Antero Resources has closed the previously announced sale of its midstream assets, located in the Woodford Shale area of the Arkoma Basin, to Cardinal Midstream LLC for $270 million. The sale included a 60% membership interest in Centrahoma Processing LLC, which is a joint venture with MarkWest Energy Partners LP that operates two cryogenic processing plants in the Arkoma Basin with 100 MMcfd of natural gas processing capacity. In addition, Antero sold to Cardinal roughly 50 miles of gathering pipeline and an amine treating plant with 42 MMcfd of capacity. Following the midstream closing and application of proceeds to the repayment of bank debt, Antero has $532 million of available and undrawn borrowing capacity under its new bank credit facility and $49 million of cash on hand resulting in total liquidity of $581 million.
Denbury sells Encore interests to Vanguard
Denbury Resources Inc. has agreed to sell its ownership interests in Encore Energy Partners LP (ENP) to Vanguard Natural Resources LLC for $380 million. Denbury is selling its interest in the entity which owns 100% of ENP's general partner's interest and roughly 20.9 million ENP common units, or approximately 46% of ENP's outstanding common units. By virtue of Denbury's ownership of 100% of ENP's general partnership interest, Denbury consolidates 100% of ENP's financial results with Denbury's financial results, even though Denbury's aggregate ownership represents only approximately 46% of ENP's common ownership. Production attributable to ENP averaged 8,630 boe/d during 3Q10, and its proved reserves at December 31, 2009 were roughly 43 MMboe (67% oil). Vanguard expects to fund the acquisition with a $175 million acquisition term loan led by BNP Paribas, RBC Capital Markets, Credit Agricole and Citi, in addition to borrowings under its senior secured credit facility, and up to $80 million of Vanguard common units valued at $25.50 (up to approximately 3.1 million common units) which may be issued, at Vanguard's option, to Denbury. Denbury plans to use the proceeds to repay outstanding bank debt and to fund any shortfall between its anticipated cash flows from operations and planned capital expenditures during 2011. Wells Fargo Securities LLC acted as advisor to Denbury. RBC Capital Markets is acting as exclusive financial advisor to Vanguard and Vinson & Elkins LLP is acting as legal counsel to Vanguard.
CNOOC, Chesapeake close Eagle Ford shale deal
Chesapeake Energy Corp. and CNOOC Ltd. have closed on the project cooperation that gives CNOOC International Ltd. a 33.3% undivided interest in Chesapeake's 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale in South Texas. CNOOC paid $1.08 billion in cash, plus an additional $40 million payment adjustment at closing. CNOOC Ltd. will fund 75% of Chesapeake's share of drilling and completion costs up to $1.08 billion, which Chesapeake expects to occur by year-end 2012. Chesapeake's deal with CNOOC in the Eagle Ford shale was announced in October. The acreage is located primarily in the oil window (roughly 85%) in Dimmitt, LaSalle, Zavalla, Frio and McMullen counties. Lower reservoir pressure has some skeptical about the value of the company's lease position, but results from the company and the industry paint a different picture, according to an October 14 report from Jefferies & Co. Inc. The company went on to say that Chesapeake's Eagle Ford results are "impressive" and that the area "appears to be solidly economic at $70 oil" citing its review of public data. Chesapeake's advisor on the transaction was Jefferies & Co. Inc., and CNOOC Ltd. advisor was Tudor, Pickering, Holt & Co. Securities Inc.
Institution to invest $2M in Dejour Enterprises
Dejour Enterprises Ltd. has agreed to sell 7,142,858 common shares and 4,642,858 share purchase warrants to a New York-based institutional investor, resulting in expected gross proceeds of nearly CAD$2 million. The warrants have an exercise price of CAD$0.40 per share and a 5 year term from the closing date of the transaction. Dejour intends to use the net proceeds to accelerate the previously announced waterflood program at its Woodrush oil project in northeastern British Columbia, retire certain debt obligations and supplement working capital.
El Paso Pipeline Partners to issue $750M senior notes
El Paso Pipeline Partners Operating LLC, a wholly owned operating subsidiary of El Paso Pipeline Partners LP, plans to issue $750 million of senior notes of varying maturities. Net proceeds are expected to be used as partial consideration for the previously announced acquisition of the remaining 49% member interests in both Southern LNG Co. LLC (SLNG) and El Paso Elba Express Co. LLC (Elba Express) and an additional 15% interest in Southern Natural Gas Co. (SNG) from El Paso Corp., to repay the Elba Express project financing term loan, and to reduce outstanding borrowings under its revolving credit facility. Following the acquisition, El Paso Pipeline Partners will own 100% of SLNG and Elba Express and a 60% interest in SNG. RBS, BNP PARIBAS, Deutsche Bank, and JP Morgan are acting as joint book-running managers of the offering.
