M&A news

• El Paso Corp., Houston, (NYSE: EP) plans to acquire private, Denver-based Medicine Bow Energy Corp. for $814 million, gaining an estimated 356 billion cu. ft. equivalent of proved reserves primarily in the Rockies and East Texas. The transaction is expected to close by Sept. 30. "Medicine Bow Energy is a terrific acquisition for El Paso, and it is consistent with our acquisition goals," says Lisa Stewart, El Paso president of production and non-regulated operations. "We are increasing our reserve life and the stability of our business by adding onshore properties that complement our existing operations. We expect that the annual cash flow from these properties will exceed capital expenditures by more than $100 million." The properties have a high percentage of oil reserves. "We will also add a solid group of exploration and production professionals to El Paso." Medicine Bow's properties are 68% proved developed producing and 65% gas from 300 operated wells with a current reserve life of 10.2 years. In addition to the Rockies and East Texas, Medicine Bow operates in the Midcontinent, San Juan Basin, Permian Basin and the Gulf Coast. Approximately 130 billion cu. ft. of gas equivalent of proved reserves and 27 million equivalent per day of production are owned directly by Medicine Bow, which also owns a 38.6% interest in Four Star Oil & Gas Co. Through Four Star, Medicine Bow owns approximately 226 billion equivalent of proved reserves and approximately 68 million equivalent of daily production, net to its interest. Petrie Parkman & Co. advised Medicine Bow, which was formed in 2002 with capital from EnCap Investments, Credit Suisse First Boston Private Equity, Kayne Anderson Energy Fund II and other institutions. • Whiting Petroleum Corp., Denver, (NYSE: WLL) has entered two purchase agreements with Midland, Texas-based Celero Energy LP, a Quantum Energy Partners portfolio company formed in January 2004, for approximately $802 million. Whiting will acquire the operated interest in two producing oil and gas fields: Postle Field in the Oklahoma Panhandle and North Ward Estes Field in the Permian Basin. Whiting will pay $343 million for Postle and $442 million in cash for North Ward Estes, plus 441,500 shares of Whiting common stock. Whiting estimates the deal cost at $1.09 per thousand cu. ft. equivalent of proved reserves. Total proved reserves for the properties to be acquired are estimated at 734 billion cu. ft. of gas equivalent (94% oil; 43% developed). The properties cover approximately 112,000 net acres. Whiting will operate approximately 95% of the properties, which produced at an average net daily rate of approximately 7,510 bbl. of oil and 2.8 million cu. ft. of gas, or 47.8 million cu. ft. equivalent, during the first quarter of 2005. Merrill Lynch & Co. provided a fairness opinion to Whiting, which received a funding commitment from JPMorgan Chase Bank NA. • Enerplus Resources Fund, Calgary, (NYSE: ERF; Toronto: ERF.UN) plans to acquire Lyco Energy Corp., a private Dallas-based oil and gas producer that operates in Montana and North Dakota, for US$421 million, including assumed debt and working capital of US$34 million. The acquisition represents a move into the U.S. for Enerplus and establishes a new core area for it with development potential. The assets produce approximately 7,000 BOE per day (92% oil) from the Sleeping Giant project area in Montana. The purchase also includes 120,000 net acres of undeveloped land in Montana and North Dakota. Enerplus will gain approximately 22.5 million BOE of proved reserves and 31 million equivalent of proved-plus-probable reserves. It reports an acquisition cost of C$15.68 per BOE of proved-plus-probable reserves. The proved reserves have life index of 8.8 years. Petrie Parkman & Co. advised Lyco. • Range Resources Corp., Fort Worth, Texas, (NYSE: RRC) has completed the purchase of privately held Plantation Petroleum Holdings II LLC for $116.5 million, gaining some 77 billion cu. ft. of gas equivalent (82% gas, 62% proved developed) of proved reserves in the Permian Basin. The proved producing reserves-to-production ratio is 15 years. Range will assume operations