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Industry Briefs

Emerald Oil completes Williston Basin acquisition

Denver, CO-based Voyager Oil & Gas Inc. (dba Emerald Oil Inc.) has closed the previously announced acquisition of operated acreage in McKenzie County, North Dakota. Emerald acquired 4,453 net acres in McKenzie County, North Dakota for $3,200 per acre. The purchase included operating permits for four wells and a recently constructed well pad and tank battery at an additional cost of $1.18 million, for a total cash purchase price of $15.4 million. Emerald is focused primarily on the development of its approximately 48,100 net acres in the Williston Basin in North Dakota and Montana, prospective for oil in the Bakken and Three Forks formations. The next step in the conversion is to execute, noted Global Hunter Securities October 8. The prospectivity supports the acreage value, and while the conversion to operator is daunting, the company's steps are well documented, noted the analyst, who estimate 2012 CF of $10.5 million to scale to $27.5 million in 2013.

Halcon to offer $700M in senior unsecured notes

Halcon Resources Corp. intends to offer $700 million in aggregate principal amount of senior unsecured notes due 2021. Halcon intends to use the net proceeds from the offering to fund the cash consideration payable in connection with its pending acquisition of producing and undeveloped oil and gas assets in the Williston Basin. The offering is expected to close into escrow, subject to release upon closing of the Williston Basin Assets acquisition.

Investment group launches OFS Capital

A group of international oil and gas industry executives and investment bankers has launched OFS Capital (OFS), a boutique energy investment and merchant bank. OFS provides services to the energy industry with a focus on the exploration and production, oilfield services, power, distribution, and renewables sectors. The group will advise both corporate and institutional clients and will be active throughout North and South America. OFS Capital is co-headquartered in Houston and Rio de Janeiro, with offices in Washington, DC, Bogota, Mexico City, New York, and London.

Wynnchurch Capital sinks private equity into oil, gas drilling equipment company

On October 1, private equity firm Wynnchurch Capital Ltd. made an equity investment in onshore and offshore oil and gas drilling equipment provider Loadmaster Derrick & Equipment Inc. Tommy Welsh and Tommy Hebert, the owners of Loadmaster, co-invested in the transaction and will continue to lead the Broussard, Louisiana-based company.

Chesapeake sells Glass Mountain Pipeline share

Tulsa, Oklahoma-based SemGroup Corp. and Gavilon LLC said October 10 that each has completed the acquisition of a 25% share of Glass Mountain Pipeline LLC previously owned by an affiliate of Chesapeake Energy. SemGroup now owns 50% of Glass Mountain Pipeline. The remaining 50% is now owned by Gavilon. Chesapeake will maintain its long-term transportation agreement with Glass Mountain Pipeline, providing the economic incentive for its construction. The Glass Mountain Pipeline will have an initial capacity of approximately 140,000 b/d and 440,000 barrels of intermediate storage. One lateral will originate in Woods County, OK. The second lateral will originate in Ellis County, OK. The pipeline will increase in diameter where the laterals intersect near in Major County, OK and continue east to Cushing, OK. The pipeline will terminate at Gavilon's Cushing facility, where the JV will own one million barrels of crude oil storage. Following pipeline construction, Rose Rock Midstream LP, SemGroup's master limited partnership, will serve as the pipeline operator.

United Central Industrial merges with GHX Industrial

Houston-based GHX Industrial LLC and United Central Industrial Supply of Bristol, Tenn., have merged, forming a large, energy-focused industrial distribution and service-related company. Both entities will continue to operate independently, but will utilize a combination of shared administrative, strategic and management services. Since its inception in 1974, United Central has focused on serving mining industries in the US and Canada. GHX has a 70-year history of providing fluid transfer (hoses), fluid sealing (gaskets), and other products to a variety of oil and gas upstream companies, refineries, power generation, petrochemical, mining, agriculture, and marine enterprises. Coming out of the merger, The United Distribution Group Inc. has been formed to manage United Central and its subsidiaries, Gooding Rubber Co. and National Mine Service and GHX and its subsidiaries McCarty Equipment Company and McCarty Equipment of Canada.

