Triton Diving Services, LLC, an affiliate company of Grey Mountain Partners (“Grey Mountain”), has acquired the diving assets of Louisiana Oilfield Divers (“LOD”), including the Premier Explorer, a 208-foot, 4-point vessel.
Mark Jeansonne, CEO of Triton Diving Services, said, “The LOD acquisition strengthens Triton’s position as the dominant shallow water (0-300’) commercial diving contractor operating in the Gulf of Mexico. The additional capacity provided by this acquisition will allow us to better serve our customers.”
Beth Lesniak, Vice President of Grey Mountain, said, “With a 20-ton lift capacity, accommodations for 40 crew and a fully functioning machine shop, the Premier Explorer vessel is an excellent addition to Triton’s growing dive service vessel fleet. We look forward to serving customers that have already utilized the Premier Explorer and enhancing our ability to respond to our customers’ current needs in the Gulf of Mexico and abroad.”
EPL Oil & Gas, Inc. (EPL or the Company) announced it has executed a purchase and sale agreement to acquire certain shallow water Gulf of Mexico (GOM) shelf oil and natural gas interests from Hilcorp Energy GOM Holdings, LLC (Hilcorp) for $550 million.
The assets are currently producing approximately 10,000 barrels of oil equivalent (boe) per day, about 50% of which are oil. Estimated proved reserves as of the July 1, 2012 economic effective date totaled approximately 36.3 million boe, 54% of which are oil. The properties include three fields that Hilcorp had acquired from Chevron Corporation in Ship Shoal Block 208, South Pass 78, and South Marsh Island 239, which are all on the Central GOM shelf in the vicinity of EPL’s existing core field areas. These three fields account for 64% of the current proved reserves, and approximately 82% of the total proved acquisition PV10 value estimated at $626 million using strip prices as of August 31, 2012 (see discussion of PV10 in appendix). The currently estimated asset retirement obligation to be assumed by EPL in the acquisition is expected to total approximately $120 million.
Gary Hanna, EPL’s President and CEO commented, “This is the fourth acquisition we have made since 2011, and it is the most transformational. This accretive acquisition provides scale and diversification while continuing to focus the value of our Company in the Central gulf, which is the most prolific, oil bearing region of the GOM. These underdeveloped, legacy Chevron assets allow us to leverage our proven strengths as an efficient exploiter of shallow water shelf assets.
The high operating control of 95% will permit us timely access to the development opportunities that exist on these properties. There are already over 90 low-risk, oil-rich shallow behind pipe and drilling opportunities, as well as numerous optimization projects that our operational teams will vigorously pursue. Meanwhile, as our successful strategy has demonstrated with prior acquisitions, we will apply our proven regional knowledge and technical skills to identify and exploit the upside potential of these acquired properties in short order.”
Gary Hanna continued, “This transaction nearly doubles our proved reserves to approximately 74 million boe. Additionally, it drives our production above 20,000 boe per day, supports EBITDAX generation in 2013 in the range of $450 million to $500 million and is very accretive to our key operational and valuation metrics. This transformational acquisition fits all of our acquisition criteria.”
In conjunction with signing the purchase and sale agreement, EPL will add to its crude oil and natural gas hedge positions to provide downside protection. The Company is planning to hedge 80% of the forecasted proved producing oil and natural gas production of the assets being acquired for years 2013 through 2015, with 2013 hedges scheduled to be secured early this week representing approximately 80% of forecasted proved production. Approximately 50% of EPL’s existing oil production is hedged for 2013.
In addition to utilizing cash on hand to finance the purchase, EPL has obtained committed financing from Bank of Montreal to complete the transaction, including an increase in its senior secured credit facility from $250 million to $750 million. The borrowing base under this expanded credit facility has been increased from $200 million to $450 million in conjunction with the acquisition. Additionally, Bank of Montreal and BMO Capital Markets have provided the Company a commitment for $200 million in the form of a senior unsecured bridge loan, which is expected to remain unutilized as the Company plans to access the high yield market for permanent financing before the anticipated closing date in late October.