and own a working interest of approximately 100%. The properties are similar to Range's existing properties in the Permian Basin. Current production is approximately 7 million cu. ft. of gas equivalent per day from 58 wells. Range estimates the deal cost at $1.51 per thousand cu. ft. of gas equivalent of proved. The acquisition replaces approximately 90% of the company's anticipated 2005 production. • Kerr-McGee Corp., Oklahoma City, (NYSE: KMG) plans to sell its North Sea operations to Centrica Plc and Maersk Olie og Gas AS for approximately $3.5 billion in cash, the assumption of an estimated $182 million of abandonment obligations, and the assumption of all related derivative liabilities totaling $175 million after taxes. Centrica purchased interests in four nonoperated fields and related exploratory acreage and facilities for approximately US$566 million. The acquired gas fields are in the northern and central North Sea and will add approximately 11 million bbl. of oil to Centrica's portfolio. Maersk has purchased the stock of Kerr-McGee (G.B.) Ltd. and affiliated entities for $2.95 billion. This deal includes interests in 10 producing fields, five of which the company will operate. Production is 60,000 BOE per day. Kerr-McGee's North Sea assets include 231 million BOE of proved reserves and daily production of approximately 77,700 BOE, representing some 21% of Kerr-McGee's total production. • Pogo Producing Co., Houston, (NYSE: PPP) plans to acquire Unocal Corp.'s Canadian Northrock Resources Ltd. subsidiary for US$1.8 billion in cash. Pogo's total proven reserves will grow 45%, from 1.437 trillion cu. ft. of gas equivalent to 2.081 trillion. The deal will increase its worldwide net leasehold about 82%, from approximately 1.73 million net acres to approximately 3.15 million; add more than 900 drilling opportunities to its inventory; and extend its reserve life to 9.3 years. Northrock has 644 billion cu. ft. equivalent of estimated proved reserves on approximately 300,000 net acres in addition to approximately 1.1 million net acres of undeveloped leasehold. Pogo estimates the acquisition cost at approximately US$2.48 per thousand cu. ft. equivalent. In addition, the deal gives Pogo an approximate 50% working interest in some 2.7 million gross acres and exploration and development opportunities in Saskatchewan and Alberta with key exploration plays in Canada's Northwest Territories, British Columbia and the Alberta Foothills. • Total E&P Canada Ltd. plans to acquire Deer Creek Energy Ltd., Calgary, (Toronto: DCE) for approximately C$1.35 billion, gaining access to Deer Creek's operations in the Athabasca oil sands. Deer Creek has an 84% working interest in the Joslyn project and is operator. The project is to produce more than 200,000 bbl. of bitumen per day. Goldman, Sachs & Co. and Peters & Co. Ltd. are financial advisors to Deer Creek. • First Reserve Corp. plans to acquire Chart Industries Inc., Garfield Heights, Ohio, (OTCBB: CIDI) in a deal valued at US$460 million. Chart's management team will remain in place. The company designs custom equipment for air separation, liquefied natural gas, petrochemical, and natural gas-processing industries. UBS Securities LLC was financial advisor to Chart. • The Los Angeles Department of Water and Power (LADWP) has entered a $300-million purchase agreement with Denver-based Anschutz Pinedale Corp. for a portion of the company's gas reserves in Sublette County, Wyoming, to secure long-term gas supply for power generation. The acquired assets include Anschutz Pinedale's interest in 38 operating oil and gas wells, and any associated lateral pipelines, equipment, permits, rights-of-way and easements used in the production. The agreement calls for a transition to a new field operator, Ultra Resources Inc. The agreement gives LADWP 74.5% ownership in the gas acquisition, which is expected to yield approximately 112 billion cu. ft. of proven reserves. The deal would represent the largest gas field owned by a public power utility. LADWP is the lead agency in a partnership with the Southern California Public Power Authority (SCPPA), which is representing the cities of