ExxonMobil to double Permian resources with $6.6B buy from Bass family
Exxon Mobil Corp. will more than double its Permian Basin resource to six billion barrels of oil equivalent through the acquisition of companies owned by the Bass family of Fort Worth, Texas, with an estimated resource of 3.4 billion barrels of oil equivalent in New Mexico's Delaware Basin. ExxonMobil will make an upfront payment of $5.6 billion in ExxonMobil shares, and a series of additional contingent cash payments totaling up to $1 billion, to be paid beginning in 2020 and ending no later than 2032 commensurate with the development of the resource. The acquired companies, which include the operating entity BOPCO, hold about 275,000 acres of leasehold, and production of more than 18,000 net oil equivalent barrels per day, about 70% of which is liquids. This includes about 250,000 acres of leasehold in the Permian Basin, the bulk of that in contiguous, held-by-production units in the New Mexico Delaware Basin, with more than 60 billion barrels of oil equivalent estimated in place. In a note to investors, Jefferies said the transactions "appear to offer good value to Exxon," noting that "Assuming $40k/flowing barrel and no value to the acreage outside the Delaware Basin, the initial price paid is equivalent to about $19.5k/acre. This is an attractive price relative to other recent transactions in the broader Permian that have averaged near $33k/acre (excluding the EOG acquisition of Yates Petroleum). Including all future potential contingent payments on an undiscounted basis brings the transaction to $23.5k/acre."
Noble Energy to acquire Clayton Williams Energy
Noble Energy Inc. has agreed to acquire Clayton Williams Energy Inc. for $2.7 billion in Noble Energy stock and cash. The deal includes 71,000 contiguous net acres in the core of the Southern Delaware Basin in Reeves and Ward counties in Texas (directly adjacent to Noble Energy's existing 47,200 net acres). In addition, there are an additional 100,000 net acres in other areas of the Permian Basin. 80% average working interest in the Southern Delaware position, with more than 95% of the acreage operated. The acreage includes 2,400 identified Delaware Basin gross drilling locations that target the Upper and Lower Wolfcamp A zones, along with the Wolfcamp B and C. The average lateral length of the future locations is 8,000 feet. Total estimated net unrisked resource potential on the acreage is over 1 billion barrels of oil equivalent in the Wolfcamp zones, with upside potential in other zones. Noble Energy's outlook is to increase production on the acquired assets from 10 MBoe/d currently (70% oil) to approximately 60 MBoe/d in 2020 in the company's base plan. The acquired Delaware Basin acreage is largely undedicated to third-party oil and gas gathering and water systems, and approximately 12,500 acres are dedicated from a third-party operator. Existing midstream Delaware Basin assets include over 300 miles of oil, natural gas, and produced water gathering pipelines. Clayton Williams Energy shareholders will receive 2.7874 shares of Noble Energy common stock and $34.75 in cash for each share of common stock held. In the aggregate, this totals 55 million shares of Noble Energy stock and $665 million in cash. The value of the transaction, based on Noble Energy's closing stock price as of January 13, 2017, is approximately $139 per Clayton Williams Energy share, or $3.2 billion in the aggregate, including the assumption of approximately $500 million in net debt. Noble intends to fund the cash portion of the acquisition through a draw on its revolving credit facility. As of the end of 2016, the company's $4 billion facility was completely undrawn. The company also anticipates retiring outstanding debt of Clayton Williams Energy assumed as part of the transaction at or following the closing. Noble expects this, along with general and administrative cost elimination, will result in annual cost synergies to the company of approximately $75 million. Funds managed by Ares Management LP, which owned approximately 35% of the outstanding shares of Clayton Williams Energy as of December 31, 2016, have entered into a support agreement to vote in favor of the transaction. Following completion of the transaction, shareholders of Clayton Williams Energy are expected to own approximately 11% of the outstanding shares of Noble Energy. Closing is expected in the second quarter of 2017 and is subject to customary regulatory approvals, approval by the holders of a majority of Clayton Williams Energy common stock, and certain other conditions. "Valuing existing production of 10 MBoe/d (70% oil) at $35M/Boe/d and assigning $0 for 100M net acres located outside of the SDB core (primarily in Glasscock and Sterling counties, TX) implies a purchase price of ~$40M/acre. Deducting $600MM for midstream assets suggests $31M/acre, in line with recent transactions in the basin," said Stifel analysts after the announcement.
