Industry Briefs

Shell to sell interest in offshore Brazil BC-10

Shell has agreed to sell a 23% interest in the Parque das Conchas (BC-10) project offshore Brazil to Qatar Petroleum International for approximately $1 billion. The transaction is subject to approval by the National Petroleum and Gas Agency (ANP, Brazil's oil and gas regulator) and the Administrative Council for Economic Defense (CADE, Brazil's anti-trust authority). Shell will continue to operate BC-10 with a 50% working interest, and will retain a significant upstream presence in Brazil. In addition to the recent entry into the Libra oil discovery, Shell is currently operating two floating, production, storage and offloading (FPSO) vessels in Brazil's offshore — the Espírito Santo at Parque das Conchas, and the Fluminense at the Bijupirá/Salema fields. Currently, BC-10 is producing 50,000 boe/d.

Sandvik acquires Varel International

Sweden-based Sandvik AB has reached an agreement to acquire Varel International Energy Services Inc. for $740 million. Carrollton, TX-based Varel is a global supplier of drilling solutions focusing on drill bits and downhole products for well construction and well completion. Varel will form a new product area within the business area Sandvik Venture. Closing of the acquisition is expected to occur within the first six months of 2014. The acquisition forms a platform to enable Sandvik to enter into drilling solutions in the oil and gas sector.

Cameron sells Reciprocating Compression business to GE

Cameron has agreed to sell its Reciprocating Compression business to GE Oil & Gas for $550 million. Cameron intends to use the net cash to partially fund its existing share repurchase program. The sale is expected to close during the third quarter of 2014. The division provides reciprocating compression equipment and aftermarket parts and services for oil and gas production, gas processing, gas distribution, and independent power industries. It generated sales of $355 million in 2012, and operates from 20 global locations. After closing, Cameron's Reciprocating Compression division will become part of GE Oil & Gas' recently formed Downstream Technology Solutions business. Citi is acting as financial advisor to Cameron, and Winston & Strawn and Baker Botts are acting as the company's legal counsel. Citi is also assisting Cameron in the process of exploring strategic alternatives for its centrifugal compression business.

Cunningham, Pettey form Cunningham Oilfield Services

Cunningham Energy has merged with Pettey Oilfield Services Inc. to form Cunningham Oilfield Services, offering well service solutions. The new company provides full vertical and horizontal contract drilling, completion drilling, service/swabbing rig work, cement services, plugging services, well location and right-of-way construction, pipeline construction, and commercial trucking.

Vortus makes equity commitment to Foreland Resources

Private equity firm Vortus Investments Advisors completed its first investment with a $50 million equity commitment to privately-held Foreland Resources LLC on December 30, 2013. Vortus and its partners made the commitment in partnership with Foreland's existing management team primarily to develop Foreland's core 11,800 acre Permian Basin asset. Approximately $37 million of the $50 million equity commitment was funded at close. The transaction also included the refinancing of approximately $120 million of Foreland's existing mezzanine facility into a two tranche facility comprised of a $50 million senior credit facility and a $70 million second lien facility provided by funds advised by Sankaty Advisors LLC, the independently-managed fixed income and credit affiliate of Bain Capital LLC. Sankaty also provided 20% of the $50 million equity commitment.

OFS Energy Fund invests in Bold Production Services

Houston-based private equity firm OFS Energy Fund has closed on an initial $5 million investment in Houston-based Bold Production Services LLC for a majority ownership interest in the newly formed oilfield services company. Bold provides flowback and early production equipment to oil and gas operators and other oilfield service companies. Bold also provides support services including mobilization and de-mobilization, maintenance, monitoring and consulting services.

Flotek acquires Eclipse IOR Services

Flotek Industries Inc. has closed its purchase of Eclipse IOR Services LLC (EOGA) and plans to expand its enhanced oil recovery (EOR) platform. Total consideration for the purchase was $7 million, including $5.25 million in cash and 94,354 shares of Flotek common stock. While final year-end financials are pending, the company estimates EOGA's 2013 net income to be approximately $1.6 million.

Linc receives A$20M for UCG project

Linc Energy Ltd. has confirmed receipt of A$20 million (US$17.6 million) from Exxaro Resources as the second tranche payment under an intellectual property license agreement. The payment is in recognition that all conditions precedent contained within the agreement, and a services agreement, and a master agreement executed with Exxaro in May 2013, have been satisfied. The companies will continue to development of the first joint underground coal gasification (UCG) project in Sub-Saharan Africa, following completion of the joint concept study that was completed in December 2013. Linc Energy is entitled to a further payment of A$7 million (US$6.2 million) upon the successful completion of the first gasifier passing agreed performance tests, as well as ongoing royalties for the synthesis gas produced and equity participation in future projects.

PTTEP, Pertamina fail to acquire Pangkar project

On Jan. 13, Thailand's PTT Exploration & Production Plc (PTTEP) provided an update on the company's announcement dated Dec. 2, 2013, regarding the acquisition of Hess Corp.'s interests in Indonesian oil and gas producing assets. In December 2013, PTTEP and Pertamina, on an equal basis, completed the transaction to acquire 23% participation interest of Natuna Sea A project, for the equity interests in certain holding entities at $526 million and certain inter-company debts at $124 million. As a result, PTTEP effectively holds 11.5% participation interest in Natuna Sea A project. Regarding the Pangkah project, the existing joint venture partner exercised its preemption rights, which was one of the closing conditions prescribed in the share purchase agreements and completed the transaction to acquire the interest for sale in Pangkah project from Hess.

Ridgewood Energy closes $1.1B fund

Ridgewood Energy Corp., a private upstream oil and gas investment company based in Montvale, New Jersey, and Houston, Texas, has closed its latest private equity fund, Ridgewood Energy Oil and Gas Fund II LP, with total commitments of $1.1 billion, reaching its hard cap. The fund, which had an original target amount of $750 million, has been formed by Ridgewood to invest in exploration and production of oil projects in the US deep waters of the Gulf of Mexico. Fund II has already invested in two oil wells, one of which, the Dantzler Project, was drilled in partnership with Noble Energy Inc. and resulted in an oil discovery.

GE Capital provides financing for Permian Basin Materials

GE Capital, Corporate Finance is serving as administrative agent on $72.5 million of senior secured credit facilities to Permian Basin Materials LLC (PBM), a newly formed affiliate of WL Ross & Co. LLC. The credit facilities are being used to support the simultaneous acquisitions of Crockett County Mining Ltd., Highland Concrete Co., and Wallach Concrete Inc., and for ongoing working capital needs. GE Capital Markets served as sole lead arranger and bookrunner on the transactions. The combined operations of Permian Basin Materials will produce construction aggregates and concrete for general construction and energy markets in the Permian Basin region of west Texas and southeast New Mexico. In total, PBM will own or lease 10 aggregates mines and 16 ready-mix concrete plants in the region.

Chesapeake sells ownership interest in Chaparral energy

Chesapeake Energy Corp. has completed the sale of 100% of its ownership interest in Chaparral Energy Inc. The transaction closed on Jan. 13 for gross proceeds of $215 million. Domenic J. Dell'Osso Jr., Chesapeake's CFO, commented, "This sale demonstrates the continued refinement and focus of our portfolio around core assets and continues our strategy of reducing financial complexity." In connection with this transaction, Dell'Osso resigned from the Chaparral board of directors.rgy.com

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