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    Industry Briefs

    AEPB acquires Permian leasehold for $2.5B

    American Energy – Permian Basin LLC (AEPB), an affiliate of American Energy Partners LP (AELP), has signed an agreement to acquire approximately 63,000 net acres of leasehold in the southern Permian Basin, primarily in Reagan and Irion Counties, Texas from affiliates of Enduring Resources LLC for $2.5 billion. At closing, the properties are expected to have net production of approximately 16,000 boe/d. Enduring Resources LLC ranked No. 94 in the latest installment of the OGFJ100P list. The Enduring transaction marks AEPB's entry into the Permian Basin. Enduring is currently using four rigs to develop the acreage and AEPB plans to increase operated drilling activity to 6-8 rigs by YE15 with plans to drill up to 2,500 gross wells and 1,750 net wells on its acreage over the next decade. AEPB's lead equity investor is The Energy & Minerals Group, with additional equity provided by First Reserve Corp., AEPB's management team and others. Goldman, Sachs & Co., Tudor, Pickering, Holt & Co. and Citi acted as financial advisors to AEPB. Financing was provided by Goldman Sachs Bank USA. Sullivan & Cromwell LLP, Commercial Law Group, PC and Porter Hedges LLP acted as legal advisors to AEPB. Jefferies LLC acted as financial advisor to Enduring and Latham & Watkins LLP acted as legal advisor to Enduring.

    Penn Virginia sells Mississippi assets for $72.7M

    Penn Virginia Corp. has agreed to sell its Selma Chalk assets in Mississippi to an undisclosed buyer for gross cash proceeds of $72.7 million, or approximately $6,109 per flowing mcfe, a price in-line with other recent all dry-gas deals, noted analysts at Jefferies LLC. The properties to be sold had net production of 1.9 million cubic feet of natural gas equivalent per day during the first quarter of 2014, almost 100% of which was natural gas. As a result of the divestiture, Penn Virginia's 2014 production will decrease by an estimated 1.9 bcfe. Estimated proved reserves associated with the divested properties, as determined by the company's third-party engineers at YE13, were 85.3 bcfe, 69% of which were proved developed and 100% of which were natural gas. Scotia Waterous (USA) Inc. served as the company's exclusive financial and technical advisor.

    Marathon sells Norway business for $2.7B

    Marathon Oil Corp. has entered into an agreement with Det norske under which Det norske will purchase Marathon's wholly owned subsidiary, Marathon Oil Norge AS, for a total transaction value of $2.7 billion. After adjustment for debt, net working capital, and interest on the net purchase price, Marathon expects net proceeds of $2.1 billion at closing. The sale includes the Marathon-operated Alvheim floating production, storage and offloading vessel, 10 company-operated licenses, and a number of non-operated licenses on the Norwegian Continental Shelf in the North Sea. Full-year 2013 net production in Norway averaged 80,000 boe/d. Scotia Waterous served as financial advisor to Marathon. Marathon expects to redeploy the majority of the net proceeds to the US onshore program, with the balance being allocated to the $1.5B share repurchase program currently in place, noted analysts with Global Hunter Securities, who view the deal positively. With FY2013 production from Norway at roughly 80 Mboepd net (80% of total North Sea volumes), the company "takes in a solid price" around $33.7K/flowing boe – representing roughly 4 times annual cash flow multiple given ~15% of MRO's FY2013 CF (or ~$820MM) was attributable to North Sea assets.

    ExxonMobil extends Permian footprint in LINN deal

    Exxon Mobil Corp. has executed an agreement to add nearly 26,000 acres to its portfolio managed by subsidiary XTO Energy Inc. through a non-monetary exchange with LINN Energy LLC. Virtually all of the acreage is located within the portion of the Midland Basin that is most prospective for horizontal Wolfcamp and Spraberry development. In exchange, LINN Energy will receive a portion of XTO's interest in the Hugoton gas field in Kansas and Oklahoma including all non-royalty trust interests in the shallow formations, with current production of about 85 MMcfe/d, 80% of which is natural gas. With this agreement and its recent transaction with Endeavor Energy Resources, XTO increases its operated position in the Midland Basin Wolfcamp core to roughly 100,000 net acres and its total position in the basin to 300,000 net acres. Current production of the acquired acreage is approximately 2,000 boe/d. Part of the package includes 1,000 net acres in the New Mexico Delaware Basin. The deal brings XTO's leasehold position in the Permian Basin to over 1.5 million acres and in excess of 90,000 net boe/d production, noted management.

    Regency raises $400M

    Regency Energy Partners LP sold 14.4 million common units to ETE Common Holdings LLC, a wholly owned subsidiary of Energy Transfer Equity LP, which owns the general partner of Regency, for $400 million. Proceeds from the issuance will be used to pay down borrowings on the partnership's revolving credit facility, to redeem certain senior notes of the partnership and for general partnership purposes.