WPX increases Delaware Basin inventory
WPX Energy has agreed to pay $775 million to Tulsa, OK-based Panther Energy Company II LLC and Carrier Energy Partners LLC to acquire assets Permian Basin assets that would increase the company's Permian operations to more than 120,000 net acres. The acquisition includes approximately 6,500 Boe/d (55% oil) of existing production from 23 producing wells (17 horizontals), two drilled but uncompleted horizontal laterals, 18,100 net acres in Reeves, Loving, Ward and Winkler counties in Texas and 920 gross undeveloped locations in the geologic sweet spot of the Delaware Basin. WPX expects the incremental cash flow from the purchase to fund the existing two-rig program on the acquired acreage. This will bring WPX's rig count in the Permian to seven. WPX plans to close the cash transaction using a combination of proceeds from an equity issuance and cash on hand. Including the Panther transaction, WPX has added approximately 32,000 net acres in the core of the Delaware Basin at an average cost of $18,600 per acre since its purchase of RKI Exploration and Production in August 2015. The average cost excludes flowing production. On a pro forma basis, WPX is now targeting 30% oil growth and 25% overall production growth in 2017, along with a targeted net debt/EBITDAX ratio at the lower end of the company's previously announced range of 2.0x to 2.5x by year-end 2018. The forecast targets 52,000-56,000 barrels of oil per day in 2017. This estimate includes nine months of production associated with the bolt-on purchase. Tudor, Pickering, Holt & Co. acted as financial advisor to WPX on the Panther and Carrier bolt-on transaction.
Anadarko sells Eagle Ford assets to Sanchez Energy and blackstone for $2.3B
Anadarko Petroleum agreed to sell its Eagle Ford Shale assets in South Texas for approximately $2.3 billion to Sanchez Energy Corp. and Blackstone Group LP. Anadarko's sponsored MLP, Western Gas Partners LP, will continue to own and operate its midstream assets in South Texas and is expected to benefit from drilling commitments made by the buyers in conjunction with the transaction. The divestiture includes approximately 155,000 net acres primarily located in Dimmit and Webb counties. At the end of 4Q16, sales volumes from these properties totaled approximately 45,000 barrels of liquids per day and approximately 131 million cubic feet of natural gas per day. The transaction is expected to close in the first quarter of 2017, subject to customary closing conditions and adjustments. Anadarko Petroleum received approximately "$34,400 per flowing barrel which reflects its operatorship premium to the $29,365 per flowing barrel that SM received for its recent divestiture (includes midstream," noted Cowen and Company analysts in a note to investors following the news. The deal price "appears in-line with investor expectations following SM's recent deal," the analysts said, noting expectations for Anadarko to end the first quarter of 2017 with over $6 billion in cash "providing it with the flexibility to accelerate drilling beyond 12% - 14% 5-yr oil CAGR or to add opportunistically to its core plays."
