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Industry briefs

BP to sell certain North Sea assets TAQA for $1.1B

BP has agreed to sell its interests in a number of central North Sea oil and gas fields to TAQA for $1.058 billion plus future payments which, dependent on oil price and production, BP expects will exceed $250 million. The assets included in the sale are BP's interests in the BP-operated Maclure, Harding and Devenick fields and non-operated interests in the Brae complex of fields and the Braemar field. The $1.058 billion base consideration includes a deposit of $632 million that has been paid and anticipated future payments of $250 million expected to be realized over three years. BP has an equity interest of 27.7% in the Marathon-operated South, Central, North and West Brae fields, and 33.21% in the Marathon-operated East Brae field and production facility. Braemar is a subsea tie-back to the East Brae platform in which BP owns a 52% interest. The Maclure oil field was developed via a single subsea gas-lifted well tied back to Maersk's Gryphon Floating Production Storage and Offloading vessel. BP is the operator and owns 37.04%. Harding is isolated from the rest of BP's portfolio and will require significant investment and resource to develop its gas reserves. BP owns 70% of Harding and is the operator. Devenick is a subsea tie-back to the East Brae platform. BP owns 88.7% of Devenick and is the operator. BP has now entered into agreements to sell assets with a value of around $37 billion since the beginning of 2010. Jefferies acted as financial adviser to BP in this recent transaction.

ONEOK scraps Bakken Crude Express Pipeline

ONEOK Partners LP did not receive sufficient long-term transportation commitments during its recently concluded open season for the Bakken Crude Express Pipeline. As a result, the partnership has elected not to proceed with plans to construct the pipeline. The Bakken Crude Express Pipeline would have been a 1,300-mile, crude-oil pipeline with the capacity to transport 200,000 barrels per day of light-sweet crude oil from multiple points in the Williston Basin in the Bakken Shale in North Dakota and Montana to the crude-oil market hub in Cushing, Okla.

Magnolia Petroleum spuds first operated well in Mississippi Lime

Magnolia Petroleum plc has spud its first operated well in the Mississippi Lime in Oklahoma. The Roger Swartz #1, a vertical well targeting the producing Mississippi Lime formation, commenced drilling on November 19. Drilling is expected to last between 8-10 days at an estimated cost of US$729,148 and has a targeted total depth of 5,500ft. The well is located in Noble County, Oklahoma, and forms part of the acquisition of 800 gross acres as previously announced by the company on February 10, 2012. The directors believe that a further seven potential well sites could exist on this acreage. Under the terms of the original farm in deal, Magnolia acquired a 100% working interest in the leases at no initial cost to the company. The farmors have a 16.25% back-in to the Well once pay-out has been achieved i.e. drilling costs have been recovered. Upon pay-out Magnolia's working interest/ net revenue interest in the Well will therefore be 83.75% and 68.05%, respectively.

Magnum Hunter gains Williston acreage, wells

Magnum Hunter Resources Corp. subsidiary Bakken Hunter LLC has agreed to acquire existing wells and approximately 20,000 net Williston Basin lease acres located in Divide County, North Dakota, from Samson Resources Co. for $30 million in cash. The transaction is expected to close on or about December 20, 2012. Magnum Hunter currently owns an approximate 47.5% working interest in the properties being acquired, and upon closing, the company will have varied working ownership interests in the properties up to approximately 100%. The company will become operator of that portion of the acquired properties which is currently being operated by Samson. In addition to the acreage being acquired, the company is also acquiring approximately 310,000 barrels of oil equivalent of proved developed producing reserves and approximately 192 net barrels of oil equivalent production per day. Upon closing of the transaction, the company will own approximately 180,000 net acres in the Williston Basin.

KKR closes on Westbrick Energy investment

Energy investor Kohlberg Kravis Roberts & Co. (together with its affiliates, KKR) has closed on a C$75 million investment in Canadian oil and gas company Westbrick Energy Ltd. In addition, KKR has committed C$175 million of equity capital for follow-on investments in Westbrick Energy to support its continued growth through acquisitions and the organic development of its asset base, for a total potential investment of C$250 million. Proceeds from the initial C$75 million investment will be used to fund Westbrick's capital program and acquisition strategy. Westbrick is a private oil and gas company with current operations in the greater Pembina area of Alberta. Two members of KKR's Energy & Infrastructure business, Jonathan Smidt and Brandon Freiman, joined the company's board of directors.