Transocean buys jackup rig for $195 million
Transocean Ltd. has agreed to purchase a Pacific Class 400 design jackup for $195 million. The high-specification jackup is under construction at PPL Shipyard Pte Ltd. The jackup rig is capable of operating in water depths up to 400 feet and constructing wells 30,000 feet deep. A November 17 research report from Global Hunter Securities, citing a Transocean fleet status, noted four additional Transocean rigs were idled. The deepwater semi Sovereign Explorer off Brazil is stacked, midwater semi GSF Rig 135 offshore Gabon is idle, while 2 jackups off the coast of Egypt are now without work: 350' ILC jackup GSF Adriatic X is idle while GSF Key Singapore is stacked. Idle rigs continue to be marketed, generally incurring full daily cost. The stacked/idle count now stands at 47: 5 deepwater, 7 midwater, 34 jackups and 1 barge.
Cheniere signs MOU with Morgan Stanley
Cheniere Energy Partners LP subsidiary, Sabine Pass Liquefaction LLC, has entered into a non-binding memorandum of understanding (MOU) with Morgan Stanley Capital Group Inc. in connection with the potential acquisition by Morgan Stanley of certain import capacity and approximately 20% of a proposed 7.0 million tonnes per annum (mtpa) of LNG liquefaction capacity at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana. Consistent with the MOU, definitive agreements would provide Morgan Stanley the ability to export or import 1.7 mtpa of LNG from the proposed facility. Cheniere Partners owns 100% of the Sabine Pass LNG terminal located in western Cameron Parish, Louisiana on the Sabine Pass Channel. The terminal has sendout capacity of 4.0 bcf/d and storage capacity of 16.9 bcfe. As currently contemplated, the liquefaction project would be designed and permitted for up to four modular LNG trains, each with a peak processing capacity of up to approximately 0.7 bcf/d of natural gas and an average liquefaction capacity of approximately 3.5 mtpa. The initial project phase is anticipated to include two modular trains and the capacity to process on average approximately 1.2 bcf/d of pipeline quality natural gas. Cheniere said it intends to enter into contracts for at least 0.5 bcf/d of natural gas liquefaction capacity per train in support of reaching a final investment decision regarding the development of the project. The company believes that the time and cost required to develop its proposed liquefaction project would be materially lessened by Sabine Pass LNG's existing large acreage and infrastructure. Development costs incurred during the assessment of this project will be funded by Cheniere using existing funds. LNG exports could begin as early as 2015.
Williams diversifies interests with Bakken acquisition
Williams has agreed to purchase roughly 85,800 net acres from private owners for $925 million. The acreage is located entirely on the Fort Berthold Indian Reservation, located in the Williston Basin. The company estimates that these properties represent approximately 185 MMboe in total net reserves potential in the Middle Bakken and the Upper Three Forks formations. The assets also include 3,300 b/d of net oil production from 24 existing wells. In addition to the purchase price, Williams expects to invest additional funds for drilling and development costs totaling nearly $60 million in 2010 and $200 million to $300 million in 2011. The company expects to fund the acquisition and 2010 capital expenditures with cash on hand, including proceeds from the Piceance asset drop down to WPZ. The funding for 2011 will be provided by expected increases in operating cash flows and expected cash on hand. Currently, there are three rigs operating on these properties. Williams expects to double the current level of drilling activity to six rigs by 2012 and expects the new leases to be producing more than 20,000 b/d by the end of 2012.
Eagle Ford Gathering enters services agreement with Chesapeake Energy
Eagle Ford Gathering LLC, a 50/50 joint venture between Kinder Morgan Energy Partners LP and Copano Energy LLC, has executed a definitive long-term agreement to provide services to Chesapeake Energy Marketing Inc., an affiliate of Chesapeake Energy Corp., in the Eagle Ford. Chesapeake will commit a significant quantity of natural gas production from multiple counties in South Texas over a 14-year term. Eagle Ford Gathering will gather Chesapeake's gas from major delivery points and provide transportation, processing and fractionation services. Eagle Ford Gathering's previously announced 30-inch pipeline in the western Eagle Ford Shale play is under construction and is expected to begin full service in the 3Q11; however, certain segments are expected to be available for service in the first half of the year. Kinder Morgan and Copano will invest roughly $175 million to construct 111 miles of pipeline facilities to serve Eagle Ford Shale production from Chesapeake and from SM Energy Co., with which the JV executed a gas services agreement in July 2010. Copano serves as operator and managing member of Eagle Ford Gathering.