The purchase is subject to customary closing conditions and adjustments. Hilcorp has indicated to EPL that this sale represents their exit from the GOM shelf. The economic effective date is July 1, 2012, with closing expected by October 31, 2012. EPL has submitted a 10 percent cash deposit to Hilcorp under the terms of the purchase agreement.
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The companies expect to close the transaction, subject to completion of the necessary Government and regulatory approvals, by this fall.
With an effective date of Jan. 1, 2012, the sale includes 17 million barrels of oil equivalent of net proved reserves across 10 fields in the Cook Inlet, as well as natural gas storage, and interests in natural gas pipeline transmission systems.
In 2011 net production averaged approximately 93 million cubic feet of natural gas per day and 112 barrels of oil per day.
Additionally, Marathon Oil had approximately 12.5 billion cubic feet of natural gas in storage at the end of 2011.
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Marubeni Corporation announced that Marubeni Eagle Ford Limited Partnership, a U.S. subsidiary of Marubeni, has entered into an agreement with Dallas based Hunt Oil Company, one of the world’s largest privately-owned independent oil and gas companies, to acquire a 35% working interest in the Eagle Ford shale oil and gas play covering approximately 52,000 net acres of oil and gas leases located in Texas.
The Project has plans for several hundred wells to be sequentially drilled for 5 – 10 years, with total development costs (including acquisition costs on Marubeni’s share basis) of approximately U.S.$ 1.3 billion. In addition, Marubeni and Hunt have agreed to jointly acquire additional acreage in the Eagle Ford shale oil and gas area.
The Eagle Ford oil and gas shale play currently produces high-quality light crude oil, and is one of the most attractive and promising shale oil and gas resource plays in the U.S. Marubeni said that it believes that this Project, including future expansion and the potential new businesses associated with it, will become a solid base for Marubeni providing a strong cash flow and profit on the mid- to long-term basis. The company’s position in the Eagle Ford is believed to be prospective, and Hunt, the operator of this Project, has extensive experience and expertise in the development and operation of a number of oil and gas shale plays including the Bakken located in North Dakota in the United States.
Marubeni has positioned its energy and mineral resources business, including oil and gas exploration and development, as a strategically important business area, and has already been involved in projects in the Gulf of Mexico, the North Sea (U.K.), India, Qatar and the Niobrara Shale Oil (U.S.), which started its initial oil production in October, 2011. As the result of this Project, Marubeni’s total acreage for shale oil play is approximately 72,000 net acres, which makes Marubeni the largest acreage holder among Japanese firms.
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Repsol and US oil company SandRidge Energy have reached an agreement for Repsol to buy approximately 1,500 km2 (363,636 net acres) of the Mississippi Lime play, an area rich in gas and light oil. Repsol will invest $1 billion and will incorporate reserves and production from 2012.
Repsol will participate with a 16% and 25% stake respectively in two areas within the Mississippian Lime deposit, which spans the states of Oklahoma and Kansas in the USA. Repsol’s share of production is expected to reach a peak of 90,000 barrels of oil equivalent per day in 2019.
According to the agreement, Repsol anticipates drilling more than 200 horizontal wells during 2012 and exceed 1,000 wells by 2014, in a fractured carbonate-rich area of 6,900 km². Repsol will pay $250 million in cash at closing and the remainder in the form of a drilling carry, expected to be completed in three years, according to current development expectations.
Mississippian Lime has a long production history and proven resources, rich in light oil and gas produced from fractured carbonates. The area, that has been in operation for more than 30 years, has extensive infrastructure which will accelerate the start-up of production and marketing of these hydrocarbons.
The deal is part of Repsol’s strategy to diversify its portfolio into OECD countries. The company is developing in the United States various key projects contained in its Horizon 2014 strategic plan, including exploration in the Gulf of Mexico. Repsol also has activities in Alaska, and an LNG import terminal on the Canadian-US border.
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