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All Standard Disclaimers & Seller Rights Apply.
August 30, 2012 • Volume 05, No. 11
CapitalMarketsServing the marketplace with news, analysis and
business opportunities
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&1,000 MCFD --Net Cashflow ~$100,000/Mn GIDDINGSLiquids Rich
Reserves: ----- +40% LiquidsAvg Well Cost: $1,900,000Von Goten
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CapitalMarkets 2 August 30, 2012
Upstream Market Movers — Last 30 Days Source: Capital IQ
Company Ticker$/Share 7/30/12
$/Share 8/29/12
% Change
Top
5
Gulfport Energy GPOR $20.94 $26.29 26%
Warren Resources WRES $2.36 $2.92 24%
Triangle Petroleum TPLM $5.62 $6.82 21%
Magnum Hunter MHR $3.77 $4.49 19%
Miller Energy Resources Inc. MILL $3.85 $4.55 18%
Bott
om 5
Lone Pine LPR $2.34 $1.26 (46%)
BP Prudhoe Bay Royalty Trust BPT $116.60 $76.77 (34%)
Quicksilver Resources KWK $4.75 $3.61 (24%)
Abraxas Petroleum AXAS $2.59 $2.00 (23%)
ZaZa Energy ZAZA $3.91 $3.09 (21%)Note: Data includes public,
US-based companies operating in the oil & gas space, limited to
companies >$100MM market cap & >$1.00/share.
Top five stock winners & losers Gulfport Energy shares are
up 26% in August, driven by the company’s eagerly
anticipated first Utica horizontal well results. The well did
not disappoint, testing at 17.1 MMcfd of gas and associated
condensate and NGLs adding up to 4,650 boepd, well above that of
most other results in the young play.
Shares of Warren Resources are up 24% this month on strong Q2
performance. The company had record quarterly oil production and
18% sequential oil sales growth which accounted for over 90% of
total Q2 revenues. Warren cut 2012 capex 13% to $62 million, while
increasing Q3 oil production guidance 12% sequentially from
midpoint to 3,178-3,342 bopd.
Triangle Petroleum has made a gradual 21% share climb over the
past month, possibly buoyed higher by strong quarterly production
news from several other Bakken E&Ps. Additionally, Imperial
Capital initiated coverage of the company with an Outperform
rating. Imperial cited high valuation for a proposed QEP Bakken
acreage acquisition as a positive indicator for pure-play Bakken
operators such as Triangle
and Oasis, which it believes are the most likely takeover
targets in the play.
Magnum Hunter shares climbed 19% in August on the company’s
strong progress in its shift-to-liquids efforts. While production
only grew 3% sequentially to 12,984 boepd, the production mix swung
from 35% to 45% oil and liquids with year-end expectations of 60%
liquids production. Moreover, the company projected a 2012
production exit rate above 18,000 boepd, a 38% increase from Q2
average.
Shares of Lone Pine Resources fell 37% on August 14 and are down
46% on the month due to discouraging Q2 results. The company cited
limited Q2 field activity due to the Canadian spring break-up, and
production fell 10% YOY and modestly vs. Q1. Lone Pine also reduced
2012 capex ~19% to C$160-175 million. That said, oil sales volumes
rose 14% sequentially and 44% YOY, with liquids now accounting for
32% of total production vs. 28% in Q1 and 21% in 2Q11.
BP Prudhoe Bay Royalty Trust is down 34% this month as other,
smaller royalty trusts cut dividends. Several analysts noted the
trust was trading at a $2.33 billion market value but had only a
~$1.4 billion projected income stream. They argued the hunt for
yield was inflating share prices.
The PLS CapitalMarkets covers the energy finance sector with
news and analysis on budgets, spending, financial performance and
tracking trends in available capital from commercial banks and
other providers.
In addition to the news, the Capital report has deals for sale,
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can contact PLS with provided listing code(s).