PDC Energy expands Permian footprint with Delaware Basin deal close
On December 30, 2016, PDC Energy Inc. closed on a deal to expand its Permian Basin footprint, acquiring approximately 4,500 net acres in Reeves and Culberson Counties, Texas, from Fortuna Resources Holdings LLC, for approximately $118 million in cash. PDC's working interest in the acquired leasehold is 100% and PDC expects to operate 100% of the properties. The acquired properties are concentrated in the company's central acreage block contiguous with the company's acreage from the recently closed acquisition of approximately 57,000 net acres in Reeves and Culberson Counties. Current net production associated with the acquisition is approximately 300 boe/d. Also included is a drilled, but uncompleted (DUC) horizontal well, and a salt water disposal well. Assuming $35M/Boe/d for 300 Boe/d, said Stifel analysts in a note following the announcement, the implied purchase price is ~$24M/acre, in line with recent purchases in the area, they continued. PDC Energy estimates the acquired acreage contains 75 gross one-mile horizontal drilling locations, based on four wells per section in each of the Wolfcamp A, B and C zones. Financing is expected to come from existing cash and PDC's $750 million credit facility, the analysts said, noting that the company's balance sheet "remains strong as we project YE17 and YE18 debt/EBITDA of 1.4x and 1.0x and 2017 and 2018 interest coverage of 15.9x and 17.8x."
Rex Energy agrees to sell Ohio Utica Warrior South asset
Rex Energy Corp. has agreed to sell its Ohio Utica assets in the Warrior South Area to Antero Resources Corp. for net proceeds at closing of approximately $30 million. Included in the sale are 14 gross wells and approximately 4,100 net acres in Guernsey, Noble and Belmont Counties in Ohio; the assets are currently producing approximately 9.0 Mmcfe/d. Rex Energy expects to use the proceeds from the sale to pay down the revolving line of credit and for general corporate purposes. to close in the first quarter of 2017, subject to customary closing conditions and required approvals. Upon the closing of the transaction, the company has received approval from its bank lenders to maintain the existing $190 million borrowing base under its revolving credit facility. Stifel analysts said the deal is "better than expected," the purchase price implying a value of "$3.3M/Mcfe/d for the production and no unproved acreage value." Upon close, expected in 1Q17, Rex Energy's bank lenders have agreed to maintain the company's credit facility's $190 million borrowing base.
Schlumberger acquires Peak Well Systems
Schlumberger has acquired Peak Well Systems, a specialist in the design and development of advanced downhole tools for flow control, well intervention and well integrity. Schlumberger acquired Peak from growth equity investor Summit Partners and the company's founders and management team.
Krewe Energy makes Coquille acquisition, sees capital investment
Covington, LA-based Krewe Energy LLC, a privately held oil and gas exploitation and development company, has completed the acquisition of additional working interest in the Coquille Bay Field, which it operates in Plaquemines Parish, Louisiana, giving Krewe approximately 100% interest in the field. Krewe Energy was formed by Houston, Texas-based Sage Road Capital together with Krewe Energy's founders, Tom De Brock and Barry Salsbury. Additionally, Krewe Energy recently received a new investment from Coral Reef Capital to recapitalize the company and further support its growth. Financial terms of the transaction were not disclosed. Coral Reef Capital is a New York-based private investment firm that focuses exclusively on private equity investments in the natural resources sector.
SM Energy plans Divide County assets sale
SM Energy Co. has engaged Tudor, Pickering, Holt & Co. to run a formal bid process for sale of the company's Divide County area assets in the Williston Basin. Assuming an acceptable offer is received, the company expects to close the sale transaction around mid-year of 2017. Associated December 2016 production for the Divide County assets was 10,700 Boe/d.
AVAD sees equity commitment from Pearl Energy Investments, Natural Gas Partners
AVAD Energy Partners LLC (AVAD), a newly formed oil and natural gas production company based in Dallas, TX, has raised $77.5 million of equity commitments from lead investor Pearl Energy Investments, Natural Gas Partners (NGP) through its affiliate NGP Natural Resources XI LP, and management. AVAD is focused on acquiring and developing conventional oil and gas properties in the US. John Davis, AVAD's CEO, previously co-founded Alpine Gas Company LLC. Tom Quigley, senior vice president, will head the acquisition, evaluation, and development efforts of AVAD. He has over 25 years of engineering experience, having previously worked at Alpine, NSAI, Exxon, Hunt Petroleum Corp. and Encana Oil and Gas USA Inc. Crystal Blackstone, vice president, has worked for 25 years alongside David and Quigley as an analyst at NSAI, Hunt and Alpine.