New railroad launched by Port San Antonio, Watco to meet Eagle Ford demand

Port San Antonio and Watco Companies inaugurated a rail service that clears the way for growth at the Port's East Kelly Railport. The San Antonio Central Railroad (SACRR) now operates within the 350-acre site. San Antonio Central also transfers railcars from nearby Union Pacific and BNSF Railway trains and delivers the cargo to the front door of the growing number of logistics, manufacturing and warehousing businesses at the Port. In addition to operating the region's newest rail service, Watco Companies has completed the first phase of track expansions at East Kelly Railport. Over the summer, the firm doubled track at the Railport from four to almost eight miles. Port San Antonio began operations at the Railport in 2007, and has added customers from various sectors. Recently, in particular, strong demand from oil and gas drilling projects on the Eagle Ford Shale have driven growth at the Railport. Between fiscal 2010 and 2011, rail volume grew over 75%—from 2,594 railcars served in FY2010 to 4,556 in FY2011. In FY2012, which concluded September 30, a new record was set with 5,167 railcars processed at the Railport. The new activity has been largely driven by demand for transloading services for drilling equipment and supplies headed to Eagle Ford Shale well sites. The track expansion now allows businesses at the Railport to serve up to 20,000 railcars per year.

W&T Offshore to issue $250M private placement to fund GOM acquisition

W&T Offshore Inc. is in the process of issuing $250 million of 8.5% senior notes due 2019 via a private placement to repay debt and partially fund a recent Gulf of Mexico asset acquisition. The notes are proposed to be offered as additional notes under an indenture pursuant to which W&T Offshore initially issued $600 million principal amount of its 8.5% senior notes due 2019 on June 10, 2011. The company intends to apply the net proceeds of this private offering to repay a portion of the outstanding indebtedness recently incurred under its revolving credit facility to partially fund its recently completed acquisition of exploration and production properties in the Gulf of Mexico from Newfield Exploration. On October 5, W&T Offshore closed on the $208 million purchase of 7.7 MMboe of proved reserves, 8,350 boepd of production (37% crude oil), and 78 GoM lease blocks from Newfield Exploration. According to Global Hunter Securities, as of October 4, W&T Offshore had a cash balance of $46 million with $120 million drawn down on its revolver which holds a $650 million borrowing base. On a debt maturity basis, the current revolver matures in 2015 while the outstanding $600 million of 8.5% notes mature in 2019.

AusTex equity raise to fund Miss Lime development

AusTex Oil Ltd. has plans to raise up to A$12.5 million in an equity capital raise which will fund the appraisal and development of the company's acreage in the light oil portion of the Mississippi Lime Play. The offer comprises a placement of approximately 83.3 million new fully paid ordinary shares to investors at a price of $0.12 per share which raised $10 million; and, a Share Purchase Plan of up to $15,000 per eligible shareholder at the Issue Price to raise up to $2.5 million. GMP Securities is Sole Lead Manager and Bookrunner. The first tranche of 29.3 million shares was expected to settle on October 24, 2012, and the second tranche of approximately 54 million shares is subject to shareholder approval at a meeting to be held on or around November 21, 2012. Net proceeds from the offer will be used to fund appraisal and development of AusTex's acreage in the light oil window of the Mississippi Lime, including: participating in additional horizontal wells with Range Resources, including an offsetting well to the Balder #1-30N (1st 30-day average rate 899 boepd, 70% oil); continuation of the two vertical well per month program at the company's 100% owned Snake River Project in Northern OK; drilling activity at AusTex's properties in Kansas; and pursuing land acquisitions and joint ventures.

Copano makes public offering

Copano Energy LLC has started a public offering of 6,000,000 of its common units representing limited liability company interests in the company. Copano also intends to grant the underwriters a 30-day option to purchase up to 900,000 additional common units if the underwriters sell more than 6,000,000 common units in the offering. Copano intends to use the net proceeds from the offering, including the proceeds from any exercise of the underwriters' option to purchase additional common units, to repay a portion of the outstanding indebtedness under its revolving credit facility and expects to use the increased borrowing capacity as needed for capital projects, acquisitions, hedging, working capital and general corporate purposes. Barclays, BofA Merrill Lynch, Morgan Stanley, Wells Fargo Securities, Goldman, Sachs & Co. and RBC Capital Markets are acting as joint book-running managers for the offering.

CLNG ramps up effort to highlight LNG benefits

The Center for Liquefied Natural Gas (CLNG) has launched a new initiative and dedicated website (http://lnginitiative.org/) focused on America's opportunity to sell liquefied natural gas (LNG). The CLNG exports website will provide the public with information and analyses on the benefits of selling natural gas outside the US. "A revolution in American energy has unlocked a vast supply of natural gas, more than enough to meet the needs of our country for generations to come," said CLNG president Bill Cooper. "We can continue to harness this important resource for our domestic needs while also selling some to our trading partners. This will grow our economy, revitalize our manufacturing sector, and create tens of thousands of American jobs."


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