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ABOUT PLS
•Barclays projects natural gas de-mand could grow 11.3 Bcfd from
2015-2020 with growth gradual enough to prevent significant price
spikes. Annual growth over the period as pro-jected would average
2.26 Bcfd/year, while annual growth has averaged 2.51 Bcfd/year
over the past five years. Five Bcfd of demand could stem from LNG
exports, with four Bcfd through the US and another Bcfd through
Canada. Gas power generation is expected to take up another 1.54
Bcfd, new industrial demand could hit 2.2 Bcfd and oil sands
production could add 1.2 Bcfd.
•San Isidro Development Co. com-pleted a management buyout and
recapital-ization through Wilcox Swartzwelder & Co.
San Isidro has operations in the Eagle Ford and Texas Gulf
Coast, along with a leasehold in the Mon-tana Bakken. Wilcox is
a boutique i-bank serving middle-market companies in the energy,
industrial and infrastructure sec-tors. Principals have completed
over 100 deals worth over $3.6 billion in aggregate.
Capital Markets Briefs
Gulfport’s strong Utica well update pushed shares up 26%.
Triangle is trending higher on thoughts it could be a possible
takeover target.
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Volume 05, No. 11 3 energyFinanCe
Pickens gets out of BP & Suncor, slashes SandRidge stakeT.
Boone Pickens’ BP Capital Management LP completely liquidated its
stake
in supermajor BP, regulatory filings show. The firm’s Q2 13-F
filing reflects sale of the company’s ~452,000 share position,
which was valued in the prior quarter at $20.3 million. Shares of
BP fell 9.9% during Q2, culminating in a $1.4 billion
net loss on the quarter caused largely by major asset
writedowns. Pickens began building his BP position in 3Q10 after
the April
2010 Macondo spill.Pickens also closed his position in Suncor
and cut his $9.3 million stake in
SandRidge by 77% to ~278,000 shares. Data from Q2 also reflected
a previously announced full exit from Pickens’ ~499,000-share,
$11.56 million (using Q1 data) Chesapeake position in May,
reportedly due to falling gas prices. On the
service side, Pickens closed positions in Schlumberger and
Halliburton (valued at the end of Q1 at a combined $7,8
million) and pared back stakes in National Oilwell Varco and
Weatherford. He also sold $5.0 million in shares of Golar LNG.
Conversely, Pickens moved assets into McMoran Exploration,
Anadarko, Apache, EOG, Pioneer Natural Resources, Quicksilver
Resources and Southwestern Energy during Q2. He also added over
84,500 shares to a Range Resources position, which was valued at
$5.2 million as of Q2.
Huge Chevron cash position creates acquisition buzz With ~$21.2
billion in cash on the books (up 59% YOY and 12% sequentially),
speculation has picked up over what Chevron plans to do with it
all. The Wall Street Journal notes the company is now carrying more
cash than any other public energy
company with ~18% more than ExxonMobil. The company has
benefited largely due to higher oil prices and its limited US
natural gas presence.
CEO John Watson said as far back as March (when cash was a
comparatively modest $18.9 billion) that “we have the balance sheet
to do acquisitions.” Morningstar’s Allen Good said the company
might be considering “companies trading at a substantial discount,”
presumably referring to beaten-down US gas companies such as
Chesapeake. After a recent boardroom shake-up, Chesapeake could be
moving toward the block. While the company’s current low share
price could certainly be compelling, its complicated financial
structure could act as an offset. Deutsche Bank recently speculated
that Hess might be an attractive option due to Bakken operations.
Oppenheimer’s Fadel Gheit,
at least, thinks that sitting on so much dead money is evidence
the company is contemplating an acquisition.
Chevron bought back $2.5 billion in shares in H1 (up 43% YOY),
also increasing its quarterly dividend 11% to $0.90/share for what
amounts to a ~3.2% yield using recent share prices. Deutsche Bank
suggested Chevron could raise the dividend further.
Chevron defends the cash position as a way to reduce risk in a
“period of heavy investment,” with liquidity needs diminishing as
major Australian LNG and other projects come online over the next
few years. Chevron recently noted Australian dollar foreign
exchange and rising labor costs have caused it to institute a
review of the $43 billion Gorgon LNG project.
