Chesapeake, RKI swap Powder River Basin assets
Continuing its quest to refine its portfolio, Chesapeake Energy Corp. has outlined an asset exchange in the Powder River Basin and a repurchase of Utica preferred shares. The Oklahoma City-based company will exchange Powder River Basin assets in Wyoming with RKI Exploration & Production LLC (RKI). Chesapeake will convey to RKI approximately 137,000 net acres and its interest in 67 gross wells, with an average working interest of 22% in the northern portion of the PRB, where RKI is currently designated operator. In exchange, RKI will convey to Chesapeake approximately 203,000 net acres and its interest in 186 gross wells, with an average working interest of 48% in the southern portion of the PRB, where CHK is currently designated operator. In addition to the exchange of acreage, Chesapeake will pay RKI $450 million in cash. Upon closing of the acreage exchange, Chesapeake's PRB acreage will be concentrated in the southern area. It will operate nearly 100% of its 388,000 net acres in the PRB, and will hold an approximate 79% average working interest. "Given that 4.5 mboe/d of net production is being acquired, the average acreage acquisition cost is below the net acreage cost of $6,818/acre," noted Stifel analysts following the announcement. "Given the solid well results by both Chesapeake and others, we think this play could become a bigger focus in 2015 as the company moves from three to 7-9 rigs on the emerging oily play," noted Wunderlich Securities analysts.
Newfield to sell Granite Wash assets for $588M
Newfield Exploration Co. has signed a $588 million purchase and sale agreement for its Granite Wash assets to Oklahoma City-based Templar Energy LLC (operating through Le Norman Operating LLC). Newfield's assets in the Granite Wash include approximately 42,000 net acres and current net daily production is nearly 65 MMcfe/d, of which approximately 60% is natural gas. Proved net reserves at year-end 2013 were approximately 38 MMboe. Newfield intends to use the proceeds from this sale to call its 71/8% Senior Subordinated Notes due in 2018. JP Morgan Securities and Wells Fargo Securities acted as Newfield's financial advisors on the transaction.
Dejour secures $1.5M for Woodrush development
Dejour Energy Inc. has entered into subscription agreements for an equity financing that will result in gross proceeds of US$1.5 million with three institutional investors to support the company's third-quarter 2014 Woodrush development plan. This program encompasses reworking several existing wells to enhance productivity and involves drilling additional wells in an effort to expand production and associated reserves. On March 26, Dejour acquired certain natural gas producing assets and related processing facilities adjacent to its Woodrush oil field located 120 kilometers north of Ft. St. John, British Columbia, Canada. On July 3, the company closed on its acquisition of an additional 24% working interest in the company's legacy Woodrush operation. As of the end of the second quarter, the field produced an average of 475 boe/d. In connection with the offering, the company plans to issue 6,000,000 units at a price of US$0.25 per unit. Each unit consists of one common share of the company and one full warrant to purchase one common share. Each warrant will be exercisable to purchase one common share at an exercise price of US$ 0.35 per share until Dec. 31, 2015, subject to early acceleration.
Vine, Blackstone to acquire Shell's Haynesville assets
Vine Oil & Gas LP, a recently formed exploration and production company, and Blackstone Energy Partners, an affiliate of Blackstone, have a definitive agreement to acquire the Haynesville assets of SWEPI LP and Shell Gulf of Mexico Inc., affiliates of Royal Dutch Shell plc, for $1.2 billion. The assets comprise over 107,000 net acres in North Louisiana in the core of the Haynesville natural gas shale basin. The transaction is expected to close in the fourth quarter of 2014. Evercore and Kirkland & Ellis LLP advised Blackstone and Vine on the transaction.
SM Energy makes Bakken/Three Forks acquisition
SM Energy Co. has signed an agreement with Calgary, Canada-based Baytex Energy Corp. to acquire approximately 61,000 net acres adjacent to its Gooseneck prospect in the Bakken/Three Forks region for $330 million. In 2Q14, the acquired acreage produced an average of approximately 3,200 boe/d. SM estimated the assets have "proved or probable" reserves of 53.5 million boe, 81 percent of which is oil and natural gas liquids. The properties are 90% operated and approximately 70% held by production. The deal includes interests in 126 drilling spacing units, 81 of which will be operated by SM Energy. Working interest for operated spacing units is expected to range between 37.5% - 50.0% . Global Hunter Securities analysts called the deal "impressive" as SM was allowed "to acquire this acreage with very little credit given to the undeveloped acreage ($1.2K/acre after applying $80K/boepd flowing production)."