Greenwell Energy Solutions acquires Exclusive Energy Services
Greenwell Energy Solutions, an independent specialty provider of completion and production services for the upstream energy industry, has acquired Exclusive Energy Services. Exclusive provides highly-automated, Data Acquisition System mixing plants that enable optimal chemical mixing and delivery for coil tubing, work-over and frac jobs.
Swift Energy sets 2017 capital budget
Swift Energy Co. has set its 2017 capital budget and expected production. Swift Energy's net operational capital budget for 2017 is expected to be in the range of $85 - $95 million. The company plans to run one rig in the Eagle Ford to complete twelve wells in 2017. Specifically, the company expects to complete nine wells (not including three wells drilled and completed in late 2016) in its Fasken field in Webb County, drill and complete two wells on its AWP acreage in McMullen County, and drill and complete its first well in Oro Grande in LaSalle County. All drilling activities will target the Lower Eagle Ford. Swift expects to spud the Oro Grande appraisal well in 2Q17. The anticipated capital budget is inclusive of the aforementioned completions as well as associated drilling activities, infrastructure, and other discretionary expenditures. The company expects production for 2017 to be 47.5 - 49.5 Bcfe with gas making up approximately 85% of total production. The 2017 capital budget is expected to be funded primarily through internally generated cash flows and, to a lesser extent, available borrowings on the credit facility. As of January 20, 2017, Swift had hedges in place for over 70% of expected natural gas and crude oil production at average weighted prices of $3.10 and $48.10, respectively.
W&T Offshore approves 2017 capital budget
The board of directors of W&T Offshore Inc. approved a 2017 capital expenditure budget of $125 million, excluding potential acquisitions. The company has also provided production and expense guidance for 2017 and expects total production in 2017 to be approximately 4% higher than the mid-point of the company's expected production in 2016. The company currently anticipates drilling six to eight wells during 2017 in the Gulf of Mexico in a program that is expected to be generally balanced between exploration and development projects and between wells located on the shelf and in the deepwater. The 2017 capital plan includes completing the Ship Shoal 349 "Mahogany" A-18 well, which was drilled to total depth in late 2016 and put on production in mid-January, and the drilling and completion of three additional wells in the Mahogany field. Each of these projects is expected to achieve a rate of return in excess of 100%, with a relatively quick payback. The plan also includes the drilling and completion of two wells at the Ewing Bank 910 field, which are expected to average a rate of return in excess of 100%, with an average projected payout in approximately one year. Additionally, the 2017 plan includes performing between 20 and 25 recompletions at a cost of approximately $26 million. Approximately two-thirds of the entire capital budget is directed at projects that will come on line and start producing in 2017.
Lucas Energy enters Permian
Lucas Energy Inc. has entered into an agreement with a privately-held, Houston, Texas-based oil and gas holding company to acquire a leasehold position in the Permian Basin in Texas. Lucas Energy will purchase the initial lease comprised of 16,322 gross, 3,630 net, mineral acres, and the parties have agreed to form an area of mutual interest (AMI) on the Central Basin Platform. Lucas will operate the properties and own a 90% working interest and the partner will hold a 10% working interest in the initial leases and all subsequently acquired leases. The initial cash consideration paid by Lucas Energy is $1.43 million, in exchange for access to the partner's regional, technical database and the company's 90% interest. As additional leases are acquired under the AMI, the company will pay the partner its lease acquisition costs and grant an incentive overriding royalty interest. Upon meeting certain acreage acquisition goals based on size and location of the properties, Lucas Energy will also issue to the partner 200,000 unregistered shares of its common stock and pay the partner an acreage fee based on the total leasehold and brokerage costs.