Capital Markets News •Harvest Natural Resources an-
nounced two exchange agreements totaling $6.5 million worth of
8.25% senior convertible notes for 1.17 million shares of
privately issued common at an exchange price of $5.60/share. In
lieu of cash, Harvest issued an ad-
ditional 59,170 shares in exchange for note-holders foregoing a
one-year interest make-whole of $540,457.50. After the exchange,
~$9.0 million of principal in the 8.25% convertibles will remain.
Harvest also said it is considering offering up to $75 million in
new senior unsecured notes in the future to fund its Gabon drilling
program.
•SandRidge Energy announced tenders and consents representing
94.26% of outstanding principal for its previously announced tender
offer for $350 million in senior floating rate notes
due 2014. Resulting indenture amendments
will allow redemption of remaining notes with three days notice.
Holders who tender prior to expiration of the tender offer on
August 31 will receive 97.25% of par value. Barclays is acting as
dealer manager and solicitation agent.
•White House spokesman Josh Ear-nest recently confirmed via a
news brief-ing that the White House is considering a release from
the US Strategic Petroleum Reserve. Earnest said the administration
is carefully monitoring the global oil market and global prices,
and would “continue to coordinate” with other major economies
regarding its findings. Reuters reported US officials were
considering the move to keep high energy costs from undermining
Iran sanctions.
Capital Markets Briefs
If Chevron retired all debt, it would still have ~$11.2 billion
cash remaining.
Chevron paid ~$3.2 billion in 2010 for gas-levered Atlas
Energy.
Shell's strong cash position also breeds acuisition buzz.
A&D Transactions Vol.23, No.11
Pickens' BP stake was worth $20.3 million in Q1.
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BP Capital’s stock holdings dropped ~25% to $130 million in
Q2.
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CapitalMarkets 4 August 30, 2012•Antero Resources reported a
Q2
net loss of $478 million (vs. a $75 mil-lion 2Q11 profit and a
$59 million loss in 1Q12), driven largely by a $427 million loss on
the sale of its Ar-koma basin assets to Vanguard Natural Resources.
Adjusted net income was $22 million (down 52% sequentially). Net
production was a record 348 MMcfed, up 57% YOY and 10% sequentially
driven largely by new Marcellus and Piceance wells. Gas represented
93% of daily pro-duction with NGLs at 5% and crude 2%.
•Atlas Resource Partners reported Q2 adjusted EBITDA of $16.6
million (up 5% YOY and 23% sequentially). Produc-tion was a record
62.5 MMcfed (up 71% YOY and 57% sequentially), supported by
recent Barnett acquisitions. Gas was 93% of production.
Presi-dent Matthew Jones said the
company had commenced its Barnett drill-ing plan on the July
closure of Atlas’ Titan Operating LLC acquisition, and was
begin-ning drilling in its new development areas including the
Mississippi Lime, Utica and Marcellus. Atlas projects a ~50% YOY
2013 distribution increase at $2.30-2.45/unit.
•Cimarex Energy reported Q2 ad-justed net income of $70.4
million, down 51% YOY and 35% sequentially on lower oil (down 12%
YOY), NGL (36%) and gas prices (49%). Production was 590.1 MMcfed,
up marginally YOY and down 2% sequen-tially. However, oil
production was up 8% YOY (although down 3% sequentially) to 28,686
bopd. Production was hurt by Cana-Woodford ethane rejection.
Overall production was 54% gas, 29% oil and 17% NGLs. Cimarex
raised Permian/Mid-Con oil production growth guidance from 20-27%
to 28-32% due to strong drilling results.
•EV Energy Partners reported Q2 adjusted net income of $23.5
million (down 8% YOY and 17% sequentially). Production was 162
MMcfed (up 47% YOY due to 2011 acquisitions and 2% sequentially).
Total operating costs rose 58% YOY to $85.6 million, with LOEs
rising 38% to $24.9 million. EVEP launched its Utica monetization
process, which is moving forward as planned, at the end of Q2.
Earnings & Capex Briefs Capital Market News
Crude likely to outperform sector in crisis, TPH saysWith all
eyes on Israel and Iran, Tudor, Pickering, Holt & Co.
examined
performance of WTI and various industry segments in the
one-month period following the “Arab Spring” Egyptian turmoil and
Libyan uprising periods last year for comparisons. Overall, oil
outperformed the industry.
