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Global Deals

The week kick started with an $825 million OFS deal by Tetra Technologies’ gas compression unit Compressco Partners. Compressco acquired all of the outstanding shares of Compressor Systems.

While Diamondback continued Midland Basin acreage expansion with a $538 million deal, Salamander abandoned its corporate sale.

Meanwhile, media sources reported that Repsol is exploring a bid for Talisman. Later the same day, BG also made headlines mulling the sale of its North Sea operations, reportedly for about $1.7 billion.

The week ended with Breitburn’s $3 billion acquisition of Houston-based QR Energy in a 'unit-for-unit' exchange.

Exploration

Tullow Oil, Statoil and Centrica reported disappointing results during the week. Tullow did not encounter hydrocarbons in the Lupus exploration well in PL507, North Sea. Centrica came up dry at its PL405 wildcat located in the Norwegian North Sea. Statoil made an uncommercial gas find at its Atlantis wildcat, in PL615, Barents Sea.

Lundin tasted success, producing 26.4 MMcf/d of gas and 880 bbl/d of condensate from the Gohta appraisal well in PL492, Barents Sea. AWE discovered gas at the Drover-1 exploration well in EP 455, Perth Basin, Western Australia.

Projects & Capex

Harvest Natural signed a declaration of commerciality for four oilfields in the Ruche area of the Dussafu Block off Gabon. Santos’ Narrabri Gas project also saw progress after receiving an environmental assessment approval from the NSW Government.

Gazprom Neft started commercial production from its Badra oilfield in Iraq.

Rosneft announced that its Q2-2014 profit surged by almost five times to RUB 172 billion (US$4.9 billion), due to a stronger currency. The company also revealed a 22% YoY hike in its revenue to RUB 1.44 trillion. The revenue growth is mainly due to the higher sales volumes.

Q2-2014 operational highlights

• Production rose to 5 MMBOE/d (84% liquids), up 4.6 YoY
• Liquids production of 4.2 MMbbl/d, marginally lower than Q2-2013, due to assets sales
• Gas production of 13.5 Bcm, up 45% YoY
• Refinery throughput remained unchanged at 23.62 MMT

View Rosneft press release

A Burlington Northern Santa Fe (BNSF) train carrying crude oil derailed as it left a railyard in north Seattle, US. There were no reports of a spill or injuries.

The train originated in North Dakota and was bound for Tesoro Corporation's 120 Mbbl/d Anacortes oil refinery, 129 km north of the city. The train is expected to be back on the track shortly. The cause of the accident is under investigation.

Source: Reuters

Compressco Partners has priced its $359 million public offering of 15.28 million common units at a price of $23.5 per unit. The underwriters of the common units offering have been granted an option to purchase up to an additional 2.3 million common units within 30 days at the public offering price, less the underwriting discount. The offering is scheduled to close 31-Jul-2014.

Compressco will use the net proceeds to fund the Compressor Systems Inc. acquisition and for the repayment of borrowings under its existing revolving credit agreement.

View Compressco press release

Husky Energy reported a 4% YoY increase in the Q2-2014 net profit to C$628 million (US$585 million), helped by an 8% YoY rise in production to 334 MBOE/d. The company added that the average realized prices for crude oil, NGLs and bitumen also rose 16% YoY to C$90.33/bbl.

Despite higher output and average realized prices, the company continues to see “some cost pressure” at its Sunrise Energy project in northern Alberta. Husky said that the costs could climb for phase one of Sunrise, which is set to start up later in 2014.

Husky also reported that the throughput at its refineries and the Lloydminster heavy oil upgrader fell 4% YoY to 304 Mbbl/d.

Source: Reuters

Mid-Con Energy Partners (MCEP) has acquired operated interest in the Oilton Field, located in Oklahoma, from its affiliate Mid-Con Energy III for $56.5 million. The purchase price comprises $4.5 million in cash and the rest in MCEP shares.

Under the agreement, MCEP will acquire operatorship in the Oilton Field along with an approximate 97% net working interest. Located in the Creek County, Q2-2014 production of the field was 410 BOE/d, primarily from the Arbuckle, Wilcox and Bartlesville formations. As of 1-Jul-2014, the field held estimated 1P reserves of 2.6 MMBOE.

View Mid-Con press release

ONEOK Partners plans to invest up to $470 million over the next two years to build a gas processing plant in Grady and Stephens counties, Oklahoma. The plant will eventually process up to 200 MMcf/d.