New management consulting firm opens in Houston
Three ex-Big Four partners and directors have formed Trenegy Inc., a full service consulting firm in Houston. Gordon Sorrells, Bill Aimone, and Peter Purcel founded Trenegy to provide consulting services to growing middle market companies. Aimone, managing director, will lead Trenegy's performance, finance and organization improvement service line. Purcell, managing director, is responsible for the information technology and strategy service line. Prior to forming Trenegy, Sorrells served as a director at Deloitte & Touche, was a managing director of the energy group at the investment banking firm Harris Webb & Garrison, CFO of First Seismic Corp., and was an executive officer managing a multi-state energy lending division for several regional banks. Aimone previously served as the leading partner for the finance consulting practice in the Gulf Coast Region for Deloitte Consulting. He was instrumental in launching Deloitte's oil and gas practice and building the global performance management methods for the firm. Purcell was a director at Deloitte Consulting and led the National IT Strategy Consulting Practice in energy. He helped launch Deloitte Consulting's oil and gas practice and built global IT strategy methods for the firm.
Stone Energy offers $100M senior notes
Stone Energy Corp. intends to publicly offer $100 million aggregate principal amount of its 8.625% Senior Notes due 2017. The Senior Notes are an additional issuance of Stone's outstanding 8.625% Senior Notes due 2017, which it issued in January 2010 in an aggregate principal amount of $275 million. Net proceeds are expected to be used for general corporate purposes, which will include the repayment of borrowings under its bank credit facility and the payment of amounts due related to the acquisition of additional lease acreage in Appalachia. Merrill Lynch, Pierce, Fenner & Smith Inc. is acting as sole book-running manager for the Senior Notes offering.
Cornerstone acquires interests in Citation assets
Cornerstone Acquisition & Management Co. LLC, a sub-advisor to Centaur Performance Group, has acquired a portfolio of royalty interests in producing oil and gas properties located in Southern Oklahoma, operated by Houston-based Citation Oil and Gas Corp. Cornerstone builds and manages portfolios of private energy assets and currently manages in excess of $100 million of oil and natural gas royalty interests diversified across 21 states and several hundred counties. According to company management, Cornerstone targets properties located 100% onshore within conventional basins and reservoirs.The transaction closed in October, and terms were not disclosed.
Gastar acquires Marcellus Shale assets in West Virginia
Gastar Exploration Ltd. has acquired roughly 59,000 net acres of leasehold in the Marcellus Shale from undisclosed private sellers. The properties are concentrated in Preston, Tucker, and Pendleton Counties, West Virginia. Terms of the acquisition were not disclosed. Prior to executing the agreement, Gastar had obtained an exclusive option on the leasehold with the right to conduct operations to test the Marcellus Shale potential on the properties to be acquired. Gastar deepened an existing well to the Marcellus Shale and tested that vertical well at over 1.1 MMcf/day from the lower Marcellus. Gastar also re-completed another existing vertical well in the Marcellus and tested that well at rates as high as 1.0 MMcf/day from the lower Marcellus formation. The assets also include a gathering system consisting of 41 miles of pipeline, a salt water disposal well, and 7 producing conventional wells making approximately 500 Mcf/day. Gastar's joint venture partner in its existing Marcellus Shale assets has the right to participate in this acquisition on pre-determined terms. In September, the company entered into a $70 million Marcellus shale joint venture agreement with an affiliate of Seoul, South Korea-based investment firm Atinum Partners Co. Ltd.
Regency Gas Services selects Triple Point to manage risk
Triple Point Technology, a provider of multi-market commodity and enterprise risk management software solutions, has been selected by Regency Gas to provide counterparty credit risk and credit scoring software to manage credit risk processes for its growing natural gas and natural gas liquids (NGLs) business. Regency Gas Services is a midstream natural gas services provider that specializes in the gathering and processing, contract compression, and transportation of natural gas and NGLs.
Weatherford approved for Swiss Exchange listing
The Swiss Exchange (SIX) has approved the listing and trading of shares of Weatherford starting November 17, 2010, under the stock ticker WFT. The inclusion of the 758,446,637 registered shares of Weatherford into the benchmark SPI Index is expected to occur in a staggered manner over five trading days. Based on the company's size as measured by free float market capitalization and volume traded on the SIX, the Swiss Exchange is considering adding WFT to the SMI Index, an index of the 20 largest and most liquid shares on the Exchange. SIX is expected to make its decision regarding WFT's inclusion in the SMI Index in the first quarter of 2011. If WFT meets the SIX criteria, the earliest date WFT would enter the SMI Index would be after close of trading on the Eurex monthly expiration date of March 18, 2011, for effect as of March 21, 2011. Weatherford shares continue to be listed on the New York Stock Exchange and the NYSE Euronext.