Chesapeake sells some Marcellus, Utica assets for $5.375B
Chesapeake Energy Corp. has agreed to sell assets in the Southern Marcellus Shale and a portion of the Eastern Utica Shale in West Virginia to Southwestern Energy Co. for aggregate proceeds of $5.375 billion ($6,235/acre adjusted for current production). The transaction, which is subject to certain customary closing conditions, including the receipt of third-party consents, is expected to close in the fourth quarter of 2014. Chesapeake has agreed to sell approximately 413,000 net acres and approximately 1,500 wells in Northern West Virginia and Southern Pennsylvania, of which 435 are in the Marcellus and Utica formations, along with related property, plant and equipment. Average net daily production from these properties was approximately 56,000 barrels of oil equivalent (boe) during the month of September, consisting of 184,000 Mcf of gas, 20,000 barrels of natural gas liquids and 5,000 barrels of condensate. As of December 31, 2013, net proved reserves associated with these properties were approximately 221 million barrels of oil equivalent (MMboe). The deal, called "transformational" by Baird Equity Research analysts, "substantially increases SWN's Appalachian footprint, more than doubling net acreage from 292,446 to 705,446 and increasing proved reserves by 70% to 3,289 bcfe," they noted. Southwestern expects to commence production with four to six rigs in 2015, the analysts continued, increasing even more to 11 rigs by 2017.
Apache sells certain non-core assets
Apache Corp. has agreed to sell non-core southern Louisiana and certain Anadarko Basin oil and gas assets for $1.4 billion in two separate transactions. In southern Louisiana, Apache agreed to sell its working interest in 90,000 net acres. These mature fields, which are characterized by high decline rates and short reserve lives, produced 21,000 boe/d (62% gas and NGLs) net to Apache during the third quarter of 2014. Apache will retain its 275,000 mineral acres in South Louisiana. In a separate transaction in the Anadarko Basin, Apache agreed to sell 115,000 net acres in a portion of its Stiles Ranch field in Wheeler County, Texas, and in its Mocane-Laverne and Verden fields in western Oklahoma. Net production from these properties averaged 26,000 boe/d (83% gas and NGLs) during the third quarter of 2014. Both transactions have an effective date of Oct. 1, and are expected to close during the fourth quarter of 2014. RBC Richardson Barr acted as the financial advisor on the southern Louisiana transaction, and Wells Fargo Securities LLC acted as the financial advisor on the Anadarko Basin transaction.
J-W Operating buys properties from BHP
J-W Operating Co., recently No. 24 in the OGFJ100P ranking of privately-held companies, has acquired oil and gas properties in Northern Louisiana from BHP Billiton. The properties are located in the Elm Grove and Caspiana fields and include interests in 1,200 wellbores and associated gathering lines and compressor facilities. By the addition of 700 active wells that are producing in the Cotton Valley formation, a conventional oil and gas field, the acquisition will result in a significant and immediate increase in production. The acquisition does not include any of BHP's unconventional Haynesville shale assets. The terms of the transaction were not disclosed.
Magnum Hunter Resources divests certain Divide County, ND assets
Magnum Hunter Resources Corp. subsidiary Bakken Hunter LLC has sold certain non-core, non-operated working interests in specific oil and gas properties located in Divide County, North Dakota to an independent exploration and production company for $84.7 million in cash ($1,880/acre adjusted for 720 boe/d of production). The sold properties consist of a non-operated working interest in approximately 105,661 gross (12,500 net) leasehold acres. Year-to-date proceeds from divestitures of non-core assets completed have exceeded $200 million and more of the company's Divide County, ND assets are expected to be sold as management intends to monetize the approximately 75,000 remaining net acres in the Williston Basin. The company intends to reallocate resources to its core operations in West Virginia and Ohio.
Clayton Williams enters farm-out agreement
Clayton Williams Energy Inc. has entered into a farm-out and exploration agreement with Caza Oil and Gas Inc. covering a portion of the company's 71,000 net acre resource play in Reeves County, Texas. All of the 15,000 net undeveloped acres covered by this agreement are located along the western flank of the company's acreage block. The company has drilled no horizontal Wolfcamp wells within the farm-out area. Under the terms of the agreement, Caza will pay 75% of the costs of the initial horizontal Wolfcamp well to earn 50% of the acreage associated with that well (either 640 or 1,280 gross acres, depending on lateral length). After the initial well, Caza will pay 100% of the costs of all other carried wells (as defined in the agreement) to earn 75% of the associated acreage. The company will pay its 25% of the cost to drill and complete all density wells drilled on previously earned acreage. In addition to the initial well, Caza is obligated to drill and complete two additional horizontal Wolfcamp wells in the farm-out area by Dec. 31, 2015. Caza is subject to a penalty of $1.6 million per well for any obligation well not drilled. Caza must also drill a minimum of two carried wells per year in order to continue participation in the agreement beyond Dec. 31, 2015.
