PXP to sell shallow water GoM assets to McMoRan for $818M

Plains Exploration & Production Co. has agreed to sell certain of its shallow Gulf of Mexico properties to McMoRan Exploration Co. for a combination of cash and stock totaling $818 million. PXP will receive $75 million in cash and 51 million shares of McMoRan common stock in exchange for PXP's interests in all of its Gulf of Mexico leasehold located in less than 500 feet of water. The properties are currently producing nearly 45 million cubic feet of natural gas equivalents per day net to PXP and include estimated proved reserves of approximately 63.9 billion cubic feet of natural gas equivalents as of June 30, 2010. In conjunction with the transaction, McMoRan has secured $900 million of committed financing from an investor group and PXP will have the right to designate two directors to McMoRan's Board of Directors. Separately, PXP has begun the process of marketing the company's Gulf of Mexico deepwater assets. The portfolio is anchored by Friesian and Lucius and an exploration portfolio with interests in 107 blocks, 9 well defined prospects and an additional 22 prospects or leads in Pliocene, Miocene and Lower Tertiary reservoirs. PXP engaged Barclays Capital and Jefferies & Co. to assist in executing both transactions. Barclays Capital provided a fairness opinion to PXP on the divestiture of its shallow water properties to McMoRan.

Halliburton has closed stock and cash acquisition of Houston-based Boots & Coots. The merger makes the iconic well control company a wholly owned subsidiary of Halliburton and combines Halliburton's coiled tubing and hydraulic workover operations with Boots & Coots' well intervention services. Halliburton issued nearly 3.4 million shares of its common stock and paid approximately $142.5 million in cash to Boots & Coots stockholders. The value of $1.27, which was intended to be used to compute the exchange ratio for the stock portion of the total merger consideration, was increased to $1.28, and the $1.73 in cash to be paid per share of Boots & Coots common stock, was reduced to $1.72. Boots & Coots' operating management have been retained to lead Halliburton's Boots & Coots product service line with operating results reported through Halliburton's Completion and Production reporting segment.

SM Energy's latest Bakken shale well, the Nelson 4-29H in McKenzie County had an initial production rate of 671 boepd. The well is located in the Bear Den prospect of North Dakota where the company holds 17,000 acres. Citing the North Dakota Industrial Commission and company data, a September 20 report by Jefferies & Co. Inc. said the this latest well "looks to be a disappointment" when compared to the company's last well in the prospect, the Anderson 12-14H, which had average production of 860 boepd over its first 30 days. SM Energy holds 78,000 total acres in North Dakota.

Weatherford International Ltd. has commenced a $700 million offering of senior notes. Net proceeds are expected to be used to fund the purchase price for the cash tender offer announced separately on September 16, 2010 for up to $700 million of the outstanding 6 5/8% Senior Notes due November 15, 2011 of Weatherford Delaware, 5.95% Senior Notes due June 15, 2012 of Weatherford Delaware, 5.15% Senior Notes due March 15, 2013 of Weatherford Bermuda and 4.95% Senior Notes due October 15, 2013 of Weatherford Bermuda, repay existing short-term indebtedness and for general corporate purposes.

Baker Hughes has acquired Meyer & Associates, a petroleum industry software developer. The acquisition strengthens Baker Hughes' Reservoir Development Services (RDS). With the addition of Meyer & Associates software and expertise, Baker Hughes enhances its capabilities to design hydraulic fracturing simulation plans for unconventional gas, tight formations in the deepwater Gulf of Mexico and carbonates in the Middle East. The software also complements Baker Hughes' geomechanical modeling capabilities.

Inergy LP's wholly owned subsidiary, Inergy Midstream LLC, has agreed to purchase Tres Palacios Gas Storage LLC, the owner of the Tres Palacios natural gas storage facility, for $725 million plus reimbursement of certain capital expenditures and subject to customary net working capital adjustments. Located in Matagorda County, Texas, Tres Palacios is a salt dome natural gas storage facility with approximately 38.4 bcf of working gas capacity including 27.1 bcf of current working gas capacity and 11.4 bcf of incremental working gas capacity scheduled to be placed in service in 4Q10. The facility is expandable by an additional 9.5 bcf of working gas capacity which Inergy expects to place in service by or before 2014. Tres Palacios is connected to a total of ten intrastate and interstate pipelines via a 40 mile, 24" dual-pipe, looped header system offering connectivity to multiple markets including Houston, San Antonio, and the broader Texas markets as well as markets in the Northeast, Midwest, Southeast, and Mid-Atlantic US and Mexico. Approximately 90% of the existing storage capacity is under contract. To fund the acquisition, Inergy has secured an underwritten $700 million bridge financing from Wells Fargo, Barclays Capital, and JP Morgan. Remaining expenses will be initially funded by borrowings on Inergy's existing $525 million secured credit facilities. Wells Fargo Securities LLC acted as financial advisor to Inergy and Barclays Capital acted as financial advisor to the seller in connection with the transaction.