Anaheim, Colton, Glendale, Burbank and Pasadena, and the Turlock Irrigation District. The gas will be transported to Los Angeles using LADWP's existing long-term capacity contract with the Kern River Gas Transmission Co. Petrie Parkman & Co. advised SCPPA on this transaction. • AIG Financial Products Corp., Wilton, Conn., has closed a $72.2-million volumetric production payment (VPP) for an unidentified Southeastern U.S. energy company, involving some 2 million BOE of proved reserves. The production is from 10 fields in Mississippi and Louisiana, and the deal has a term of 7.33 years. • Gastar Exploration Ltd., Houston, (Toronto: YGA) closed the acquisition of working interests in East Texas and the Powder River Basin from Geostar Corp. for $68.5 million, including $30.5 million in cash, 1.7 million common shares and $32 million in unsecured subordinated notes. The acquisition increases Gastar's working interest in the leases to an average of more than 90%. The transaction also includes the purchase of an option to acquire brown-coal mining rights in the Gippsland Basin, Victoria, Australia. • Vintage Petroleum Inc., Tulsa, Okla., (NYSE: VPI) plans to acquire certain producing properties in the Midcontinent, Permian and southeastern regions of the U.S. for approximately $67.4 million from unidentified sellers. The properties contain approximately 8.7 million BOE of proved reserves (60% gas; 69% proved developed nonproducing and proved undeveloped). Net daily production is approximately 845 BOE (65% gas). • XTO Energy Inc., Fort Worth, Texas, (NYSE: XTO) has purchased nonoperated interests in the Goldsmith and Wasson oil fields in Ector and Yoakum counties, Texas, from Mission Resources Corp., Houston, for $56.5 million in cash. Net production is approximately 1,000 BOE per day. The balance of Mission's assets were purchased by Petrohawk Energy Corp. Petrie Parkman & Co. advised Mission in both deals. • Pioneer Natural Resources Co., Dallas, (NYSE: PXD) has signed an agreement with ConocoPhillips Alaska to acquire up to a 50% working interest and potentially assume operatorship of the Cosmopolitan unit, Cook Inlet, Alaska. • Abraxas Petroleum Corp., San Antonio, (Amex: ABP) has acquired an average 44% of approximately 12,000 contiguous acres in the Oates SW Field area of West Texas and a three-year lease on a large portion of the remaining mineral interests for approximately $2.9 million. The acquisition involves 2 billion cu. ft. of gas equivalent of proved reserves. • Berry Petroleum Co., Bakersfield, Calif., (NYSE: BRY) has acquired interests in approximately 20,000 gross acres in the Williston Basin of North Dakota and is in the process of purchasing additional interests in another 100,000 gross acres for a total of approximately $9 million. The deals will be Berry's entry to the Bakken oil play in the Williston Basin. • Enerplus Resources Fund (NYSE: ERF) has acquired TriLoch Resources Inc. in a deal valued at C$73.4 million in stock, including the assumption of debt of about C$5.2 million. Enerplus gained assets in the Enchant area of southern Alberta currently producing approximately 1,550 BOE per day (68% gas) and involving 3.8 million BOE in proved and 1.8 million of probable reserves. The reserve-life index is 9.9 years. GMP Securities Ltd. was financial advisor to TriLoch. • W&T Offshore Inc., Houston, (NYSE: WTI) has closed the acquisition of 25% of East Cameron 321, Gulf of Mexico, from Marathon Oil Corp., Houston (NYSE: MRO). W&T now owns a 100% working interest in EC 321 and has become operator. Reserves total approximately 9 billion cu. ft. of gas equivalent and production is some 1,300 bbl. of oil and 6 million cu. ft. of gas per day. • PetroQuest Energy Inc., Lafayette, La., (Nasdaq: PQUE) has closed the acquisition of gas properties in the Arkoma Basin of Oklahoma from Staab Holdings LLC, Mako Resources LLC and Golden Gas Service Co. for an adjusted purchase price of approximately $16 million. The acquisition includes approximately 6.7 billion cu. ft. of proved reserves (61% proved developed producing; 100% gas) and approximately 2 million cu. ft. of gas per day of production. The purchase expands the company's operations