IHS Herold Inc., the independent research firm, has provided OGFJ with updated production data for our periodic ranking of US-based private E&P companies. The rankings provided are based on operated production only within the US. In this installment, the data provided is year-to-date 2008 production data.
Management changes
Austin, Tex.-based Texas American Resources Co. (TARC) has made a few management changes since the October issue. First, the company named Tim Taylor COO. He joined the company in August 2008 and has 37 years experience in the industry. He received a bachelor’s, a master’s, and a PhD from The University of Texas at Austin.
Additionally, the company has appointed Tom Rogers as vice president of operations - northern region. He joined the company in June 2005 and previously served as regional manager of operations. Rogers holds a bachelor’s degree from Oklahoma State University.
The privately-held company focuses on the acquisition and exploitation of proved or near proved properties in the Mid-Continent, Gulf Coast, and Rocky Mountain regions.
TARC operates roughly 400 wells in Texas, Wyoming, and Colorado. The company’s total proved net reserve base of roughly 32 MMboe is 30% developed and 43% oil.
Another company, privately-held Red Mesa, is working to enhance its oil and natural gas operations in La Plata County, Colo.
The Colorado-based oil and natural gas operator opened a new 1,500-square foot field headquarters in Marvel, Colo. near its more than 40 producing wells. In addition, the company has reworked 21 wells to date and completed improvements to its 6-mile long natural gas pipeline.
“Improving the company’s infrastructure, safety protocols and environmental protection practices aligns Red Mesa with its long term expansion plans in the region,” commented Rich Larson, Red Mesa’s vice president, energy asset management.
Red Mesa Energy Co. was founded in 2007. Its oil and natural gas production is derived from reworking legacy wells and through the drilling of new wells.
Investments
Laredo Petroleum, a private company headquartered in Tulsa, Okla., closed a second round of equity financing of up to $300 million with Warburg Pincus LLC and Laredo Petroleum’s senior management team.
The new funding follows an earlier $300 million equity commitment by Warburg Pincus in July 2007. The company plans to use the funds to support continued growth with the execution of its ongoing program of acquisition, exploration, and development of oil and gas properties in the Mid-Continent.
In the near-term, Laredo expects to continue an aggressive exploration and development drilling program over its Texas Panhandle and Oklahoma Anadarko Basin properties. In addition, Laredo’s new Midland, Tex., office is positioned to begin an active exploration program in the Permian Basin. Laredo currently manages a leasehold portfolio of roughly 250,000 gross acres and 145,000 net acres.
Another investment in the private sector came from GE Energy Financial Services. The company formed a partnership with TriTex Energy LLC to acquire proved oil and gas reserves in southeastern New Mexico for $31 million.
GE Energy Financial Services is investing $30 million as the 98% limited partner. Addison, Tex.-based TriTex is investing the balance as the 2% general partner and operator. The new alliance, TriTex Energy A LP, plans to invest an additional $14 million to develop and produce proved reserves over the next two years.
In another notable deal, NGP Capital Resources Co. closed a $30 million senior secured credit facility with Black Pool Energy Partners LLC, a private oil and gas producer based in Houston. Proceeds will be used by BPEP to develop certain properties. BPEP currently holds interests in assets located offshore Texas and onshore in southern Louisiana.
NGP Capital Resources acted as agent and sole lender. Initial availability under the facility is $13.5 million with roughly $0.3 million funded at closing.
Transactions
In the last OGFJ100P listing in October, we mentioned the merger agreement between privately-held Chaparral Energy Inc. and publicly-held Edge Petroleum Corp. in an all stock deal. Just before press time, the companies agreed to terminate the deal upon fears that the economic climate and lack of financing would make a satisfactory completion of the transaction unlikely. The merger required Oklahoma City-based Chaparral to refinance its existing $600 million borrowing-based revolver to $1 billion. Chaparral has struggled with this and the minimum pro forma availability of $325 million required by Magnetar Financial LLC, a privately-held investment firm.
Magnetar was to invest $150 million in convertible preferred stock in Chaparral and was represented by Willkie Farr & Gallagher LLP. The termination agreement has Magnetar paying Chaparral $5 million, of which $1.5 million will be paid to Edge at Chaparral’s direction.
The October 2008 issue was the last listing of then No. 14-ranked Taylor Energy and then No.8-ranked Henry Petroleum. In March of 2008, Scotia Waterous advised Taylor on the sale of its Gulf of Mexico shelf oil and gas properties to South Korea’s KNOC and Samsung Corp. for an undisclosed amount. Later in the summer, Concho Resources paid roughly $560 million for Henry Petroleum.
On the flipside, one of the biggest transactions in the space in the latter half of 2008 was put into motion by Dallas-based Harding Energy Partners LLC. At the end of September, the company acquired all core Barnett Shale assets, including those of ExxonMobil, which were held by DDJET Ltd. LLP. Immediately following the acquisition, the company sold the holdings to Chesapeake Energy Corp.
Harding Energy Partners LLC is a spin-off of Harding Co.
Another transaction in the space involves Petroflow and privately-held Patron Energy LLC. The companies have executed a formal Joint Venture Agreement to mutually develop the Hunton Resource Play and other formations in Oklahoma.
This JVA will allow Petroflow to own working interests that vary between 65% and 70% in three new project areas initiated by Oklahoma City-based Patron. Advantages to Petroflow include leased mineral rights in roughly 4,600 net acres of land in one of the project areas; plus existing evaluations of the geological potential within the other areas. In consideration, Petroflow paid Patron $1 million. The purchase price represented reimbursement to Patron for 70% of its costs in the three project areas.
Petroflow, with Patron, now holds ‘right of first refusal’ options until June 2009 on any projects proposed by its geological team; however, Petroflow is not obligated to participate.
Richard Azar, who is a director of Petroflow, owns 20% of Patron. Azar intends to participate in the activities to be undertaken pursuant to this JVA with working interests of roughly 6%. Azar abstained from voting on the approval of this JVA.
Finally, as mentioned in the October 2008 100P update, privately-held Antero Resources was to be assigned by Dominion E&P drilling rights to acreage in the Marcellus Shale prospect. Originally, it was set to be near 205,000 acres, but due to the financial crisis, Antero couldn’t come up with follow-up financing so the acreage was scaled back to roughly 114,259 acres. Total price was $347 million ($205 million after tax), or about $3,037 per acre.
OGFJ and IHS Herold Inc. will continue to update the information as new production figures become available. Future issues of OGFJ will present news and relevant information regarding individual companies, including a breakdown of liquids and gas production.
Click here to download a .pdf of the 2008 Year-to-date production ranked by BOE