P2 Energy Solutions, a provider of oil and gas software, geospatial data, land management tools and outsourcing, has partnered with Verian Technologies, a provider of automation software in the E&P industry. The partnership will broaden P2's suite of financial, operational accounting and land management software to include Verian's procurement and materials management automation solutions.

Madison Williams and Co., a New York-based integrated capital markets and investment banking firm, has initiated coverage of the US exploration and production industry under senior equity research analyst Andrew Coleman. Coleman's research reports on investment opportunities among both oil-weighted and gas-weighted companies operating in the key resource plays in the US. Madison Williams' top pick for oil-weighted E&P stocks is Continental Resources. Its top pick for gas-weighted companies is Cimarex Energy. The top catalyst-driven name Madison Williams covers is Energy XXI. Madison Williams believes Petrohawk Energy Corp. is the best positioned E&P to benefit from a rally in gas prices. Coleman joined Madison Williams in May 2010 as managing director and Senior Exploration & Production Research Analyst.

Preem AB, Sweden's largest oil company, will implement Allegro Development Corp.'s Allegro 8 platform to manage its oil supply, trading, refining, logistics, sales, and marketing operations. The Allegro 8 software will handle Preem's physical and financial crude oil and products trading, operations, and invoicing processes. Allegro is a provider of energy trading and risk management ETRM solutions for power and gas utilities, refiners, producers, and commodity traders.

Whiting Petroleum Corp. has acquired oil and gas leasehold interests covering 111,966 gross acres (90,174 net acres) in the Montana portion of the Williston Basin from undisclosed sellers. The company believes that the acquired properties are prospective in both the Bakken and Three Forks formations. The undeveloped leasehold acreage is located in Roosevelt and Sheridan Counties within Whiting's Starbuck Prospect area. While an acreage price was not given, a September 7 report from Jefferies & Co. Inc. noted that the Denver-based company typically targets $200-300/acre. "Assuming $75 oil for the remainder of the year, the company should generate cash flow of $525 million versus capex of $500 million. After the buy back of some long-term debt as well as the redemption of its preferred shares, the company should have $650 million remaining on its $1.1 billion revolver. Looking to '11, the company should generate cash flow of $1.1 billion, adequate for a ramp-up in Lewis & Clark as well as for exploration activity in the newly acquired acreage," noted Jefferies.

Nabors Industries Ltd.'s wholly owned subsidiary, Nabors Industries, established the previously announced unsecured revolving credit facility in an aggregate principal amount of $700 million, with an accordion feature that permits additional commitments of up to $150 million. The facility is fully and unconditionally guaranteed by Nabors Industries and matures in four years. The facility may be used to partially fund the previously announced Superior Well Services Inc. acquisition and for general corporate purposes. Participating lenders are UBS Loan Finance LLC, Citibank NA, Deutsche Bank AG New York Branch, Mizuho Corporate Bank (USA), Morgan Stanley Bank NA, Bank of America NA, PNC Bank, National Association, The Bank of Nova Scotia, and HSBC Bank USA NA.

GMX Resources Inc. has reduced its capital expenditure guidance for 2011 and 2012 down from $200 million in each year to $175 million in each year. Capital expenditure guidance for 2010 remains unchanged at $175 million. GMXR's current plan is to continue to run a two rig program. Based on increases in well performance, previously announced production guidance remains unchanged at 17.5 to 19 bcfe for 2010, 28 to 30 bcfe for 2011, and 32 to 34 bcfe for 2012. The company has agreed to extend the sublease of one of its H&P FlexRig 3™ with a major operator for the remaining term of the original rig contract which expires on March 25, 2013. Under the extension, the company's remaining obligation under the rig contract is reduced by $22 million to approximately $5 million which will be paid over the remaining term of the rig contract.

More Oil & Gas Financial Journal Current Issue Articles
More Oil & Gas Financial Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com