Petrofac JV wins US$229 million contract in Iraq

Petrofac has won a further inspection, maintenance and repair contract for the Rumaila oil field in Southern Iraq with its joint venture partner, China Petroleum Engineering & Construction Corp. (CPECC). The US$229 million contract was awarded by BP Iraq NV (BP), via the Rumaila Operating Organisation (ROO), following a competitive tender. The three-year contract, which is worth more than US$160 million to Petrofac, will be led by its Offshore Projects & Operations (OPO) business. The contract covers the inspection, maintenance and repair of degassing stations, rotating machinery and cluster pumping stations and came into effect on November 1, 2012.

Wells Fargo, Emerald Oil close on senior credit facility

Denver, CO-based Emerald Oil Inc. has closed on a senior credit facility with Wells Fargo Bank NA. The credit facility is a senior secured reserve based revolving credit facility with a maximum commitment of up to $400 million and an initial borrowing base of $27.5 million. On November 20, 2012, approximately $15.2 million was drawn to pay in full the approximately $15 million balance on the Macquarie Bank Limited credit facility and fees and expenses associated with the credit facility.Proceeds from the credit facility can be used to acquire oil and gas properties, finance ongoing working capital requirements, for general corporate purposes, or refinance existing debt. The annual interest cost is the London Interbank Offer Rate (LIBOR) plus 1.75% to 2.75%. The current annual interest rate on the credit facility is LIBOR plus 2.25%. Redetermination of the borrowing base will be on a semi-annual basis, with an option to elect additional redeterminations every six months.

First Reserve acquires Ameriforge Group

First Reserve Corp. has agreed to acquire Ameriforge Group Inc. from Post Oak Companies LP, an affiliate of Houston-based private equity firm Tanglewood Investments Inc. In partnership with Ameriforge's management, the energy investment firm will acquire the company through First Reserve Fund XII. Financial terms were not disclosed. The transaction is expected to close in December. Ameriforge is a vertically integrated manufacturer of engineered products, subassemblies and integrated systems for the oil and gas, midstream, downstream, power generation, aerospace, transportation and industrial markets.The executive management team will remain in place and will retain an equity interest in the company. In addition, the three founders and principals of Tanglewood will be continuing equity investors in Ameriforge. Harris Williams & Co. is acting as the exclusive advisor to Ameriforge.

Salans, FMC and SNR Denton plan merger

Salans, Fraser Milner Casgrain and SNR Denton, have recommended a proposed merger of the law firms. The goal is to create a fully integrated global firm that will rank as the seventh largest law firm in the world, measured by number of lawyers and professionals. The combination would unite energy practices in Africa, Asia, Canada, Europe, Central Asia, the Middle East, the UK and the US. In addition, it connects a Canadian mining practice to strong practices in Africa, Central Asia, the Middle East, Europe, the UK and the US. It would offer clients the full range of transactional, dispute resolution and regulatory services in the financial and commercial centers such as London, New York, Paris, Toronto, Frankfurt, Hong Kong, Moscow, Dubai, Chicago, Shanghai and Singapore. The new firm would be structured as a Swiss Verein and known as Dentons. A vote on the proposed merger was scheduled at press time. Subject to the vote, the combination will become effective in the first quarter of 2013.

Subsea landscape changes with Cameron, Schlumberger JV

Oilfield services providers Cameron International Corp. and Schlumberger Ltd. have created OneSubsea™, a 60/40 joint venture to manufacture and develop products, systems and services for the subsea oil and gas market. Cameron will contribute its existing subsea division and receive $600 million from Schlumberger. Schlumberger will contribute its Framo, Surveillance, Flow Assurance and Power and Controls businesses. The partnership is expected to benefit from Schlumberger's expertise in subsea processing and platform integration and Cameron's position in subsea pressure control. Cameron will manage the joint venture and will consolidate it for financial reporting purposes. Cameron will reflect minority interest in its financial statements for Schlumberger's interest in the JV. EnergyPoint Research analysts see the partnership as good for the subsea market as Schlumberger recognizes the need to be meaningfully involved in the space and a partnership between the two well-known companies could lead to greater competitive pressure and performance amongst the players.

Platte River Equity acquires The WellMark Company

Denver, CO-based private equity firm Platte Platte River Equity has increased its presence in the oil and gas space with the acquisition of The WellMark Company LLC. Oklahoma City, OK-based WellMark manufactures liquid and pneumatic flow controls and valves serving the oil and gas and petrochemical industries. Bartlit Beck Herman Palenchar & Scott LLP served as legal counsel, and St. Charles Capital served as buy-side advisor to Platte River. Madison Capital Funding LLC provided senior debt financing for the transaction.

