• A subsidiary of Exco Resources Inc., Dallas, (NYSE: XCO) has acquired Winchester Energy Co. Ltd. and its affiliated entities from Progress Energy Inc., Raleigh, N.C., (NYSE: PGN) for $1.2 billion in cash.

The assets in the transaction include gas properties in the Cotton Valley, Hosston and Travis Peak trends of East Texas and North Louisiana with an average 87% working interest (68% net revenue interest). Current production is approximately 75 million cu. ft. of gas equivalent per day from 588 producing wells (89% operated).

Proved reserves are approximately 325 billion cu. ft. of gas equivalent with probable reserves of 300 billion cu. ft. and possible reserves of 30 billion cu. ft.

The properties include approximately 775 drilling locations (33% proved) and 106,000 net acres of leasehold, six gathering systems with 300 miles of pipe and a 54-mile, 16-inch pipeline with throughput of 115 million cu. ft. of gas per day (35% company owned).

Exco's total proved reserves are now approximately 1.3 trillion cu. ft. of gas equivalent and its reserves in all categories total approximately 2 trillion. It has assumed approximately 5.5 billion cu. ft. equivalent of hedges for the year from the seller at $9.33 per million cu. ft.

The acquisition was financed with a $650-million term loan facility and a new revolving credit facility. Progress chairman and chief executive Bob McGehee says, "This was the right time for our company to exit the gas exploration and production business. We were able to capitalize on favorable market conditions while substantially increasing value over the invested capital and lowering the company's risk profile."



• Occidental Petroleum Corp., Los Angeles, (NYSE: OXY) has acquired oil and gas assets adjacent to its existing operations in California and the Permian Basin in West Texas from Plains Exploration & Production Co., Houston, (NYSE: PXP) for $865 million in cash.

The assets are in the Asphalto, Buena Vista and Mount Poso fields in the San Joaquin Valley, the Sansinena Field in the Los Angeles Basin, the Pakenham Field in West Texas and various minor properties. Sales, net of exchange-related gas volumes, are approximately 7,200 BOE per day. Proved reserves are approximately 56 million BOE.

Jim Flores, Plains chairman, president and chief executive, says, "This quickly executed divestment allows us to accelerate our realignment of personnel and management responsibilities on our remaining properties that have growth potential for the next several years." Proceeds will be used toward debt and stock buybacks."

Ray Irani, chairman, president and CEO of Occidental, says, "We plan to apply the techniques we have used successfully to enhance production in our other U.S. operations." Occidental expects to increase current production within the next few years.

The transaction was financed with cash on hand. Lehman Brothers and Randall & Dewey, a division of Jefferies & Co., assisted Plains in the sale.

Standard & Poor's says, "The acquisition comes on the heels of a large dividend increase and expansion of the company's share-repurchase program, the loss of 7% of its production through termination of its operating contract in Ecuador, and its $3.8-billion acquisition of Vintage Petroleum earlier this year.

"Although none of these events is credit friendly and they are a departure from several years of fiscal restraint, core operations remain strong and expected robust near-term oil prices should allow Occidental to fund these actions from cash flow while comfortably maintaining a financial profile consistent with the ratings."



• Energy XXI Gulf Coast Inc., a subsidiary of Energy XXI (Bermuda) Ltd., London, (London AIM: EGY) has acquired certain properties onshore and offshore Louisiana from a number of affiliated private sellers for US$308 million in cash and other potential considerations.

The assets include interests in approximately 21 fields with 35 active wells on approximately 108,000 net acres and access to more than 2,200 square miles of 3-D seismic coverage.

Energy XXI estimates proved and probable reserves of more than 19 million BOE (90% gas). Production is approximately 33 million cu. ft. equivalent per day, and there are two rigs under contract. Financing will be through cash on hand, debt and proceeds from lowering a warrant exercise price from US$5 each to US$4.

Energy XXI now has proved and probable reserves of more than 55 million BOE, primarily in the Gulf of Mexico and on the Gulf Coast.



• Unit Petroleum Co., a subsidiary of Unit Corp., Tulsa, Okla., (NYSE: UNT) has acquired privately owned Tulsa-based Brighton Energy LLC for approximately $67 million in cash.

Brighton's assets are in the Anadarko and Gulf Coast basins of Oklahoma, Texas and Louisiana, with additional reserves in Arkansas, Kansas, Montana, North Dakota and Wyoming. Production is 5 million cu. ft. of gas equivalent per day and proved reserves are approximately 27 billion cu. ft. equivalent (78% gas, 67% proved developed).



