GE gets in on natural gas boom with Dresser acquisition

Nov. 1, 2010
Addison, Tex.-based Dresser Inc., majority-owned by private equity firms Riverstone Holdings LLC and First Reserve Corp., has agreed to be acquired by GE for $3 billion.

Addison, Tex.-based Dresser Inc., majority-owned by private equity firms Riverstone Holdings LLC and First Reserve Corp., has agreed to be acquired by GE for $3 billion. The deal includes all of the Dresser businesses, which provide products and services for compression, flow technology, measurement and distribution infrastructure. Part of Fairfield, Conn.-based GE's energy business model is natural gas-fired turbines for power generation and water treatment and recycling for oil and gas drilling operations. Morgan Stanley acted as exclusive financial advisor to privately-held Dresser, while Barclays Capital Inc. acted as exclusive financial advisor to GE. In 2009, Dresser held revenues of $2 billion and earnings of $318 million.

Acon, TPG Capital to buy Marathon's Minnesota downstream assets

Private equity firms ACON Investments and TPG Capital have signed definitive agreements with Marathon Oil Corp. to acquire the majority of Marathon's Minnesota downstream assets valued at $900 million. TPG Capital and ACON Investments will form a new company, Northern Tier Energy LLC, to operate the assets as equal partners. The acquisition includes the 74,000 barrel/day St. Paul Park refinery and an equity interest in the Minnesota Pipe Line. Northern Tier Energy will operate the Minnesota assets as a stand-alone company. Mario E. Rodriguez will serve as Northern Tier Energy's CEO and Hank Kuchta will serve as COO. ACON and TPG's financial advisors were Goldman Sachs, JP Morgan and Bank of America Merrill Lynch. ACON and TPG's legal advisors were Cleary Gottlieb Steen & Hamilton, Vinson & Elkins LLP, Stroock, Stroock and Lavan LLP, and Faegre and Benson.

Gulf Coast Energy receives $250M capital infusion from Warburg Pincus

Gulf Coast Energy Resources LLC, a privately-held company focused on conventional onshore oil and gas plays, has received an investment commitment of up to $250 million from private equity firm Warburg Pincus and the management team. The management team consists of: Kevin Guilbeau, president and CEO; C. Gordon Lindsey, vice president exploration and business development; Manuel Mondragon, CFO; Steve Longon, vice president engineering; Jay Parker, exploration manager. Gulf Coast Energy Resources LLC (doing business in Texas as GCE Resources LLC) is a Houston-based private-equity backed E&P company formed in 2010. The company's strategy is to acquire, exploit, and explore for oil and gas in the Gulf Coast region of Texas and Louisiana.

GE introduces loans for development drilling

GE Energy Financial Services is expanding its oil and gas reserves investing business by offering loans for development drilling. In its first transaction of this type, GE made a loan to Knox Energy Inc. — an exploration and production company based in Columbus, Ohio — for drilling natural gas wells in central Ohio. Knox Energy will use the proceeds from the debt financing, for which financial details were not disclosed, to refinance its debt and provide capital to drill more shallow wells in a mature producing region.

Copano Energy signs Eagle Ford shale deal with GeoSouthern

Midstream energy company Copano Energy has signed a long-term, fee-based agreement to provide GeoSouthern Energy Corp., one of the first producers to have success in the NGL-rich region of the northern Eagle Ford Shale play in Texas, with gathering, compression, processing, and fractionation services for its Eagle Ford Shale production. GeoSouthern holds a substantial acreage position in DeWitt County, Texas. Copano will gather gas into its recently completed 36-mile, 24-inch DK Pipeline in DeWitt and Karnes counties and will provide fully integrated services for both natural gas and natural gas liquids at its Houston Central Complex, located in Colorado County, Tex. Copano plans to spend $60 million to expand its Houston Central Complex fractionation facilities and its downstream NGL product handling facilities to accommodate producer demand in the area. The fractionation expansion will double Copano's current capacity to 44,000 barrels per day. Expected in-service date is September 2011.

Berry Petroleum buys $180M in Wolfberry acreage

Berry Petroleum Co. is buying 9,300 net acres in the Wolfberry trend in West Texas from a group of sellers for a combined purchase price of $180 million in cash. Berry's proved plus probable reserve estimates associated with the 40-acre development of the properties are approximately 35 MMboe with crude oil comprising 76%. Upon completion, the properties are expected to add roughly 2,200 boe/d to Berry's production during 2011. The company expects to fund the acquisition with its credit facility and on a pro forma basis expects to have liquidity of over $500 million. The deal is expected to close in December 2010. Assuming completion of the acquisitions in 2010, the company plans to run four drilling rigs in the Permian Basin during 2011 and spend roughly $130 million to drill approximately 75 wells. The company's capital budget for 2011, based on $75 WTI, is expected to be between $375M and $425M and should be fully funded from cash flow.