PDC divests Marcellus JV interest, increases Utica leasehold
PDC Energy Inc. has agreed to sell its 50% interest in PDC Mountaineer LLC (PDCM), a Marcellus joint venture, to Mountaineer Keystone Energy LLC for approximately $250 million. PDC's net pre-tax proceeds from the sale is expected to be approximately $190 million comprised of $150 million in cash and a $40 million note. The transaction includes the buyer's assumption of PDC's share of the firm transportation obligations related to the assets owned by PDCM as well as PDC's share of certain PDCM natural gas hedging positions for the years 2014 and 2015. The assets are approximately 99% natural gas and include an estimated 240 bcf of proved reserves net to PDC, as of December 31, 2013. The assets produced approximately 24 MMbcfe/d net to PDC in the first quarter of 2014. Tudor Pickering Holt acted as advisor on the sale. Through a series of transactions, the company recently added approximately 13,000 net acres, subject to confirmation of title, in the liquid-rich windows of the Utica Shale play in southeast Ohio. The cost for the additional acreage is approximately $35 million which the company expects to fund from its existing 2014 capital budget of approximately $647 million. PDC's total acreage position in the Utica Shale with the additional acreage increases from approximately 54,000 to 67,000 net acres. Total gross horizontal well inventory is projected to increase from approximately 300 to 350 locations.
Magnum Hunter to relocate
Magnum Hunter Resources Corp. plans to relocate its corporate headquarters from Houston to the Dallas, Texas, area, effective on or about Dec. 31. The company's finance, treasury, and reservoir engineering departments will be moving to the Dallas area as part of the corporate headquarters relocation. Additionally, the company plans to consolidate its accounting department, which is currently located in Grapevine, Texas, to the new corporate headquarters. Eureka Hunter Pipeline LLC, a majority-owned subsidiary of the company, will continue to maintain its corporate headquarters in Houston.
Hess to pursue MLP
Hess Corp. intends to pursue the formation and initial public offering of a master limited partnership (MLP). The company previously stated its intention to monetize its midstream assets in the Bakken in North Dakota. Hess intends to use the MLP as the primary midstream vehicle to support its Bakken production growth. Interests are initially expected to come from Hess's natural gas processing plant located in Tioga, North Dakota; Hess's rail loading terminal in Tioga, North Dakota, along with the associated rail cars; Hess's crude oil truck and pipeline terminal located in Tioga, North Dakota; and Hess's propane storage cavern and related rail and truck loading and storage terminal located in Mentor, Minnesota. Hess will own the general partner of the MLP, all of its incentive distribution rights, and a majority of its limited partner interests following completion of the initial public offering. Hess expects the MLP to file a registration statement with the Securities and Exchange Commission in the fourth quarter of 2014 and, subject to market conditions, expects to make an initial public offering of common units representing limited partner interests in the MLP in the first quarter of 2015.
Gastar Exploration sees base increase to $145M
Gastar Exploration Inc. reported that the borrowing base under its revolving credit facility has been increased to $145 million. This represents a $25 million increase over Gastar's previous borrowing base effective March 2014. Currently, Gastar has drawn $20 million under the revolving credit facility, resulting in $125 million of unused borrowing capacity. The company "put nine wells (gross) on production in 1H:14 and expects to add 36 wells to production in the back half of the year," noted analysts at Global Hunter Securities following the announcement. The "36 planned wells should contribute to additional reserve growth and future borrowing base increases, further enhancing GST's liquidity heading into 2015," they continued.
Report: US E&P Stable Due To Robust Crude Oil Prices
The outlook for the US exploration and production (E&P) sector is relatively stable for the remainder of 2014 and heading into 2015, according to a report published Aug. 7 by Standard & Poor's Ratings Services. "We believe industry performance will generally be strong during this time, because we expect ongoing capital investment to continue to support production growth amid a favorable operating environment," said Standard & Poor's Credit Analyst Mark Salierno. "Specifically, we expect crude oil prices to remain robust and production growth in the E&P sector to be largely oil-based." Natural gas prices rose in early 2014, following a harsh and prolonged winter, which led to high levels of natural gas consumption for residential and commercial heating purposes in response. With storage levels largely replenished, prices have since drifted back to pre-winter levels. Through the remainder of the year, Standard & Poor's expects that supply will be more than sufficient to meet demand, and that natural gas prices will stay at levels that prohibit production restarts and at which dry gas production is only nominally profitable.
ShawCor acquires shares of Desert NDT
ShawCor has completed the acquisition of all of the outstanding shares of Desert NDT LLC for a total consideration of approximately US$260 million. Desert NDT is a US provider of nondestructive testing, integrity management, and inspection services for gathering pipelines and midstream infrastructure. Desert will operate as ShawCor's ninth division. ShawCor Ltd. is a global energy services company specializing in products and services for the pipeline and pipe services and the petrochemical and industrial segments of the oil and gas industry.
Landmark acquires Neftex
Landmark Software and Services, a Halliburton business line, has acquired Neftex Petroleum Consultants Ltd., a UK-based company specializing in sequence stratigraphy-based products and consulting for subsurface risk reduction. The Neftex Earth Model Base Module provides tectonic and stratigraphic data and framework interpretations needed to underpin regional exploration. Additional Neftex Earth Model Modules deliver supplementary licensed datasets for each region across the globe. The content provides operators with the ability to compare stratigraphic sequences for a particular basin with other basins around the world during the same time period.
