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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Fairmount Marine’s multipurpose support vessel Fairmount Fuji has assisted drill ship Stena Icemax while making a stop-over at Cape Town. On request of the owner of Stena Icemax the Fairmount Fuji carried out several cargo runs from the port of Cape Town to the anchorage.
Stena Icemax was under way from the Far East to French Guiana and required to make a stop-over at Cape Town for crew change and replenishment. Stena Icemax is a 228 meters long new build drill ship designed for deep water operations in harsh environments.
Fairmount Fuji is a multipurpose support vessel with a spacious aft deck of 280 square meters and with towing capabilities. Directly after assisting Stena Icemax the Fairmount Fuji was prepared for her next assignment in West Africa region, where she will act as a accommodation and general support vessel for an offshore operator.
- South Africa: Fairmount Fuji Assists Stena Icemax Drill Ship (worldmaritimenews.com)
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- French Guiana: Shell to Begin Guyane Drilling in Mid 2012 (mb50.wordpress.com)
GC Rieber Shipping has today ordered a new high capacity subsea vessel from Ulstein Verft with an option of one additional vessel. The new building, to be delivered in the first quarter of 2014, represents a total investment of approximately NOK 800 million.
“The market for this type of vessel is expected to be attractive going forward. This investment is consistent with our strategy to strengthen our position in the high end subsea segment. We have an attractive and flexible ship design with interesting potential also in the SURF market as well as a favorable delivery date,” says CEO Irene W. Basili in GC Rieber Shipping.
GC Rieber Shipping concluded 2011 with a fully booked fleet and significantly improved operational performance. The company expects a strong demand within advanced subsea operations in the coming years, which has been the basis for making this investment now.
The vessel is a construction support vessel “CSV” designed to operate in harsh and deep waters with length of 130m and beam of 25m. It is built to the highest standard for dynamic positioning DP-3 and equipped with a 250t AHC offshore crane. Furthermore, the ship is designed to operate in the SURF market, with capacity for pipe loads below deck and on main deck, and a vertical pipe lay system above the moon pool.
The vessel will carry two ROVs; one is to be launched from the starboard side and the other through a moonpool. The ship has a large cargo deck for OCV work. She will have diesel electric propulsion and three main azimuth thrusters. The vessel can accommodate 130 persons and will be constructed in accordance with the latest international environmental regulations.
Basili looks forward to a positive partnership with Ulstein Verft. “GC Rieber Shipping has over many years developed considerable competence in the design of specialized vessels, and the constructive cooperation we have experienced with Ulstein to accommodate for our requirements , has been important. GC Rieber Shipping positions itself in the more challenging niches of the offshore market, and I am very comfortable that we will receive a top-class vessel from Ulstein,” says Basili.
”GC Rieber Shipping is a solid and experienced shipowner, and we are pleased that they have chosen ULSTEIN for this project. Subsea is one of our focus areas, and we will deliver a state-of-the-art offshore construction vessel (OCV) that will serve the shipowner well in the years to come,” states Gunvor Ulstein, CEO in Ulstein Group.
- Norway: Captain Praises Ulstein-built ‘Blue Fighter’ Supply Vessel (mb50.wordpress.com)
- Norway: Ulstein Launches Blue Prosper PSV (mb50.wordpress.com)
- Norway: Eidesvik Sells 50 pct of Newbuild Subsea Vessel (mb50.wordpress.com)
- ULSTEIN Delivers in Brazil (gcaptain.com)
Aker Solutions has been awarded a contract by A/S Norske Shell, to deliver subsea connection systems for the Draugen field on the Norwegian continental shelf. Contract value is approximately NOK 105 million.
Scope of work includes the delivery of complete tie-in connection systems for production flowlines and umbilicals for the expansion of the Draugen field.
“Aker Solutions has supplied connection systems for the subsea installations on the Draugen field since 2002. We are pleased that we can continue to assist A/S Norske Shell to expand the field and increase the production with our solutions,” says Alan Brunnen, executive vice president of Aker Solutions’ subsea business area.
Management, engineering and procurement of the connection systems will be performed at Aker Solutions’ head office in Fornebu, Norway. Equipment deliveries will be made from 2012 to 2013.
The Draugen field is located in block 6407/9 in the Haltenbanken area of the Norwegian Sea, which is situated about 140 kilometres from Kristiansund, Norway, at a sea depth of 250 metres.
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- Norway: Aker Solutions Delivers Subsea Templates for Skuld Fast-Track Development (mb50.wordpress.com)
- Aker Solutions to Design World’s Largest Spar Platform for Statoil (mb50.wordpress.com)
- Ghana: Aker Solutions Signs Well Service Contract with Tullow (mb50.wordpress.com)
- USA: Aker Solutions to Provide Umbilicals for Anadarko’s Lucius Development (mb50.wordpress.com)
EMAS AMC, has been awarded a SURF (Subsea, Umbilical, Risers and Flowlines) contract for marine installation and pipe lay from Statoil valued at approximately US$55 million. The subsea development, Fram H-Nord, is situated in the Troll C/Fram area in the northern part of the North Sea.
“We are very pleased to be awarded this contract from Statoil as it’s a major milestone for EMAS AMC. This demonstrates our abilities as an EPIC SURF player, and our capability for delivering complex projects,” says Svein Haug Regional Head for EMAS AMC (Europe and Africa).
The Fram H Nord subsea development is the third phase of the development of the Fram Field which is tied back to the Troll C Platform. Fram H-Nord will be developed with one satellite well tied back to the existing infrastructure at Fram Vest A2 template via twin flowlines and a control and service umbilical.
The contract scope includes the engineering, procurement, transport and installation of one 10” flexible production and one 4” gas injection flowline both 5.3 km long as well as all activities necessary for the installation of the following:
- Integrated Template Structure & Manifold
- Subsea Control Umbilical (5.3 km long)
- Near-by Protection Structures
- Tie-ins of all lines to the Fram H Nord and Fram Vest A2 manifolds plus pre- commissioning/testing (RFO)
- Trenching and rock dumping of all line systems
- In addition the supply and installation of protection covers over tie-in areas at
- Fram H Nord and Fram Vest A2 templates.
Engineering, procurement and planning activities will commence immediately, and the offshore work is scheduled to commence in the third quarter of 2013. Vessels from EMAS AMCs modern construction fleet will be utilized. The contract will be managed out of EMAS AMC’s Oslo office.
- EMAS Wins $55 Million Subsea Installation Contract at Statoil’s Fram Field (gcaptain.com)
- Norway: Statoil Orders Subsea Structures for Asgard (mb50.wordpress.com)
- Norway: Technip Participates in Statoil’s Vilje and Visund Developments (mb50.wordpress.com)
- Norway: Technip to Install Subsea Compression System on Asgard (mb50.wordpress.com)
- Norway: Aker Solutions Delivers Subsea Templates for Skuld Fast-Track Development (mb50.wordpress.com)
- Ichthys: The Largest Subsea Gig for McDermott (Australia) (mb50.wordpress.com)
- Australia: Heerema Wins Subsea Installation Contract for Ichthys Project (mb50.wordpress.com)
- Norway: DOF Subsea to Provide Offshore Survey & Construction Services to Statoil (mb50.wordpress.com)