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OGFJ100P company update

Independent research firm IHS Herold Inc. has provided OGFJ with updated production data for our periodic ranking of US-based private E&P companies. The rankings provided by IHS are based on operated production only within the United States.

Divestitures

On May 13, Concho Resources Inc. announced its agreement with Three Rivers Operating Co. in which it would acquire all the privately-held company's oil and natural gas assets for $1 billion in cash. Coming in at No. 53 in this month's 100P installment, Three Rivers holds nearly 310,000 gross (200,000 net) acres in the Permian Basin, including large positions in the northern Delaware Basin play, the Midland Basin Wolfberry play, and the emerging southern Midland Basin horizontal Wolfcamp and Cline shale plays.

Estimated proved reserves of the assets to be acquired amount to roughly 58 million barrels of oil equivalent (50% oil and 55% proved developed) as of April 1, 2012, while estimated net production came in at 7,000 barrels of oil equivalent per day (boe/d). The acquisition adds nearly 380 identified horizontal drilling locations in the Delaware Basin, almost all of which are unproved, and over 1,100 vertical drilling locations in the Midland Basin, of which over 740 are unproved. Approximately 65% of the acreage is held by production.

For Concho, the acquisition is the largest transaction since it offered $1.65 billion in cash for the oil and gas assets of privately held Marbob Energy Corp. nearly two years ago.

Timothy A. Leach, Concho's chairman, CEO, president commented: "Three Rivers represents a material consolidation opportunity within the proven core of the Delaware Basin, a continued expansion into the horizontal Wolfcamp and Cline shale plays in the southern Midland Basin, and a complementary addition to our core Yeso play. Combined with our existing portfolio, these assets give the company nearly 750,000 net acres across the Permian Basin, with exposure to some of the most exciting oil plays in the US."

Another private company selling assets during this timeframe is Paloma Partners II LLC. On May 9 the Houston-based company entered an agreement to sell the company to Marathon Oil Corp. for $750 million in cash. Paloma II owns roughly 17,000 net acres in the Eagle Ford shale play, primarily in Karnes and Live Oak counties, TX. Net production as of April 1 was approximately 7,000 boe/d.

Principal shareholders of Paloma II are Paloma Resources LLC, Encap Energy Capital Fund VII LP, and Macquarie Americas Corp. Jefferies & Co. Inc. and Baker & McKenzie LLP acted as financial advisors and legal advisors, respectively, to Paloma Partners II in connection with the transaction.

Equity commitment

Investments in private companies—especially those companies involved in shale development—are part of the picture this issue.

In June, privately-held Inflection Energy LLC received an equity investment led by Noble Group, a global supply chain manager of bulk commodities. Inflection Energy is focused on the development and production of Marcellus Shale natural gas in Pennsylvania and New York. Existing investors Bregal Energy and Hexagon also participated in the round that will fund a drilling program in Pennsylvania and support company growth activities.

Noble Group's investment was made through its natural gas and power subsidiary, Noble Americas Gas & Power Corp. (NAGP). In addition, Inflection Energy executed long-dated gas marketing and hedging agreements with NAGP.

Another equity commitment comes in the form of a participation agreement between US Energy Corp. and privately-held Mueller Exploration Inc. Riverton, Wyo.-based US Energy, through a cash payment of $1.7 million, will earn a 26.5% working interest (19.6% net revenue interest) in Mueller's Woodbine Sub-Clarksville 7 Project in Anderson and Cherokee Counties, Texas. The project covers roughly 6,766 gross acres (1,274 net acres to USE).

The promoted amount will cover USE's portion of the costs for land, geological and geophysical work, as well as all dry hole costs for an initial test well in each of the seven prospects. Upon payout of USE's initial well costs in each unit, USE's interest will be reduced to a 19.8% working interest (14.7% net revenue interest).

The project consists of seven predominately oil prospects. Six of the prospects will target the Woodbine formation, and one is a Sub-Clarksville formation prospect. Mueller will serve as operator.

Soon to enter the private company arena may be Venoco Inc. A majority of the Denver-based company's shareholders voted June 5 to approve a proposal by Timothy Marquez, the company's chairman and CEO, to take the company private.

Click here to download the PDF of the "2011 Year-to-date production ranked by BOE"

Click here to download the PDF of the "2011 Year-to-date production – alphabetical listing"

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