Blacksands to reorganize international subsidiaries
The Blacksands Pacific Group Inc. has completed the reorganization of its international subsidiary business and operations. The international subsidiary parent corporation - Blacksands Pacific International Ltd. - will relocate from Hong Kong to Bermuda. However, its International energy trading subsidiary (Blacksands Pacific Energy Services Ltd.), its international oilfield services subsidiary (Blacksands Pacific E&P Services Ltd.), and its regional parent corporations (Blacksands Pacific Ghana Ltd., Blacksands Pacific Equatorial Guinea Ltd., and Blacksands Pacific Cote D` Ivoire Ltd.) will remain in Hong Kong. The international subsidiary business and operations focuses on Blacksands Pacific's interests, assets, and operations outside of the US and Canada.
China Rongsheng acquires stakes in Kyrgyzstan oil fields
China Rongsheng Heavy Industries Group Holdings Ltd. reports that Ocean Sino Holdings Ltd., an indirectly wholly owned subsidiary of the company, has entered into a share purchase agreement with New Continental Oil & Gas Co. Ltd. Pursuant to the share purchase agreement, Ocean Sino Holdings Ltd. conditionally agreed to acquire a 60% equity interest in Central Point Worldwide Inc., a wholly owned subsidiary of New Continental Oil & Gas Co. Ltd., at the consideration of $281.7 million (HKD 2.184 billion), which will be satisfied by the allotment and issue of 1,400,000,000 consideration shares of the company. The acquisition involves four oil fields adjacent to the Fergana Valley of Kyrgyzstan, comprising five oilfield zones - namely, Maili-Su IV, Eastern Izbaskent, Izbaskent, Changyrtash, and Chigirchik. Under the agreements entered into with the national oil company of Kyrgyzstan and a project company (a subsidiary indirectly owned by Central Point Worldwide Inc., the project company), the project company was granted rights to cooperate with the national oil company of Kyrgyzstan in the operation of the five oilfield zones. Currently, all five oilfield zones have gradually begun exploration.
Geokinetics buys a CGG business unit
Geokinetics Inc., an international land and shallow water seismic company, has signed a binding agreement with CGG for the purchase of CGG's North American Land seismic contract acquisition business. CGG will contribute its North America Land Contract activities (excluding its land multi-client and monitoring businesses) in exchange for a minority equity stake in Geokinetics. CGG, based in Paris, France, is a fully integrated geoscience company that provides geological, geophysical, and reservoir capabilities to its bases of customers, primarily from the oil and gas industry. The transaction is expected to close by the end of October 2014.
Marathon Oil signs EPSC for Gabon offshore Block G13
Marathon Oil Corp., through its wholly owned subsidiary Marathon Oil Exploration Ltd., has signed an exploration and production sharing contract (EPSC) for Gabon offshore Block G13, which was named Tchicuate upon signing, located in a deepwater, pre-salt play. Marathon was the high-bidder on the block in Gabon's licensing round in October 2013. The Tchicuate Block encompasses 275,000 acres with water depths ranging from 3,250 feet to 8,250 feet. It is located 50 miles offshore the coast of Gabon and near proven shallow-water, pre-salt oil discoveries. Marathon Oil holds a 100% participating interest and operatorship in the block. In the event of development, the Republic of Gabon will assume a 20% financed interest in the contract upon commencement of production. The State holds additional rights to participate in the block in the future as a co-investor. Marathon Oil also holds a 21.25% working interest in the non-operated Diaba License G4-223, encompassing 2.2 million gross acres, where the Diaman-1B discovery was made in 2013.
Alta Mesa's borrowing base increased to $350M
Alta Mesa Holdings LP reports that its lenders have completed a redetermination of the company's borrowing base. Pursuant to the terms of the reserve-based revolving line of credit facility, the borrowing base has been increased by the lenders to $350 million. This represents an increase of $65 million over the previous level of $285 million. The credit facility is provided by a syndicate of ten banks agented by Wells Fargo Bank NA and co-agented by Union Bank NA.
LINN agrees to buy Hugoton Basin assets for $340M
LINN Energy LLC and LinnCo LLC have signed a definitive purchase agreement to acquire assets in the Hugoton Basin from Pioneer Natural Resources Co. for a contract price of $340 million. The assets are currently producing approximately 40 MMcfe/d, approximately 60% of which is natural gas, with a shallow base decline of approximately 6%. Total proved reserves are estimated to be approximately 340 bcfe (approximately 95% PDP). The asset package is comprised of approximately 235,000 net acres, all held by production, with approximately 1,200 producing wells. LINN has identified 180 future drilling locations and 150 recompletion opportunities. The company anticipates the acquisition will close in the third quarter of 2014 and will be financed ultimately through the sale of producing and non-producing acreage in LINN's portfolio.