The company expects to complete the processing plant by Q4-2016. Construction of the plant will cost up to $240 million, while the rest is allocated for construction of related natural gas infrastructure, including gathering pipelines and compression facilities.

ONEOK President and CEO Terry K. Spencer said, “The Knox plant in Oklahoma will increase our presence in the growing South Central Oklahoma Oil Province (SCOOP) play and increase our Oklahoma natural gas processing capacity to approximately 900 MMcf/d.”

View ONEOK press release

Encana posted a 63% YoY fall in Q2-2014 net profit to $271 million, hurt by lower gas production and prices. The company said that its Q2-2014 gas output fell 8% YoY to 2.54 Bcf/d, while liquids output rose 43% YoY to 68.2 Mbbl/d.

Encana also raised its 2014 total liquids production forecast to 86-91 Mbbl/d, up from previous guidance of 68-73 Mbbl/d. The company also increased its upstream capital investment guidance to $2.6-$2.7 billion, up from $2.3-$2.4 billion, largely attributable to the planned capital expenditures in the newly acquired Eagle Ford position.

Source: Reuters

View Encana Q2-2014 report

TransCanada announced that the Alberta government has approved construction of its C$800 million (US$745 million) Northern Courier pipeline.

The 90-km pipeline will transport bitumen and diluent between the Fort Hills oil sands project in northern Alberta and Suncor Energy’s East Tank Farm near the oil sand hub of Fort McMurray, Alberta.

View TransCanada press release

Northern Petroleum has been awarded two permits (Cascina Alberto and C.R149.NP) in Italy. Cascina Alberto is located in the Po Valley and C.R149.NP is located offshore in the Sicily Channel adjacent to the Northern Petroleum-operated C.R146.NP Permit.

The Cascina Alberto Permit area was formally held by Eni. The Gattinara prospect at the permit was interpreted as having similarities when compared to the Villafortuna-Trecate oilfield, located 25 km to the south-east. The company also seeks to encompass an extension of the Vesta prospect through the C.R149.NP Permit.

Northern Petroleum said that it will re-evaluate the potential of both prospects and is seeking partners to undertake drilling operations at the prospects.

View Northern Petroleum press release

Gulf Drilling International (GDI) has awarded two contracts worth $110 million to Nakilat-Keppel Offshore & Marine (N-KOM), a JV shipyard between Nakilat and Keppel Offshore & Marine.

The first contract is for the construction of a self-propelled and self-elevating LB310- design liftboat, expected to be completed by end-2015. It is customized for field transit operations as well as providing accommodation, servicing, commissioning, maintenance and decommissioning of offshore platforms.

N-KOM has also secured a six-year repair and maintenance contract for GDI's existing fleet of jack-up rigs operating in the Middle East.

View Keppel press release

Diamond Offshore announced that BG has chartered its semi-submersible, Ocean Onyx, for operations in Trinidad. The charter has a day rate of $390,000.

The charter is for one well with additional options. It is expected to begin early Jan-2015 and continue up till early May-2015.

View Diamond Offshore fleet review status

BG Group is considering selling its operations in the North Sea for about £1 billion (US$1.7 billion). The company has appointed Rothschild to advise on the restructuring that could result in the sale of its Armada, Everest and Lomond platforms.

A BG spokesman said, "We do not respond to rumour and speculation. BG Group has been clear that we plan to take a more active approach to managing our assets. No asset is sacrosanct."

Source: Reuters

Transocean Partners has commenced an IPO of 17.5 million common units. All of the units are being offered by Transocean Partners Holdings, a wholly-owned subsidiary of Transocean Ltd. The underwriters of the offering are expected to be granted a 30-day option to purchase up to an additional approximately 2.6 million common units from Transocean Partners Holdings. The common units are expected to trade on the NYSE under the ticker symbol "RIGP".

The common units being offered represent a 25.4% limited liability company interest in Transocean Partners, or a 29.2% limited liability company interest if the underwriters exercise in full their option to purchase additional common units.

Transocean Ltd, through Transocean Partners Holdings, will own the remaining limited liability company interests in Transocean Partners.

View Transocean press release

Max Petroleum has launched a strategic review which could lead to a farm-down of its assets or a complete sale of the company. Max has appointed Blackstone Group as the exclusive financial adviser to conduct the formal sale process.

