CoP sells FCCL oil sands interest, Western Canada Deep Basin gas assets to Cenovus
ConocoPhillips has signed a definitive agreement with Cenovus to sell its 50% non-operated interest in the Foster Creek Christina Lake oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets. ConocoPhillips Canada will retain its operated 50% interest in the Surmont oil sands JV and its operated 100% Blueberry-Montney unconventional acreage position. Total proceeds are $13.3 billion before customary adjustments, consisting of $10.6 billion of cash, payable at closing; and 208 million Cenovus shares, valued at $2.7 billion on March 28, 2017. In addition, the company will receive five years of uncapped contingent payments, triggered when Western Canada Select (WCS) crude prices exceed $52 Canadian dollars per barrel. Using March 28, 2017 foreign exchange and differentials, WCS of CA$52 per barrel would equate to WTI of approximately $52 per barrel. The company intends to use the cash portion of the transaction proceeds to reduce debt to $20 billion in 2017 and increase the level and pace of share repurchases. The ConocoPhillips board of directors approved an increase in the existing share repurchase authorization to a total of $6 billion, which is double the previous $3 billion authorization. The company also intends to triple its planned 2017 buybacks from $1 billion to $3 billion, with the remaining $3 billion allocated to 2018 and 2019.
The full-year estimated 2017 production and operating expenses associated with the assets being sold is $0.4 billion. The company's previously stated estimate of cash provided by operating activities of $6.5 billion at $50 per barrel Brent is unchanged as CFO from the disposition is roughly offset by lower interest expense. ConocoPhillips does not expect any change to 2017 capital expenditures.
The disposed assets had a net book value of approximately $10.9 billion as of Dec. 31, 2016. The company expects to record a gain on sale upon closing, which is expected in 2Q17. The company expects to see a financial tax accounting benefit of approximately $1 billion in 1Q17, which results from the capital gain component of the transaction and recognition of previously unrealizable tax basis.
In a note to investors March 30, Cowen and Company analysts recalled speculation by some investors that ConocoPhillips could deliver on its $3B - $5B asset sale plan. With the deal, "COP has surpassed its plan in less than a year," the analysts said. "Over $16B of asset sales are now expected in 2017. We believe this transaction will be viewed positively as it reflects COP's commitment to shareholder returns and debt reduction."
India joins IEA as an Association country
The International Energy Agency welcomed India as an Association country on Thursday, expanding its partnership for a more secure and sustainable energy future with the world's third-largest energy consumer.
As India moves to the center of global energy affairs, the new institutional ties with the IEA mark a critical addition to the IEA's global outreach. India is one of the bright spots of the global economy and is emerging as a major driving force in global energy trends, with all modern fuels and technologies playing a part.
Thanks to rising income, population growth and urbanization, there is a huge potential for energy demand growth in India, which is home to about a fifth of the world's population but uses only about 6% of the world's energy. India's energy demand is expected to more than double over the next 25 years, according to the IEA's India Energy Outlook. Prime Minister Modi has put in place policies to press ahead with the country's modernization, including a major transformation of energy provision. An ambitious program is underway to expand and upgrade the electricity sector, including a commitment to reliable and affordable power under the "24x7 Power for All" initiative, as well as a major push to deploy solar and wind power. Other energy-sector reforms focus on improving incentives to produce oil and natural gas, promote energy efficiency and increase access to modern fuels.
India, the IEA's growing family now accounts for about 70% of the world's total energy consumption. The other IEA Association countries are China, Indonesia, Thailand, Singapore and Morocco.
Ares Management forms Development Capital Resources
Ares Management LP has formed Development Capital Resources (DCR), an oil and gas company focused on providing development capital to North American exploration and production operators. DCR has entered into a $300 million drilling partnership with Midland, TX-based Endeavor Energy Resources. DCR will fund the majority of the capital required and will participate as a non-operator to finance and develop identified locations. Upon achieving an agreed upon return, DCR's working interest will decrease during the operations phase of the drilling joint venture. In addition, DCR announced a second, similar transaction with a non-Permian operator in which DCR will fund approximately $150 million in a drilling joint venture.