The best sector segment performer in both events was onshore
domestic oil-levered E&P companies. Majors performed well,
but
not as well as domestic onshore operators. The oilfield service
segment and international E&Ps fared worst. Refiner performance
depended on whether onshore vs. LLS/Brent spread narrowed
(negative) or not. Midstream companies were largely flat in both
periods.
In the Egypt scenario, WTI rose 14% from $85/bbl during the
month following, while onshore oily E&Ps rose 15%, oilfield
services rose 9% and offshore and international E&Ps
lagged.
In Libya, WTI rose 13% from its $90/bbl start-point. While
onshore oil-levered up-streamers rose 5% in the first week, they
ended the month down 1% (vs. the S&P which fell 5%). All other
segments fell by month’s end, as well, with only oilfield services
un-derperforming the S&P. TPH rationalized the better moves
during the Egypt scenario by noting its overall smaller
contribution to global supply and thus actual impact on
markets.
Looking forward, Tudor anticipates a reaction closer to the
Libya scenario should hostilities commence, due both to
Iran’s larger contribution to global crude supply and the likely
higher starting price for crude as between the scenarios. Tudor
again sees onshore E&Ps (both oil and gas) win-ning compared to
beta for the rest of the sector because of asset safety, with
expected un-derperformance from services due to its leverage to
international operations. The i-bank said refiners were a bit of a
toss-up, as the spread could widen, but crude prices could get so
high as to hurt overall demand, potentially harming the cycle for
the segment.
Tudor reiterated its position that supply shock driven price
moves are not good for energy stocks, because long-term performance
relies on sustainability of prices and the overall sector cycle.
Neither benefit from a crisis.
Onshore domestic oil-levered E&Ps benefited most from prior
recent crises.
Regardless of short term, a crude crisis shakes confidence in
the sector.
Concho upsizes public debt offering to $700 million Concho
Resources announced and priced a $700 million public offering of
senior
unsecured notes due 2023 at par to yield 5.5%. The offering was
upsized 75% from an initially proposed $400 million. Net proceeds
will be used to repay a portion of outstanding debt under Concho’s
credit facility, which stood at $1.4 billion as of July 2
(reflecting Concho’s ~$1.0 billion Three Rivers acquisition). The
offering represents a 28%
increase to Q2 long-term debt of $2.52 billion. Joint
book-running managers are JP Morgan, Merrill Lynch, Barclays and
Wells Fargo.
Concho also reported Q2 adjusted net income of $80.5 million,
down 29% YOY and 26% sequentially. Results were hurt by a temporary
widening of the Midland-to-Cushing crude spread, as well as lower
NGL and gas prices. Operating costs also rose YOY on higher LOEs,
workover and labor costs, partially offset by lower oil and gas
taxes. Production was 74,521 boepd, up 22% YOY but down 1%
sequentially. Oil production accounted for 62% of total at 46,027
bopd (up 20% YOY and flat sequentially), while gas production was
171 MMcfd (up 27% YOY but down 4% sequentially). The sequential
decline was due to maintenance and expansion work at gas processing
and compression facilities in southeast New Mexico. CEO Tim Leach
said the Three Rivers acquisition reinforced the company’s
strategic presence in the Permian.
Public Debt & Equity
Concho upsized its debt offering 75% to help pay down its Three
Rivers buy.
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Volume 05, No. 11 5 energyFinanCeCapital Market News Earnings
& Capex Briefs
Cost improvements & infrastructure focuses at EnerComMany
operators focused on efficiency at the annual EnerCom conference in
Den-
ver, lauding downspacing and pad drilling achievements to
increase recovery. The Marcellus seems to be seeing more success
from these efforts according to Wells Far-go’s talks with
operators, while the Bakken lagged the pack a bit with SM Energy,
Oasis and Whiting in the process of moving to pads. SM’s costs may
be flat YOY, with drilling costs firm but some softness in
completions. Water is also an issue, with
QEP noting it is paying over $1 million/well for flowback
water.Robert W. Baird agreed that returns on cost improvements
were more often than not the focus, with growth challenged in
many cases. It appears Baird received conflicting impressions vs.