Max owns and operates two onshore blocks extending over 12,455 sq km in the Pre-Caspian Basin in western Kazakhstan. Till date, Max has made eight post-salt discoveries viz. ZhanaMakat, Borkyldakty, Uytas, Asanketken, East Kyzylzhar I, Sagiz West, Baichonas West and Eskene North fields. As of 31-Mar-2013, Max drilled nine wells, including five exploration wells, and four appraisal and development wells.

Source: Reuters

View Max press release

OMV reported a 5% QoQ fall in Q2-2014 production to 297 MBOE/d, due to security problems in Libya and technical difficulties in Kazakhstan.

OMV's oil output in Libya, which accounted for 10% of its total production before the 2011 uprising that toppled Muammar Gadaffi, has been virtually nil since mid-Mar-2014 due to protests at major oilfields and ports. OMV also booked an impairment charge of about €110 million (US$148 million) in Kazakhstan due to unsuccessful field redevelopment results, and an exploration license write-off in Tunisia.

The company’s refining margin rose 18% QoQ to $1.92/bbl from $1.63/bbl, mainly due to improved gasoline spreads.

Source: Reuters

View OMV’s Q2-2014 trading statement

The Norwegian Petroleum Directorate (NPD) announced that Centrica has come up dry at the PL405 wildcat (8/10-6 S) in the Norwegian North Sea. The well was drilled 13 km south-east of the Ula Field in the southeastern part of the North Sea.

PL405 wildcat was drilled to a depth of 1,945m in a water depth of 66m. The well has been plugged and abandoned.

PL405 ownership: Centrica (40%, operator), Suncor Energy (30%), Faroe Petroleum (15%) and Tullow Oil (15%).

View NPD press release

Ezion Holdings has entered into an agreement with AusGroup to sell stake in two of its holding companies for S$55 million (US$44.4 million). AusGroup will pay S$14 million in cash and the remaining S$41 million in 92.2 million fully paid ordinary shares.

The assets acquired consist of a 100% stake in Ezion Offshore Logistics Hub (EOLH) and a 90% stake in Teras Australia. EOLH is set to operate a port and a marine supply base. However, the company is still in the process setting up the port and the marine supply base and has yet to fully commence operations.

Teras provides ship chartering services, and maritime training to indigenous workers in Australia.

View Ezion press release

View AusGroup-Ezion deal presentation

Regency Energy Partners has priced its $700 million offering of 5% senior notes due 2022 at a price of 99.158% of their face value. Regency Energy Finance, a wholly-owned subsidiary of Regency, will serve as the co-issuer of the notes. The sale of the notes is expected to close on 25-Jul-2014.

Regency intends to use the net proceeds from the offering to repay outstanding borrowings under its revolving credit facility and for general purposes.

View Regency press release

Repsol is considering a bid for Talisman Energy. Media sources have reported that Repsol is working with JPMorgan on the bid.

Talisman has been slimming its operations and cutting debt in an effort to boost its share price to satisfy disgruntled and activist investors.

Source: Reuters

Gabon’s oil ministry has selected seven companies to finalize negotiations for nine offshore blocks. The selected companies are ExxonMobil, Repsol, Petronas, Ophir Energy, Marathon Oil, Perenco and Impact Oil & Gas.

Gabon’s current oil production of about 230 Mbbl/d has come down from 400 Mbbl/d in the 1990s. The government hopes that this initiative will reverse a chronic decline in output.

Source: Reuters

MDU Resources has entered into an agreement with Lime Rock Resources to sell certain oil and natural gas producing assets in Mountrail County, North Dakota, for $200 million.

The assets sold consist of approximately 4,363 net acres with a net production of approximately 2 Mbbl/d from 81 gross wells.

View MDU press release

HRT has secured a two-year extension for the Block SOL-T-195 located in the Solimoes Basin, Brazil. The extension is effective from 9-Jul-2014.

View HRT press release

McDermott International awarded a contract to provide transportation and installation services to Walter Oil & Gas for the Megalodon platform. The platform will be installed at the South Timbalier Block 311 in the Gulf of Mexico. 

McDermott will provide all materials and equipment to transport and install the six-pile platform in 391 ft of water, over an existing well site. The heavy-lift Derrick Barge 50 will perform a side-lift of the 3,300-ton jacket and set the 2,100-ton topsides. Installation is expected to commence in Q4-2014.

View McDermott press release

Halliburton has appointed Jeff Miller as President and a member of the board effective 1-Aug-2014. Mr. Miller is currently the EVP and COO of the company.

