million through a private placement of senior notes due in 2013, subject to market and other customary conditions. Certain of the independent energy company’s subsidiaries will fully and unconditionally guarantee the notes. The company intends to use the net proceeds from the proposed offering to repay amounts under its existing credit facilities and for general corporate purposes.
The notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the US without registration or an applicable exemption from the registration requirements of the Securities Act. The company plans to offer and issue the notes only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the US pursuant to Regulation S.
Maverick Tube completes sale of its HSS product line
The previously announced sale of certain assets related to Maverick Tube Corp.’s hollow structural sections (HSS) product line has been completed. At closing, Maverick received cash of about $37.8 million from Atlas Tube.
Together with proceeds expected to be derived from certain retained assets and principally traded receivables, Maverick expects to generate liquidity of approximately $51 million from the sale. As indicated in the earlier announcement, the parties have also entered into a conversion agreement whereby Maverick will continue to produce HSS products for Atlas at Maverick’s Hickman, Ark. HSS mill for up to 18 months.
Maverick Tube is a St. Louis, Mo.-based manufacturer of tubular products in the energy industry for exploration, production, and transmission, as well as industrial tubing products (steel electrical conduit, HSS, standard pipe, pipe piling, and mechanical tubing) used in various applications.
Merger between Seabulk International and SEACOR Holdings is complete
Seabulk International Inc. and SEACOR Holdings Inc. have merged. Under the terms of the merger, Seabulk’s stockholders will receive 0.2694 of a share of SEACOR common stock plus cash of $4.00 for each issued and outstanding share of Seabulk common stock. Based on SEACOR’s closing price of $64.30 on June 30, 2005, Seabulk stockholders will receive approximately $21.32 in SEACOR stock and cash for each share of Seabulk. Seabulk stock ceased trading at the close of business on June 30, 2005. Seabulk now operates as a wholly owned subsidiary of SEACOR.
Seacor and its subsidiaries are engaged in the operation of a diversified fleet of offshore support vessels that service oil and gas exploration and development activities in the US Gulf of Mexico, the North Sea, West Africa, Asia, Latin America, and other international regions. Other business activities primarily include Environmental Services, Inland River Services, and Aviation Services.
With a fleet of 144 vessels, Seabulk International is a provider of marine support and transportation services, primarily to the energy and chemical industries. Seabulk provides benchmark quality service to its customers based on innovative technology, the highest safety standards, modern efficient equipment, and dedicated, professional employees.
Valero acquires Kaneb Services and Kaneb Pipe Line Partners
San Antonio, Tex.-based Valero LP successfully completed its acquisition of Kaneb Services LLC and Kaneb Pipe Line Partners LP. With an enterprise value of more than $4 billion, the combined partnership will be one of the largest terminal and petroleum liquids pipeline operators in the US.
As part of the nearly $2.7 billion transaction, Valero LP also acquired all of Kaneb Services’ equity securities for $43.31 cash per share and converted Kaneb Partners’ units to Valero LP units at an exchange ratio of 1.0231 Valero LP unit for each Kaneb Partners’ unit. Kaneb Services and Kaneb Partners are now wholly owned subsidiaries of Valero LP. The general partner of the combined partnership will continue to be owned by affiliates of Valero Energy Corp.
The assets of the combined partnership, which will retain the name Valero LP, include about 9,150 miles of pipeline comprised of approximately 6,350 miles of refined product pipelines, 800 miles of crude oil pipelines, and a 2,000-mile anhydrous ammonia pipeline. The partnership also owns 94 terminal facilities and four crude oil storage tank facilities located in 25 US states, Canada, Mexico, the Netherlands Antilles, the Netherlands, Australia, New Zealand, and the UK. The system has approximately 77.6 million barrels of storage capacity.
Enerplus Resources Fund completes its acquisition of TriLoch Resources
Enerplus Resources Fund has completed its acquisition of TriLoch Resources Inc. pursuant to a court-approved plan of arrangement. TriLoch securityholders approved the arrangement and the final order of the Court of Queen’s Bench of Alberta with respect to the arrangement was granted.