Wells regarding the Bakken, saying costs were improving on
field-level infrastructure while recoveries also grew.
Overall, producers seemed comfortable with recently
somewhat-recovered oil prices, but warn of pending regional
infrastructure bottlenecks likely to impact both crude and NGLs.
Many producers are also coming around on gas prices with some
expressing even bullish sentiments, although exact timing of price
recovery is a primary question and volatility is expected during
shoulder season as storage capacity nears. Wells Fargo analyst
discussions with some gas players including Goodrich Petroleum and
QEP indicated they might begin drilling again at $4.50-5.00. Wet
gas producers seemed to have consensus regarding propane export
outlook next year
and recovering prices, but were mixed re-garding the possibility
of ethane export.
Baird noted cautious optimism toward both oil and gas from both
investors and producers, but with the clear focus on oil for most
and with macroeconomic uncertainty offsetting enthusiasm somewhat.
Sentiment for the Niobrara was “meaningfully improved” (perhaps not
surprisingly given the venue) on suc-cesses by Anadarko and Noble,
with Baird noting smaller operators such as Carrizo, PDC and
Bonanza Creek were poised to benefit. Meanwhile, emerging plays
including the Utica, Tuscaloosa Marine Shale (a/k/a TMS) and Brown
Dense got some positive buzz, as well. While sentiment was still
positive regarding the Eagle Ford and Permian, it apparently saw
somewhat of a downtick for both plays due to infrastructure (both
plays), NGL difficul-ties (Eagle Ford), play inconsistencies
(Permian) and “sticky” costs (Permian) contributing.
As for investors, Wells Fargo’s report also noted caution and
lack of consensus after a 20% recovery of the EPX since June. There
was apparently little margin for er-ror for recent underperformers;
Wells Fargo said there was more than one contentious
post-presentation Q&A session.
Marcellus sees most cost improvements, mixed opinions on
Bakken.
Infrastructure challenges continue to be a concern for many
plays.
•Goodrich Petroleum reported a Q2 adjusted net loss of $7.5
million (vs. YOY and sequential losses of $4.7 million and $10.1
million, respectively). Production
was 91 MMcfed (down 20% YOY and 5% sequentially), driven by
declining gas production due to
all capex being reallocated to oil produc-tion, which grew 17%
sequentially to 2,800 bopd. Production guidance for Q3 is 85-89
MMcfed and 3,200-3,600 bopd (23% of total production).
•Halcon Resources reported Q2 adjusted net income of $2.8
million (vs. $2.3 million in 2Q11 and a $2.7 million
1Q12 loss). The company pro-duced 3,912 boepd (down 6% YOY and
4% sequentially), with
73% liquids. Halcon also announced completion of its
GeoResources and East Texas asset acquisitions. Halcon’s credit
facility was also amended upward to $1.5 billion and its borrowing
base was increased 133% to $525 million.
•Magnum Hunter reported a Q2 ad-justed net loss of $6.6 million,
down from $1.7 million adjusted net losses YOY and sequentially. Q2
production was 12,984 boepd, up 162% YOY and 3% sequential-ly. The
production mix shifted signifi-cantly vs. Q1, however, with
oil/liquids production rising sequentially from 35% to 45% on
expectations of exiting 2012 with 60% oil/liquids. Magnum also
proj-ects a 2012 production exit rate ~38% above Q2 average to
exceed 18,000 boepd. The company also announced a 22% increase of
its credit facility borrow-ing base to $260 million.
•Northern Oil and Gas reported Q2 record adjusted EBITDA of
$53.1 mil-lion, up 134% YOY and 19% sequentially on stronger
production, partially offset by 2% lower realized prices and higher
water production, trucking and disposal costs. Production was
10,412 boepd, up 136% YOY and 22% sequentially. Oil was 93% of
production, and up 135% YOY and 23% sequentially, while gas and NGL
production rose 158% YOY and 11% sequentially. Northern increased
2012 capex estimates ~$27 million to ~$387 million on 7% higher
estimated com-pleted well costs of $8.8 million.