Unit to acquire assets in Hoxbar core
Unit Petroleum Co. a wholly-owned subsidiary of Unit Corp., has acquired from an undisclosed seller certain oil and natural gas assets primarily in Grady and Caddo Counties in western Oklahoma. The purchase price is approximately $57 million in cash plus 180 net acres in McClain County, Oklahoma, subject to possible adjustments. The acquisition adds approximately 8,300 net acres to Unit Petroleum's Hoxbar core area in southwestern Oklahoma as well as 47 PDP wells of which 23 are operated by the seller and 20 by Unit. As of the effective date (January 1, 2017), the estimated proved reserves of the properties totaled 3.2 MMboe. The estimated average daily net production was approximately 1,367 boe (73% liquids). The acreage is complementary to Unit's Hoxbar core area with a large overlap with Unit's existing operations. The acquisition provides future resource potential, including 65 gross potential horizontal drilling locations of which 13 are new locations. The remaining locations are already included in Unit's planned development but the acquisition will increase Unit's working interests in those locations. Of the acreage acquired, approximately 71% is held by production. Unit will also obtain a small gathering system. Unit's core Hoxbar acreage position lies adjacent to the Norge Marchand Waterflood Unit. Unit's Marchand wells have an average estimated ultimate recovery of over 500 MBoe. The acquisition provides operational control to key areas of the Marchand zone of the Hoxbar reservoir for secondary recovery efforts. It is anticipated that the initial secondary recovery phase will increase the reserve potential from the Marchand interval by at least 500 MBoe per well.
On April 4, 2017, the company entered into a distribution agreement with Raymond James & Associates Inc. as the agent, under which the company may occasionally offer, issue, and sell to the public, through the agent, shares of the company's common stock up to an aggregate offering price of $100,000,000. The agent will be entitled to compensation for its services of 2.0% of the gross sales price of shares sold. The company intends to use any net proceeds from the offering to fund (or offset costs of) acquisitions, future capital expenditures, repay amounts outstanding under its revolving credit facility, and general corporate purposes.
Flint Hills Resources Selects PortfolioScience for analysis of energy hedging portfolio
Wichita, KS-based Flint Hills Resources, a refining, chemicals, and biofuels company, has selected the PortfolioScience's RiskAPI® platform to analyze the risk of its energy hedging portfolio. PortfolioScience is a provider of on-demand risk management systems. RiskAPI is a hosted, on-demand portfolio risk analysis service that includes coverage of both listed and OTC global commodity and energy derivatives. Flint Hills Resources is an independent company and wholly owned subsidiary of Koch Industries Inc.
Westwood expands North American offering for the unconventional market
Westwood Global Energy Group, the private equity-backed group of energy research, analysis and consulting companies, has acquired Houston-based market research firm, Energent Group Software LLC. The addition of Energent's information and analytics platform, plus industry specialist analyst team expands Westwood's capabilities in the onshore US market. The acquisition brings proprietary and detailed well-lifecycle data that includes drilling pad trends, well completions metrics, frac sand, and downhole chemicals complemented by analysis and interpretation.
EXCO Resources to divest South Texas oil and natural gas properties
EXCO Resources Inc. has executed a definitive agreement with a subsidiary of Venado Oil and Gas LLC, an affiliate of KKR, to divest its oil and natural gas properties in South Texas for $300 million. The properties to be divested include interests in oil and natural gas properties and surface acreage in Zavala, Frio, and Dimmit counties in Texas. These properties produced approximately 4,100 boe/d day (~90% oil) during December 2016. Closing is expected in June 2017. EXCO intends to use the proceeds to fund drilling and development of its core Haynesville and Bossier shale assets in North Louisiana and East Texas and for other general corporate purposes. After closing, the borrowing base under the company's revolving credit agreement will be $100 million. BMO Capital Markets served as the company's exclusive financial advisor.
Hydrogen fuel cell vehicles grow more than 3-fold in 2016
Close to 2,500 hydrogen fuel cell vehicles were sold or leased globally in 2016, representing a more than three-fold increase compared to 2015, according to a report published by Information Trends. The report stated that California grew the fastest in terms of sales and leases, but remained behind Japan in terms of volume. Despite the growth, the number of fuel cell vehicles sold and leased are miniscule compared to the market, said Naqi Jaffery, President and CEO of Information Trends. However, the growth portends well for the future of hydrogen fuel cell vehicles. Toyota's Mirai dominated the market, selling or leasing more than 2,000 fuel cell vehicles worldwide, and Hyundai's Tucson Fuel Cell was a distant second.
The report said that the upcoming Mercedes-Benz GLC F-Cell, equipped with a plug-in propulsion battery, represents a milestone the evolution of fuel cell vehicles. GLC F-Cell, to be rolled out in the second half of 2017, ushers an era in which vehicles will be equipped with both fuel cells and plug-in propulsion batteries.
Ring acquires Central Basin Platform assets
Ring Energy has acquired approximately 33,000 undeveloped acres in Gaines County, TX, for an approximate purchase price of $16,600,000 ($500/acre). Ring will pay for the acreage with surplus capital received from a December 2016 public stock offering. The acreage is located in an area that the company has targeted for its horizontal drilling and development program, with more than 50% contiguous to Ring's existing Central Basin Platform leases. The company will have a 100% working interest and a net revenue interest of 75%. Kelly Hoffman, CEO of Ring, said the company has a 'horizontal footprint' of over 63,000 net (87,000 gross) acres, representing over 600 net (825 gross) potential horizontal drilling locations.