Upon completion, Enerplus issued about 1.6 million trust units in exchange for all of the Class A shares and Class B shares of TriLoch. The total transaction value, based upon Enerplus’ closing price of Can.$41.80 is roughly Can.$73.4 million. This includes the assumption of TriLoch’s debt, which totaled approximately Can.$5.2 million (net of option proceeds), and excludes transaction costs and working capital adjustments.
This acquisition complements Enerplus’ existing asset base and expertise in the Enchant area of southern Alberta. The properties being acquired by Enerplus are expected to increase Enerplus’ production by about 1,550 boe/d of natural gas and crude oil (68 percent natural gas).
Enerplus expects to achieve immediate operational efficiencies as the properties are located adjacent to existing Enerplus operations. Enerplus’ development plans for Enchant include the drilling of several natural gas development wells in both the upper shallow gas zones and the deeper Mannville formation. Enerplus also plans to initiate a crude oil waterflood project in the Glauconitic formation, which it believes has the potential to add proven reserves in the future.
Arcapita acquires Falcon Gas Storage Co.
GAStorage Investment LLC, a company organized by Arcapita, a global investment group, has acquired the majority equity interest in Falcon Gas Storage Co. Inc. and has added additional capital to complete the expansion of the company’s existing gas storage facilities and advance the development of its gas storage projects.
Current Falcon management will remain in place and continue to retain a material equity ownership in the company. The total value of the initial transaction is about $100 million. Dresdner Kleinwort Wasserstein Securities LLC advised Arcapita on the transaction.
“Our new partners will provide Falcon with the capital necessary to complete the Phase II and III expansions of our Hill-Lake gas storage facility, as well as the Phase I and II expansions of our Worsham-Steed gas storage facility,” said John M. Hopper, Falcon’s president and CEO.
Photo courtesy of Falcon Gas Storage
Together, the Hill-Lake and Worsham-Steed facilities have more than 20 bcf of high-deliverability, multi-cycle working gas storage capacity and, with the new expansions, will have up to one bcfd of aggregate maximum injection and withdrawal capacity to serve the Dallas-Fort Worth and north Texas markets, including the rapidly expanding Barnett Shale gas play.
Founded in 1996, Arcapita is headquartered in Bahrain with US and UK offices in Atlanta and London and has completed transactions with a total value over $8 billion, including more than $4 billion in the US. Its main lines of business are corporate investment, real estate investment, and asset-based investment.
Houston-based Falcon Gas Storage Co. Inc. is an independently owned developer and operator of high-deliverability, multi-cycle (HDMC) natural gas storage capacity. Falcon is also developing the MoBay Storage Hub in Alabama and has HDMC gas storage prospects in development in New Mexico, Texas, Louisiana, and the Mississippi Gulf Coast.
GE Commercial Finance and Caisse to purchase major pipeline from AIG unit
GE Commercial Finance Energy Financial Services and Caisse de depot et placement du Quebec have agreed to buy the Southern Star gas pipeline system from AIG Highstar Capital for $362 million, plus the assumption of $476 million in debt and preferred stock. The sale is subject to customary closing and regulatory approvals, expected in the third quarter of this year.
Southern Star is a regulated interstate natural gas pipeline spanning more than 6,000 miles in Kansas, Oklahoma, Missouri, Wyoming, Nebraska, Colorado, and Texas. The system also includes 39 compressor stations and eight gas storage fields.
AIG Highstar Capital acquired a 100 percent interest in Southern Star in 2002 from The Williams Companies, and GE’s Energy Financial Services unit acquired two percent of the equity of Southern Star in 2003. Upon the closing of the latest transaction, GE’s Energy Financial Services unit will hold a 60 percent economic interest in Southern Star. Caisse de depot et placement du Quebec will hold 40 percent. Southern Star’s management will continue to operate and maintain the pipeline from its Owensboro, Ky. headquarters.