in the Arkoma Basin, adding approximately 8,900 net acres, bringing its total ownership to 21,000 net acres. • A subsidiary of Calgary-based, privately held Nations Energy Co. Ltd. has plans to acquire Calgary-based Tartan Energy Inc. (Toronto Venture: TEW) for C$0.63 per Tartan share. Tartan holds assets primarily in California through Tartan Energy U.S.A. Corp. • Whiting Petroleum Corp., Denver, (NYSE: WLL) has acquired all the limited partnership interests in three institutional partnerships managed by subsidiary Whiting Programs Inc. for $30.5 million. The assets involve approximately 17.4 billion cu. ft. of gas equivalent of reserves (62% oil) for an acquisition cost of $1.75 per thousand equivalent. Production is approximately 4 million equivalent per day. The assets are primarily in Louisiana, Texas, Arkansas, Oklahoma and Wyoming. • StarPoint Energy Trust, Calgary, (Toronto: SPN.UN) plans to acquire a package of long-life, operated, light-oil properties in southeast Saskatchewan for approximately C$318 million from EnCana Corp., Calgary (NYSE: ECA). The assets contain 16.6 million BOE of proven-plus-probable reserves, and more than 6,100 BOE per day of production. After closing, StarPoint will be one of the largest producers in Saskatchewan-more than 15,000 BOE per day of light oil. Working interest is 65% and the assets are 85% operated. Proved reserves total 11.3 million BOE. The deal price per proved BOE is C$$28.15, according to StarPoint. The price per flowing BOE is C$52,200. • XTO Energy Inc., Fort Worth, Texas, (NYSE: XTO) has an agreement with ExxonMobil Corp., Irving, Texas, (NYSE: XOM) to develop acreage in the northeastern portion of the Piceance Basin in northwest Colorado. Under the terms, XTO will farm-in approximately 69,500 contiguous gross acres east of ExxonMobil's Piceance Creek Unit in Rio Blanco and Garfield counties. XTO will operate and earn a 50% working interest ownership in the entire leasehold position by drilling four wells. • Viking Energy Royalty Trust, Calgary, (Toronto: VKR.UN) plans to acquire Krang Energy Inc. for C$172 million, including assumption of bank debt and a working capital deficiency of approximately C$36 million. Privately held Krang has production of 5,000 BOE per day (50% heavy oil) in western Canada. The acquisition will include 16.6 million BOE of proved-plus-probable reserves, and a reserve-life index of approximately nine years. Krang also has a large inventory of low-risk development opportunities on 109,595 net acres of undeveloped land. • Flagship Energy Inc., Calgary, (Toronto Venture: FG) plans to purchase privately held New Venture Energy Inc. for C$18.26 million, comprised of 3.3 million Class A shares priced at C$3.85 each and the assumption of C$5.5 million of net debt. New Venture is approximately 89% owned by GrowthWorks Canadian Fund Inc., a labor-sponsored venture capital fund. It owns and operates sweet-gas properties in the Edam area of west Saskatchewan and in the Lloydminster, Swimming and Mannville areas of eastern Alberta. The acquisition includes proved reserves of 6 billion cu. ft. of gas, giving the deal a price of C$15.10 per proved BOE, according to Flagship. Production is approximately 2.55 million cu. ft. of gas per day. The acquisition also includes approximately 65,000 net acres of land, of which 38,000 acres are undeveloped. • Harken Energy Corp., Dallas, (Amex: HEC) has sold more than 2 million shares in Global Energy Development Plc, its international unit, leaving a balance shareholding of some 22 million shares or 62.7%. Proceeds totaled some $7 million. • ConocoPhillips, Houston, (NYSE: COP) and Russia-based Lukoil have finalized the Naryanmarneftegaz joint venture to develop resources in northwest Arctic Russia. ConocoPhillips has a 30% interest in the joint venture. The amount of the transaction involving acquisition of this interest is approximately US$500 million. The companies will govern the venture 50/50. The venture is expected to be producing and marketing approximately 200,000 barrels of oil equivalent per day at peak. The venture is part of a larger alliance between ConocoPhillips and Lukoil that was formed in 2004.