    Trans Energy closes $200M credit facility

    American Shale Development Inc. (ASD), a subsidiary of Trans Energy Inc., has closed on a new credit facility with Morgan Stanley Capital Group Inc. in the amount of $200 million. The facility closed and an initial amount of $102.5 million was funded on May 21. An additional $47.5 million has been committed and is available to fund growth expenditures during the next two years, based on a formula that makes further availability contingent upon the value of ASD's producing properties as compared to its net debt. An additional $50 million may be made available at Morgan Stanley's discretion. The facility carries an initial interest rate of 10%, which can be reduced upon achieving certain collateral increases, and it matures on Dec. 31, 2018. ASD also granted Morgan Stanley a net profits interest (NPI) in its oil and gas assets, with an initial NPI of 6.5% granted at the closing and a contingent NPI of 2.5% that will be earned pro rata as ASD draws on the $47.5 million contingent commitment. Durham Capital Corp. acted as the company's financial advisor.

    W&T acquires Woodside GoM deepwater properties

    W&T Energy VI LLC (Energy VI), a wholly owned subsidiary of W&T Offshore Inc., has completed the acquisition of deepwater Gulf of Mexico exploration and production properties from Woodside Energy (USA) Inc. The transaction includes a 20% non-operated working interest in the producing Neptune Field (Atwater Valley blocks 574, 575 and 618, along with an interest in the associated tension leg platform). In addition, Energy VI is acquiring all of Woodside's interest in 24 deepwater exploration blocks. The purchase price is $51 million and the assumption of any related asset retirement obligations. The acquisition was funded from available cash on hand and the revolving credit facility. Total net proved reserves acquired are 1.9 MMboe (100% classified as proved developed) with a PV-10 of $53 million and probable net reserves of 1.1 MMboe. During January 2014, average daily net production from the Neptune Field was approximately 1,660 boe (net of royalties), of which 87% was oil.

    Zenergy, Apollo partner with $755M of committed capital

    Zenergy Inc. and funds managed by affiliates of Apollo Global Management LLC have formed a partnership to invest in the acquisition and development of upstream and midstream oil and gas properties. The partnership was formed effective May 1, 2014 with total committed capital of $700 million from funds managed by affiliates of Apollo and $55 million from Zenergy, its affiliates and management team. The partnership, Zenergy LLC, will focus on assets in the Mid-Continent, Texas and Arkansas-Louisiana-Texas regions. Jefferies Inc. served as financial advisor to Zenergy.

    CIT arranges $125M financing

    CIT Corporate Finance has arranged a $125 million senior secured credit facility for Independence Contract Drilling (ICD), an integrated land drilling services provider. CIT Corporate Finance, Energy served as sole lead arranger and sole lead administrative agent in the transaction. Financing was provided by CIT Bank. Terms were not disclosed.

    First Reserve, Zhenghe Partner

    First Reserve Fund XIII has entered into a strategic cooperation with Hainan Zhenghe Industrial Group Co. Ltd. to pursue oil and gas investment opportunities in China and Central Asia. In addition, Zhenghe will act as a potential source of capital in support of First Reserve's participation in North American oil and gas upstream projects and will invest as a limited partner in First Reserve Fund XIII. Zhenghe is a publicly listed company in China and is focused on oil and gas exploration and production operations. Financial terms of the agreement were not disclosed.

    Sanchez Energy doubles reserves and production

    Sanchez Energy Corp. has a definitive agreement to purchase operated assets to be named Catarina in the Eagle Ford trend of South Texas from wholly-owned subsidiaries of Royal Dutch Shell plc for approximately $639 million in cash. The assets, consisting of 60 MMboe of proved reserves and 24,000 boe/d of average first-quarter 2014 production (60% liquids), are located on 106,000 net acres in Dimmit, LaSalle, and Webb counties, Texas. This additional acreage is expected to bring the total company position in the Eagle Ford to 226,000 acres with up to 3,000 potential drilling locations and average first-quarter 2014 pro forma production of 42,800 boe/d. Analysts from Global Hunter Securities said Sanchez Energy "scores another major acquisition in the Eagle Ford," with the transaction with an implied purchase price of roughly $32K/boepd, "well below previous transactions in the Eagle Ford." The analysts say the deal appears highly accretive to cash flow and "the acquired assets include 200 identified future drilling locations with 800 additional potential locations, giving SN multiple years of double-digit growth."

    Legacy closes WPX transaction

    Legacy Reserves LP has closed on its purchase of an escalating working interest in over 2,680 natural gas wells in the Piceance Basin from WPX Energy. Midland, TX-based Legacy purchased an initial 29% working interest that steps up to 37% on Jan. 1, 2015, then 41% on Jan. 1, 2016, for $355 million in cash. The agreement also provides WPX with 10% ownership in a newly created class of incentive distribution rights with Legacy. WPX has the opportunity to increase its ownership to 30%, contingent upon completing other transactions in the future including the potential to partner on third-party acquisitions. WPX's undeveloped locations in the Piceance Basin are not included in the transaction, which is limited to a graduated working interest in WPX's proved developed producing Piceance wells drilled prior to 2009. The interest represents approximately 9% of WPX's year-end 2013 Piceance proved reserves based on contractual terms and commodity price assumptions as of Dec. 31, 2013.

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