• Abraxas Petroleum Corp., San Antonio, (Amex: ABP) has sold certain noncore assets in South Texas to an undisclosed buyer for $12 million. The assets are in the Three Rivers (Edwards) Field in Live Oak County, representing less than 2% of the company's net proved reserves and approximately 3% of the current daily net production. Net proceeds will be used to pay debt, develop core Texas assets and for general corporate purposes.



• ConocoPhillips, Houston, (NYSE: COP) and EnCana Corp., Calgary, (Toronto: ECA; NYSE: ECA) plan to create an integrated, North American heavy-oil business consisting of upstream and downstream assets. Closing is expected in January 2007.

The Calgary-based upstream partnership will consist of EnCana's Foster Creek and Christina Lake projects, both in the eastern flank of the Athabasca oil sands in northeastern Alberta. The assets hold recoverable bitumen of more than 6.5 billion bbl. Production is 50,000 bbl. of bitumen per day and is expected to grow to 400,000 by 2015. EnCana will be operator and managing partner.

JP Morgan was advisor to ConocoPhillips, and Credit Suisse advised EnCana.



• Pengrowth Energy Trust, of Calgary, (Toronto: PGF-A, PGF-B; NYSE: PGH) has acquired Esprit Energy Trust, Calgary, (Toronto: EEE.UN) for approximately C$1.3 billion in stock and separately, closed its C$475-million purchase of assets from ExxonMobil Canada Energy, a subsidiary of ExxonMobil, Irving, Texas, (NYSE: XOM).

Pro forma for the asset deal and merger with Esprit Energy, production will increase 41% to approximately 81,000 barrels of oil equivalent per day and proved-plus-probable reserves to about 300 million BOE.

In the merger transaction, each Esprit unit was exchanged for 0.53 Pengrowth unit with a total 35.5 million Pengrowth units issued, representing a premium of approximately 26%. Existing Pengrowth unit-holders now own 82% of the combined trust. The deal cost is approximately C$72,450 per flowing daily barrel of oil equivalent and C$18.50 per proved barrel of oil equivalent, according to Pengrowth.

Pengrowth thus acquires assets in southern Alberta in the Garrington and Mikwan areas and a key operating area in and around the Olds area. Production on the properties is approximately 18,350 BOE per day, with proved-plus-probable reserves of 71.7 million barrels of oil equivalent and 250,000 net acres of undeveloped land. The assets also include shallow-gas and coalbed-methane potential.

Along with the recent Carson Creek acquisition in Alberta, Pengrowth now has total production of approximately 81,000 barrels of oil equivalent per day (51% gas) and proved-plus-probable reserves of approximately 300 million barrels of oil equivalent.

Pengrowth chairman, president and chief executive Jim Kinnear says additional development potential exists on Esprit's core properties in the Crossfield East, Garrington, Blackstone and Richdale areas in Alberta and in many of Esprit's smaller interests.

The combined trust has approximately 683,000 net acres of undeveloped land.

Esprit president and CEO Paul Myers says, "Pengrowth has interest in five of the largest oil pools in western Canada, which are expected to continue to deliver incremental reserves through technological advances in enhanced recovery."

Sprott Securities Inc. was financial advisor to Pengrowth, and CIBC World Markets Inc. was financial advisor to Esprit.

Penngrowth also has closed the acquisition of an average 89%-operated working interest in properties in the Carson Creek area of Alberta from ExxonMobil Canada Energy.

The properties are 20 kilometers south of Pengrowth's Swan Hills and Judy Creek focus areas and include the Carson Creek gas plant.

Production is 5,100 barrels of oil equivalent per day (68% oil and gas liquids), with proved reserves of 15.5 million barrels equivalent and proved-plus-probable reserves of 19 million barrels equivalent (93% producing). Pengrowth will also receive additional beneficial ownership of gross overriding royalties and working interests in non-unitized zones and lands in the area surrounding Carson Creek.

The Carson Creek assets increase Pengrowth's overall current production 9% to approximately 62,500 barrels of oil equivalent per day.

Pengrowth funded the deal through an equity financing and its existing credit facility.



• United Heritage Corp., Midland, Texas, (Nasdaq: UHCP) has amended its merger agreement with top shareholder New York-based Lothian Oil Inc.

The exchange ratio now allows Lothian preferred shareholders to receive 0.80 United Heritage preferred share rather than 0.60606 share, or four United Heritage shares per five Lothian shares.

The merger may now be terminated by either party if it has not been consummated by April 30, 2007, rather than by Sept. 30, 2006.

Lothian currently operates oil and gas properties in Louisiana and the Permian Basin of southeast New Mexico and west Texas. United Heritage has assets in Edwards County, Texas, and Chaves and Roosevelt counties, New Mexico, with total proved reserves of 1.1 million barrels of oil equivalent.