Shell awards contract extention worth $360M to Subsea 7

Subsea 7 has been awarded a two year extension on both of its Underwater Services Contracts (USC), by Shell Upstream International Europe, worth approximately US$360 million. Subsea 7 will continue to provide subsea construction, inspection, repair, maintenance and decommissioning services across Shell's European offshore fields and facilities.Subsea 7's vessels, the Seven Atlantic and the Normand Subsea will be dedicated to operate for Shell and, managed by an onshore engineering and support team in excess of 50 people, they will provide 24 hour, 365 days a year, diving and ROV support services in North Sea. The Seven Atlantic was originally custom built to meet Shell's specifications and commenced operations in 2010. The Normand Subsea was also custom built to Shell's specification and commenced operations in 2009. The contract extension will commence in 2014 and continue until at least 2016 with the possibility of up to a further two year extension.

Aker Solutions acquires Thrum Energy

Aker Solutions, the international oil services provider, is buying Canadian asset integrity management (AIM) company Thrum Energy Inc. The acquisition will grow Aker Solutions' AIM portfolio and increase the company's presence in the Atlantic Canada market. Thrum Energy is a St. John's, Newfoundland-based asset integrity management company. The company provides a diverse portfolio of quality services to both onshore and offshore assets in Canada. The acquisition supports Aker Solutions' growth plans in North America in general and in St. John's and Atlantic Canada in particular. Aker Solutions currently employs 40 people in St. John's. The company is also present in Calgary, Alberta. The transaction is expected to close in Q4 2012. Financial details were not disclosed.

Linde Group to manage energy procurement operations with Allegro 8

Gases and engineering company The Linde Group has selected energy software from energy trading and risk management (ETRM) software provider Allegro Development Corp. The company has chosen the Allegro 8 platform in an effort to streamline and optimize business processes related to the global procurement of electricity, natural gas and emissions certificates, including deal capture, settlement and accounting, risk management, global position reporting as well as hedge accounting.

Petrobras sells interest in BS-4 Block, Santos Basin

Petrobras has sold 40% of its interest in the BS-4's Concession, located in the Santos Basin, which includes Atlanta and Oliva fields, to OGX Petróleo e Gás Participações SA. The two companies have executed a Farmout Agreement and Petrobras will receive a total of $270 million for the operation. The deal is subject to approval by the National Petroleum, Natural Gas and Biofuels Agency (ANP). Queiroz Galvão Exploração e Produção SA will remain as the operator for the concession, with a 30% interest, and Barra Energia do Brasil Petróleo e Gás Ltda. will retain its 30% interest.

BreitBurn Energy Partners to buy CA oil properties

BreitBurn Energy Partners LP has signed a definitive agreement to acquire principally oil properties located in the Belridge Field in Kern County, California for approximately $40 million in cash and 3,013,561 common units representing limited partner interests in the Partnership. This is the company's fourth acquisition in 2012. According to the company, the acquisition is immediately accretive to distributable cash flow per unit upon closing and has an estimated average daily net production of approximately 825 boe/d as of October 2012 (85% oil). Estimated proved reserves are approximately 3.8 MMboe as of November 1, 2012, plus additional potential resources. The estimated reserve life index is over 12 years based on estimated proved reserves and oil production is currently 29 API gravity and price received currently averages Brent minus approximately 1%. The assets are 100% operated with 100% working interest. The cash consideration will be funded with bank credit facility borrowings. The common units will be issued in a private placement.

Chesapeake prices unsecured 5-year loan

Chesapeake Energy Corp. priced an unsecured five-year term loan facility in an aggregate principal amount of $2 billion on November 7. The new facility, arranged by Bank of America, NA, Goldman Sachs Bank USA and Jefferies Finance LLC, which will be syndicated to a large group of institutional investors, was priced at 98% of par. Amounts borrowed under the new facility will bear interest at LIBOR plus 4.50%. The new facility will rank pari passu with Chesapeake's outstanding senior notes and contingent convertible senior notes and will mature on December 2, 2017. The new facility is non-callable in the first year but may be voluntarily repaid in the second and third years at par value plus a specified call premium and may be voluntarily repaid at any time thereafter at par value. Chesapeake plans to use the proceeds to fully repay the remaining debt under its existing May 2012 term loan facility and to repay borrowings under its corporate revolving credit facility.

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