Concho acquires Marbob assets, posts 2011 Capex

Concho Resources Inc. has closed its acquisition of the oil and natural gas assets of Marbob and certain affiliates and paid another $32 million for additional non-operated rights and interests in certain Marbob properties owned by persons affiliated with Marbob. As of June 30, 2010, estimated proved reserves associated with these additional interests totaled approximately 1.3 MMboe. Aggregate consideration paid to Marbob at closing consisted of approximately $1.1 billion of cash, the issuance of approximately 1.1 million shares of Concho common stock and a $150 million senior unsecured note issued to Marbob due in 2018. The cash consideration was funded with borrowings under the company's amended credit facility and with proceeds from a $300 million private placement of common stock. The previously-announced purchase price was reduced by approximately $400 million due to the exercise of preferential purchase rights by third parties. As of October 1, 2010, current net daily production and proved reserves on the assets acquired from Marbob, reduced by the effects of the exercised preferential purchase rights, is approximately 12,000 boe/d and 63 MMboe, respectively. The company's preliminary capital expenditure budget for 2011 is estimated to be approximately $1 billion.

Comstock sells Mississippi assets to Harvester for $75M

Comstock Resources Inc. has agreed to sell its Mississippi oil and gas properties to a subsidiary of Petro Harvester Oil & Gas LLC, a new venture formed by private investment firm TPG Capital, for $75 million in cash. Net production from the properties averaged 1,138 barrels of oil and 0.9 MMcf of natural gas per day during the first six months of 2010. The sale is expected to close by the end of the year. Scotia Waterous (USA) Inc. acted as financial advisor to Comstock with respect to the sale. The Harvester team is led by chairman Gareth Roberts, the founder and former CEO of Denbury Resources. Jim Sinclair serves as president of operations and Mark Roach serves as president of acquisitions.

Ridgewood Energy, Riverstone to make Gulf of Mexico investments

Ridgewood Energy Corp., a private Gulf of Mexico oil and gas E&P company based in Montvale, New Jersey and Houston, is partnering with Riverstone/Carlyle Global Energy and Power Funds, a group of energy-focused private equity funds managed by Riverstone Holdings LLC, to make investments in a series of Gulf of Mexico deepwater oil exploration projects. Ridgewood will manage the investments on behalf of the venture. The venture has acquired positions in over 20 leases, with five defined prospects lined up for drilling in 2011. Ridgewood Energy Corp., founded in 1982, manages private equity funds for high net-worth individual and institutional investors that invest in major oil and gas projects in the US waters of the Gulf of Mexico.

Chesapeake Energy to buy Appalachian Basin acreage from privately held Anschutz

In its third quarter 2010 financial and operational results report dated November 3, Oklahoma City-based Chesapeake Energy Corp. (NYSE: CHK) noted that the company has the opportunity to acquire 500,000 net acres in the Appalachian Basin from privately-held Anschutz Corp. for $850 million. Approximately 25% of the assets acquired are expected to be resold after closing, expected later this month, while the remainder of the assets will be combined with Chesapeake leasehold in a play in which the company expects to execute a new industry joint venture in the first half of 2011. In a research note dated November 4, Jefferies & Co. Inc. reported that it expects Chesapeake to be targeting the Utica Shale in this transaction.

Robbins & Myers to acquire T-3 Energy Services

Dayton, Ohio-based Robbins & Myers Inc., a supplier of engineered equipment and systems for applications in the energy industry and other markets, will acquire Houston-based T-3 Energy Services Inc., a provider of oilfield and pipeline products and services, for roughly $422 million, net of cash assumed, in a 75% stock and 25% cash transaction. T-3 shareholders will receive 0.894 shares of Robbins & Myers and $7.95 cash for each T-3 common share. Upon closing, T-3 stockholders collectively will own roughly 27% of Robbins & Myers' outstanding shares. The combined company will be led by Robbins & Myers' existing management and board and will remain in Dayton. UBS Securities LLC is acting as financial advisor and Thompson Hine LLP is acting as legal counsel for Robbins & Myers. For T-3, Simmons & Co. International is acting as exclusive financial advisor and Vinson & Elkins LLP is acting as legal counsel.

Antero enters new $1B revolving credit facility

Antero Resources has entered into a new $1 billion revolving credit facility with a 13-bank syndicate led by JP Morgan Securities LLC and Wells Fargo Securities LLC as Joint Lead Arrangers and Joint Lead Bookrunners. The facility replaces Antero's existing $400 million revolving credit facility, has an initial borrowing base of $550 million and expires in November 2015. Closing of the new credit facility resulted in a $150 million increase in Antero's bank borrowing base.

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