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CapitalMarkets 6 August 30, 2012•Native American Energy Group
an-
nounced an $854,138 Q2 reduction in bal-ance sheet debt for a
total debt reduction of 17%. Native said it had reached agree-ments
with owners of a significant amount of long-term debt, apparently
regarding convertible debt priced between $1-2/share. The company
said the pricing speaks to creditor confidence in corporate
outlook, as well as strengthening its bargaining position in
current funding negotiations for future acquisitions. It has also
restructured certain license agreements. Going forward, Native is
halting additional debt conver-sions to prevent equity
dilution.
•Rock Energy Resources announced debt forgiveness totaling
$1,327,500 from Rock’s chief Rocky Emery and his family. Emery said
he was sensitive to company goals and wanted to do what was best in
the interest of shareholders. Vice chairman Mark Harrington said
the move was an im-portant step toward making Rock debt-free.
Private Equity Briefs
Marquez in ‘advanced discussions’ for Venoco financing Venoco
was advised that chairman Timothy Marquez’s Denver Parent Corp.
was
involved in advanced discussions regarding a $436.5 million
financing package for Marquez’s $750 million take-private offer.
DPC proposes a $21.5 million draw on a new first lien revolver, a
$175 million second-lien term loan at Venoco, and a $210 million
Venoco asset sale to DPC offset by $240 million in capital raises
by DPC including
a VPP on the sold assets. All transactions would be structured
to close simultaneously. Closure,
although not certain, is expected on or before September 14.
Shares closed up 15.2% on the news to $10.98, still 12.2% below
Marquez’s $12.50/share January bid price, but the move reflects
increasing confidence that a deal is possible. Either party may
terminate the deal and negotiations after September 14. Venoco has
extended the financing deadline, which now sits at August 31, twice
as Marquez works
to obtain necessary financing. With the most recent extension,
the company pulled the “deal termination date” forward from October
16 to September 14, with special committee chairman Rick Walker
justifying the move as a means to reduce uncertainty regarding the
deal. As of January 16 (when Marquez made his offer), Marquez owned
50.3% of the company between individual and affiliate
ownership.
Earnings & Capex
Marquez must find $240 million in capital after factoring for a
Venoco VPP.
Proposed Venoco FinancialsSources AmountVPP Proceeds $210.00
HoldCo Financing $30.00
2nd Lien Term Loan $175.00
TP Revolver $21.50
Total $436.50
Uses AmountPay merger consideration to VQ stockholders
$366.00
Pay off VQ Revolver $45.00
Fees & expenses $23.00
HoldCo Working Capital $2.50
Total $436.50
Pro Forma Capitalization ($MM) Amount
Cash 6/30/12 $0.00
PF Revolving Credit Facility $21.50
PF 2nd lien term loan $175.00
11.50% Senior notes $150.00
8.875% Senior notes $500.00
Total Debt $846.50Source: Venoco August 16 Presentation via PLS
docFinder www.plsx.com/finder
Shares rose ~15% on latest news with increasing confidence the
deal may close.
•Oasis Petroleum reported Q2 adjust-ed EBITDA of $108.5 million,
up 70% YOY and 7% sequentially. Production rose 158% YOY and 15%
sequentially to 20,353 boepd, beating both estimates and guidance,
with 91% oil production. Full year guidance was increased from
18,000-22,000 boepd to 20,500-22.500 boepd on expanded
infrastructure development ef-forts, well testing and infill
drilling. Oasis in-creased its 2012 capex budget 20% to $1.06
billion on accelerated well activity. Mean-while, Oasis expects to
decrease overall well costs by ~10% by YE12, with additional pad
drilling-related decreases in 2013.
•Penn Virginia reported a Q2 ad-justed net loss of $10.8
million, vs. $11.9 million losses in 2Q11 and 1Q12. Produc-
tion was 117.1 MMcfed, down 9% YOY and 2% sequentially. However,
oil production grew
161% YOY and 4% sequentially to 6,270 bopd. Oil and NGLs were
45% of produc-tion, vs. 24% in 2Q11. Penn said 2012 crude and NGL
production would account for 47% of production from a prior 43%.