Intervale invests in American Disposal Services
Intervale Capital has acquired a majority stake in American Disposal Services (ADS), which provides disposal of injectable drilling and production waste in the Eagle Ford and Haynesville shale plays, with operating facilities in Frio, Atascosa, Fayette, and Newton counties in Texas. ADS was founded in 1993 by J.D. "Doug" Ivey. At the closing of this transaction, Doug Ivey was promoted to senior vice president of ADS, where he will oversee a team focused on designing and building additional facilities throughout the US. Concurrent with the transaction, Gabriel Rio, an oilfield waste executive, was appointed president and CEO. He is joined by Frank Schageman, a former CFO of multiple oilfield service businesses, who will serve as CFO. Transaction terms were not disclosed. The Hancock Firm LLC acted as financial advisor, and Winstead PC provided legal counsel to American Disposal Services. Wells Fargo's Energy Group provided acquisition financing.
BP invests in two exploration blocks in Egypt
BP Egypt has been awarded two new exploration blocks as a result of the 2013 EGAS bid round. BP and its partners have committed to invest a total of $240 million in the blocks over different phases. Block 3-North El Mataria is BP's first entry into the onshore Nile Delta. The block is located in the northeastern part of the Nile Delta cone, 57 kilometers to the west of Port Said. BP will operate the block with 50% equity, and Dana Gas of Abu Dhabi will hold the remaining 50% working interest.Block 8-Karawan Offshore is located in the Mediterranean Sea, in the northeastern part of Egypt's economic waters. The block lies at 220 kilometers to the northeast and 170 kilometers to the northwest of Alexandria and Port Said, respectively. BP will have 50% equity, and the block will be operated by Eni, which holds the remaining 50%. The program will include 3D seismic and three exploration wells in each of the onshore and offshore blocks in phases over 6-8 years.
Forest shareholders approve merger
Forest Oil Corp. shareholders have approved, by majority vote of the outstanding shares of Forest, all of the proposals that were presented with respect to the previously announced business combination transaction with Sabine Oil & Gas LLC at the company's special meeting of shareholders held Nov. 20. Forest anticipates that the transaction will close in December.
FTSI to acquire J-W Wireline
FTS International (FTSI) has signed a definitive agreement to acquire J-W Wireline Co., a subsidiary of J-W Energy Co., an independent cased-hole wireline company in North America. The integration of FTSI's existing wireline division and J-W Wireline will expand FTSI's wireline service and geographical reach. transaction is expected to close by the end of 2014. FTSI intends to pay for the acquisition from cash on hand and existing credit facilities. The terms of the transaction were not disclosed. J-W Wireline's current president, Perry Harris, will lead the expanded FTSI wireline division.
KKR partners to develop East Texas Eaglebine
KKR has become a non-operated working interest partner with Anadarko Petroleum Corp. in the development of Anadarko's acreage in the Eaglebine play located primarily in Brazos, Burleson, and Robertson counties, Texas. Through long-term, full field development, KKR expects to participate in more than 500 future horizontal wells. KKR is making the investment in the Partnership primarily through its Energy Income and Growth Fund I (EIGF). With this joint venture, "KKR will receive 36,000 net acres and 40% WI in 33 existing wells in exchange for $442 million, which equates to an unadjusted transaction multiple of ~$12,300/acre," noted Baird Equity Research analysts. The deal, KKR's first investment with Anadarko and its first investment in the Eaglebine, should prove positive for nearby operators currently under pressure on concerns of larger than expected declines in the region, the analysts said.
NRC acquires Emerald Alaska
National Response Corp. (NRC), a portfolio company of JF Lehman & Co., has completed the acquisition of Emerald Alaska LLC from Emerald Services Inc. NRC is a commercial provider of United States Oil Pollution Act of 1990 regulatory compliance services as well as a global provider of specialized environmental and emergency response solutions. Emerald Alaska provides environmental and emergency response solutions to the oil and gas industry in the state of Alaska. Senior debt financing for the acquisition was arranged by BNP Paribas Securities Corp. (as sole lead arranger) and Jones Day LLP provided legal counsel to NRC.
NeoFirma acquires MineralFile
NeoFirma, a cloud-based software provider to independent oil and gas exploration and production companies, has acquired Dallas-based MineralFile, a cloud-based software solution for managing mineral royalty revenue and associated mineral deeds, leases and wells. The acquisition supports NeoFirma's expansion to help companies manage non-operated investments in both working and royalty interests. NeoFirma's cloud based well management platform includes drilling, production and non-operated management capabilities to independent E&P companies. The company was founded in 2005, is backed by T. Boone Pickens and supports over 70 clients.
Magnum Oil Tools releases dissolvable frac plug
Magnum Oil Tools International has released the industry's first dissolvable frac plug, the Magnum Vanishing Plug (MVP). The MVP dissolves with the presence of temperature at a predictable rate. Currently, the preferred method of completing unconventional horizontal wells is a plug-and-perf process whereby frac plugs are installed in a wellbore to isolate each frac stage. Once all stages are completed, a well intervention process is performed to remove the plugs from the wellbore. The MVP was developed to eliminate these interventions. Magnum is currently making this technology available to a select group of operators in shale plays across the US.