• New York-based DLJ Merchant Banking III Inc. has acquired the interests in Pinnacle Gas Resources Inc., Sheridan, Wyo., from U.S. Energy Corp., Riverton, Wyo., (Nasdaq: USEG) and Riverton-based Crested Corp. (OTCBB: CBAG) for $13.8 million in cash.

Pinnacle was formed through capital contributions by funds affiliated with DLJ Merchant Banking and contributions of coalbed-methane production and properties by subsidiaries of Carrizo Oil & Gas Inc. (Nasdaq: CRZO).



• Superior Energy Services Inc., Harvey, La., (NYSE: SPN) plans to acquire Warrior Energy Services Corp., Columbus, Miss., (Nasdaq: WARR) for approximately $175 million in cash and 5.3 million shares valued at approximately $34.53 each in a deal valued at $358 million. The offer is $14.50 in cash and 0.452 Superior share per Warrior share.

Warrior Energy is a well-service company that provides wireline and well-intervention services. Warrior has 25 operating bases in 10 states concentrated in the Gulf of Mexico and in Alabama, Colorado, Louisiana, Mississippi, Montana, New Mexico, North Dakota, Oklahoma, Texas, Utah and Wyoming. Warrior also operates two manufacturing and repair facilities in Laurel, Miss., and Decatur, Texas.

Superior chairman and chief executive Terence Hall says the deal diversifies the company's services footprint beyond the Gulf of Mexico, and brings a seasoned management team with onshore oilfield-services experience and more than 570 skilled employees.

Simmons & Co. International is financial advisor to Warrior Energy.



• Nabors Industries Ltd., Houston, (NYSE: NBR) plans to acquire Lafayette, La.-based Moncla Cos. for an undisclosed price.

The principal assets include 56 workover and well-servicing rigs, 13 truck-mounted swabbing and testing units, rental equipment, various auxiliary equipment and real estate. Moncla's central training and maintenance facility and principal operations are in Lafayette, with extended operating yards in Mississippi and southeast Texas.

Nabors chief executive Gene Isenberg says, "We view this as an excellent opportunity to expand into one of the few markets we do not serve through the acquisition of the most highly regarded well-servicing operation in the region. It also serves as a good platform for deployment of our new 400- and 500-horsepower state-of-the-art Millennium rigs."



• Production Enhancement Group Inc., Calgary, (Toronto: WIS) plans to acquire privately held Houston-based Wireline Specialists of Louisiana Inc. in an arm's-length transaction for US$9 million in cash and shares.

The deal includes US$6.8 million to be paid 50% in cash and 50% in Production Enhancement shares and US$2.2 million in assumed debt.

Wireline Specialists is a well-service company with 21 offshore wireline units, eight land wireline units, and service locations in Louisiana and Texas. Production Enhancement plans to integrate Wireline Services into its Wise well-intervention operations, doubling the number of service locations.

Production enhancement will fund the cash portion through its senior facility with GE Energy Finance and through a subordinated debt financing currently in process.



• Houston-based RigNet Inc. and Lafayette, La.-based LandTel Communications have merged.

The new company now provides oilfield-communication services in Louisiana, Mississippi, Texas, the Rockies, the Gulf of Mexico, Brazil, Malaysia, Nigeria, Norway, Qatar, Saudi Arabia, Singapore, UAE and the U.K.

The combination gives RigNet access to RigNet's network and infrastructure.



• True Energy Trust, Calgary, (Toronto: TUI.UN) has acquired Prairie Schooner Petroleum Ltd., Calgary, (Toronto: PSL) for approximately C$431 million in True units, including approximately C$54 million of assumed net debt.

True offered 1.22 units per Prairie unit, totaling approximately 26.2 million units and a 16% premium to Prairie.

Prairie's assets include 265,000 net acres in west-central, east-central and southern Alberta, approximately 80% operated and with high working interests. Current production is approximately 6,800 BOE per day (89% gas) and proved-plus-probable reserves are estimated at 20.6 million barrels of oil equivalent (88% gas). The properties may enhance True's existing operations in the Doris and Pembina/Ferrier areas of west-central Alberta.

True's production pro forma is now approximately 67% gas, 23% heavy oil and 10% light oil and gas liquids.

True president and chief executive Paul Baay says, "This gas-weighted transaction continues to reinforce our positive long-term view of natural gas markets in North America and brings us to our 2006 target of 20,000 barrels of oil equivalent per day for the trust."

Scotia Waterous was financial advisor to True and CIBC World Markets Inc., FirstEnergy Capital Corp. and Peters & Co. Ltd. were strategic advisors. GMP Securities LP was financial advisor to Prairie.

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