GE Commercial Finance Energy Financial Services, based in Stamford, Conn., invests about $3 billion annually in the energy industry. The company offers structured equity, leveraged leasing, partnerships, project finance, and broad-based commercial finance to the global energy industry.
The Caisse de depot et placement du Quebec is a financial institution that manages funds primarily for public and private pension and insurance plans. The Caisse invests in the main financial markets as well as in private equity and real estate.
AIG Highstar Capital LP is a leveraged buyout fund sponsored by American International Group Inc. Highstar and its successor fund, AIG Highstar Capital II LP, seek investment opportunities in infrastructure assets and businesses with stable cash flows, downside protection, and value enhancement opportunities. The Highstar Funds are based in New York and Houston.
Object Reservoir and Gryphon Exploration sign services deal
Gryphon Exploration Co. has renewed its contract with Object Reservoir Inc. for dynamic reservoir characterization (DRC) services. Gryphon will utilize Object Reservoir’s services over the next year on various reservoirs located in the shelf area of the Gulf of Mexico.
Object Reservoir’s technology-enabled DRC services and process will be used by Gryphon to characterize new reservoirs and update existing reservoir models with new production data. The DRC process supports development of highly precise and predictive reservoir models. An Object Reservoir spokesman says that knowledge gained from DRC models with various clients has been shown to accelerate development decisions by six months; lead to a 30 percent reserves improvement; improve return on capex by 15 percent; and change one out of three drilling decisions.
DRC represents more than 100 man-years of development and an investment of more than $18 million, says the spokesman, who adds that Gryphon, a Houston-based company of Warburg Pincus, focuses on the shallow waters of the Gulf of Mexico.
Gryphon pursues a strategy that utilizes highly contiguous pre-stack time migrated regional 3D seismic databases covering approximately 2,300 offshore blocks in the Gulf of Mexico to identify significant reserve potential prospects in deeper geologic strata.
Austin-based Object Reservoir delivers reservoir knowledge that enables early decision-making and proactive management of exploration and production company assets.
Westport Petroleum selects MarketView to power its oil and products trading group
GlobalView Software Inc., a provider of energy information management solutions, said that Westport Petroleum, a leading petroleum trading, blending, and transportation company, has chosen its award-winning application MarketView for a web-based energy information management system.
Westport Petroleum’s evaluation list included six firms. The final decision factors that weighed heavily in favor of GlobalView’s MarketView application were support, portability, analytics, and presentation. GlobalView’s dedication to the energy markets and the frequent enhancements that it provides to MarketView also influenced the decision, said a company spokesman.
“We were looking for a solution that would be portable, easy to use, provided superior analytics, and produced a steady stream of enhancements,” said David Jensen, risk manager at Westport. “We investigated six solutions, and chose MarketView to replace our existing OILspace terminals. It met all the requirements for our geographically diverse organization and provides excellent presentation tools for the data,” he added.
With MarketView, Westport will be able to track and analyze energy markets at any time, anywhere, on any device, said Jon Olson, GlobalView president.
Chicago-based GlobalView has branch offices in Houston, Connecticut, Washington DC, London, and Singapore.
Westport Petroleum is an international company in petroleum trading, blending, and transportation, and a wholly owned subsidiary of Mitsui formed in 1985.
KRG Capital Partners acquires Varel International
Denver-based KRG Capital Partners has acquired Carrollton, Tex.-based Varel International. Founded in 1947, Varel is an independent supplier in the drill bit market. The company services oil and gas, mining, and industrial markets with its roller cone and fixed cutter drill bits. KRG was founded in 1996 and is a private equity firm that acquires and recapitalizes middle-market companies.
The transaction was financed with equity from the $450 million KRG Capital Fund II in conjunction with debt provided by Royal Bank of Scotland (Agent), Freeport Financial, and Area Capital Management. Simmons & Co. International acted as financial advisor to Varel. Following the acquisition, according to a spokesman, Varel’s headquarters will remain in Carrollton, and there are no plans for changes at the executive level.