Mid-Con Energy closes Eastern Shelf acquisition, increases borrowing base
Mid-Con Energy Partners LP has closed its acquisition in the Eastern Shelf of the Permian Basin for $120 million. With the acquisition, Mid-Con Energy acquires a 96% working interest and will assume operatorship upon closing. The Eastern Shelf comprises approximately 230 producing wells. Concurrent with closing of the acquisition, MCEP also reports an increase in its borrowing base to $240 million, up 26% from the $190 million in previously established commitments. This increase became effective on Nov. 17, with Royal Bank of Canada acting as the administrative agent. Participant lenders include Bank of Nova Scotia, BOKF NA, Comerica Bank, Wells Fargo Bank NA, Frost Bank, and Union Bank. Mid-Con Energy's next regularly scheduled bi-annual redetermination will occur on or about April 30, 2015.
Dejour retains Casimir Capital
Dejour Energy Inc. has updated current progress toward financing the Kokopelli project. The company has retained Casimir Capital LP, a full service energy focused investment bank, to assist Dejour with securing debt financing to support the Kokopelli project development in 2015, 2016, and 2017. Dejour expects to participate in a 2015 drilling campaign that includes at least 10 additional wells. As per previous reports, the operator must deploy development capital for the 2014 program which includes drilling and completing nine wells to earn its 65% working interest (WI) in the 2,200-acre property. The program is under way and on schedule. Upon this deployment of capital, Dejour will retain a 25% WI in the Kokopelli project. Together, the WI partners expect to develop the area which could hold 250 potential drilling targets.
AENO updates on Oklahoma acquisitions worth $251M
American Energy - NonOp LLC (AENO), an affiliate of American Energy Partners LP, has closed a series of transactions with Double Eagle Energy Holdings LLC and several additional parties to acquire non-operated working interests with 1,800 barrels of net oil equivalent of daily production in the SCOOP and STACK resource plays in southern and central Oklahoma. The properties, which are primarily located in the counties of Canadian, Carter, Garvin, Grady, Kingfisher, Love, and Stephens, were acquired for an aggregate purchase price of $251 million. In conjunction with the acquisitions, AENO has secured a $250 million credit facility led by MUFG Union Bank NA. The credit facility has an initial borrowing base of $50 million. AENO believes it has established a premier, diversified position in the SCOOP and STACK resource plays across 543 existing or potential spacing units with significant exposure to the highly productive Woodford and Meramec shale formations and the emerging Goddard/Springer shale formation, which has recently yielded 24-hour initial production rates greater than 1,100 boe per day resulting in average single well gross estimated ultimate recoveries of 940 mboe (84% liquids). AENO's lead equity investor is the Energy & Minerals Group, with additional equity provided by AENO's management team. Double Eagle is a company owned by funds affiliated with Apollo Global Management LLC.
OFS closes additional $40M in Fund II
OFS Energy Fund (OFS) has closed on an increase in the committed capital to OFS Energy Fund II. OFS was seeking to increase the size of Fund II from $90 million to $130 million in order to support existing Fund II portfolio company growth initiatives. The $40 million tranche was offered to existing Fund II investors pro rata and was oversubscribed. OFS is now actively managing a combined $305 million across Fund II and Fund III. OFS raised the follow-on commitments in order to continue to grow Fund II's six active portfolio companies for the remainder of Fund II's life. Some of the additional funds have been invested into Davis Chemical Services in October. Another Fund II portfolio company currently has a significant acquisition under signed letter of intent that is expected to be funded using the additional commitments in early December.
Long-term study of Mexican oil spill may reveal future Deepwater Horizon impacts
The Harte Research Institute (HRI) for Gulf of Mexico Studies at Texas A&M University-Corpus Christi will receive $1.25 million over the next three years to work with Mexican colleagues in the southern Gulf of Mexico to look for residual impacts from the Ixtoc I oil spill of 1979-1980 on coastal areas, fisheries, and the deep sea. This long-term study will reveal what impacts may be in store 30 years after the 2010 Deepwater Horizon spill. On Nov. 14, the Gulf of Mexico Research Initiative (GoMRI) awarded $140 million to 12 research consortia to conduct scientific studies of the impacts of oil, dispersed oil, and dispersant on the Gulf of Mexico ecosystem and public health. These research investments focus on improving fundamental understanding of the implications of events such as the Deepwater Horizon spill, and on developing improved spill mitigation, oil and gas detection, characterization and remediation technologies. HRI will work with the Center for Integrated Modeling and Analysis of Gulf Ecosystems (C-IMAGE) consortium, led by the University of South Florida. C-IMAGE received $20.2 million in this latest round of funding to support research over the next three years by 19 collaborating institutions, in five countries including Mexico, the Netherlands, Germany, and Canada.