Mr. Miller began his career at Halliburton in 1997 and has held various senior management roles in the company’s global operations and business development. Mr. Miller holds a Bachelor of Science degree from McNeese State University, and has a MBA degree from Texas A&M University. He is a Certified Public Accountant and a member of the Texas A&M University Dwight Look College of Engineering Advisory Council.

View Halliburton press release

Halliburton reported a 20% YoY rise in Q2-2014 net profit to $774 million as drilling activity increased in the US and the Gulf of Mexico.

The company also reported a 10% YoY jump in Q2-2014 revenue to $8.05 billion.

Source: Reuters

Salamander Energy is no longer considering to sell itself as previously announced on 1-May-2014. The company had been considering a divestment of certain assets and, as part of that process, received a number of preliminary and conditional expressions of interest in relation to an offer for the company. This resulted in the commencement of a Formal Sale Process.

Separately, the company announced the conclusion of the sale of a 40% stake in the B8/38 Concession (containing the Bualuang Field) and the G4/50 Concession, off Thailand, for $280 million.

Charles Jamieson, Chairman of Salamander, commented: "The Sona transaction meets all of the criteria the Group were seeking in divesting of a minority stake in one of our key assets, as part of its strategy. The Board has carefully considered all of the proposals received under the previously announced Formal Sale Process and believes that this transaction represents the best outcome for shareholders and the wider Group. Focus will now shift to delivering the next phase of growth from both the existing asset base and the wider opportunity set in South East Asia."

View Salamander press release

Diamondback Energy has entered into an agreement to acquire additional leasehold interests in the Midland Basin for $538 million. The assets acquired include 13,136 net acres (88% operated), and net production of 2.2 MBOE/d from 131 gross (94 net) producing wells. Net 1P reserves, as on Jun-2014, are estimated at approximately 5.2 MMBOE.

According to Diamondback, the acreage is prospective for horizontal drilling in the Wolfcamp B, Lower Spraberry, Clearfork, Middle Spraberry, Wolfcamp A and Wolfcamp D (Cline) formations. Upon closing, the acquisition is expected to raise Diamondback's total position in the Midland Basin to more than 85,000 net acres.

View Diamondback press release

Canacol Energy announced the successful appraisal of the Morsa 1 well located on its Oso Pardo light oil discovery in the Santa Isabel Contract, Middle Magdalena Basin, Colombia. The well is currently flowing at a net rate 832 bbl/d of 25° API light oil and 160 Mcf/d of gas.

The well was spud on 27-May-2014 and reached a total depth of 5,944 ft with good oil and gas shows encountered while drilling through the primary Umir sandstone reservoir target. The well encountered a total of 66 ft of net oil pay in two separate sandstone reservoirs within the Tertiary Umir Formation with an average porosity of 17%.

Canacol completely owns and operates the Santa Isabel Contract.

View Canacol press release

Tetra Technologies announced that its gas compression unit, Compressco Partners, has acquired all the outstanding shares of Compressor Systems Inc. (CSI), for $825 million in cash.

CSI fabricates, sells, and maintains natural gas compressors and provides compression services. The company owns over 275 units in the 1,000 HP and larger range. In addition, CSI fabricates and sells engine-driven oilfield fluid pump systems primarily for the international market.

In a separate announcement, Compressco has said that it has commenced a private offering of $350 million in aggregate principal amount of senior notes due 2022. The company intends to use the net proceeds to fund this acquisition.

View Compressco press release

ExxonMobil has commenced drilling the Domino-2 well in the deep-water sector of the Neptun Block off Romania in the Black Sea. Data collected during the drilling program will be used to assess the size and commercial viability of the gas field discovered by the Domino-1 exploration well in 2012.

The Domino-2 well is located approximately 200 km offshore and is being drilled from the Ocean Endeavor rig in a water depth of 800m.

Ownership of Neptun Block: ExxonMobil (50%, operator) and OMV (50%).

View OMV press release  

AGR Group has entered into an agreement to sell its oil and gas services division (AGR Holdings) to Silverfleet Capital for NOK 1.6 billion (US$265 million).

AGR Holdings is the world's largest independent well management group. It provides well management solutions including accessing and managing scarce rig capacity. The company also provides specialized geology and geophysics and reservoir expertise and consultancy in well engineering, well planning and management of full drilling operations.

AGR CEO Age Landro said, “Moving forward, we are very excited to be partnering with Silverfleet Capital, and we are confident that this will in turn enable AGR Holdings to continue its business growth around the world and to deepen its scope of services, whilst providing the highest quality offering to its customers.”

View AGR press release