The company discontinued its dividend to improve liquidity and help
fund its Eagle Ford drilling program.
Earnings & Capex Briefs
Seadrill revenue up 13% YOY, backlog up 60% in Q2 Seadrill
announced new contracts during Q2 totaling $7.6 billion, which
increased
backlog 60% sequentially to a company record $20.3 billion. With
an average floater contract term of 3.2 years and a burn rate of
$1.1 billion/quarter, Seadrill expects to
maintain backlog levels going forward. The company reported Q2
net operating income of $483 million (up 12% YOY and 6%
sequen-tially) on revenues of $1.12 billion (up 13% YOY and 7%
sequen-
tially). Floater revenues rose 12% YOY to $718 million, while
tender rigs also saw strong 34% YOY revenue growth to $183
million.
Seadrill predicts solid forward newbuild demand, saying future
global drilling needs can-not be met by new capacity expected to
hit the market in 2013-2014. This opportunity should be enhanced by
lower costs driven by a cyclical shipyard downturn and lower
newbuild pric-es. The company increased its quarterly dividend 2.4%
to $0.84/share, proving its optimism.
Private Debt & Equity
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Volume 05, No. 11 7 energyFinanCe
Continental Costs Driving Margins
2009 2010 2011 1H 2012Realized oil price ($/Bbl) $54.44 $70.69
$88.51 $85.40 Realized natural gas price ($/Mcf) $3.22 $4.49 $5.24
$3.96 Oil producon (Bopd) 27,459 32,385 45,121 62,587 Natural gas
producon (Mcfpd) 59,194 65,598 100,469 165,611 Total producon
(Boepd) 37,324 43,318 61,865 90,189
EBITDAX ($000's) $450,648 $810,877 $1,303,959 $876,392
Key Opera�onal Sta�s�cs (per Boe) (1)Average oil equivalent
price (excludes derivaves)
$45.10 $59.70 $73.05 $66.31
Producon expense $6.89 $5.87 $6.13 $5.17 Producon tax $3.37
$4.82 $6.42 $6.16 G&A (2) $2.19 $2.35 $2.36 $2.25 Interest
$1.72 $3.34 $3.40 $3.45Total cash costs $14.17 $16.38 $18.31
$17.03
Cash margin $30.93 $43.32 $54.74 $49.28 Cash margin % 69% 73%
75% 74%
Years Ended December 31
1. Average costs per boe have been computed using sales volumes
and exclude any effect of derivative transactions. 2. Excludes
G&A related to equity-based compensation and excludes
relocation expense. Source: Continental August 10 Presentation via
PLS docFinder www.plsx.com/finder
Earnings & Capex •Plains E&P missed consensus esti-
mates, reporting Q2 adjusted net income of $54.9 million, down
29% both YOY and sequentially on lower gas production and
pricing YOY and overall com-modity pricing sequentially.
Production was 98,970 boepd, flat YOY but up 12% sequentially.
Oil and liquids (61% of total sales) were 59,780 bopd (up 23% YOY
and 20% sequentially), while gas was 235 MMcfd (down 22% YOY and up
marginally sequentially. Full-year produc-tion guidance was
increased 2% from midpoint to 95,000-97,000 boepd, with oil
accounting for 57-60% of production.
•Quicksilver Resources reported a Q2 adjusted net loss of $21
million (vs. a $11 million gain in 2Q11 and a $15 mil-lion loss in
1Q12). Production was 359 MMcfed (down 14% YOY and 5% sequen-
tially) with 80% gas. Quicksilver cut planned 2H capex by $50
million, deferring commitments
in the Horn River basin, as it recorded $992 million in gas and
NGL asset impair-ments. Chief Glenn Darden said the company was
“aggressively attacking costs and capital expenditures” and that
Quicksilver had made significant prog-ress on two JV
negotiations.
•Sanchez Energy reported Q2 adjusted net income of $61,000 (vs.
$960,000 YOY and $1.5 million in 1Q12). Production was ~857 boepd
(up 75% YOY but down 7% sequentially) with oil
accounting for 79% of produc-tion. Five wells awaited
comple-tion at the end of Q2, with
another 12 wells to be drilled in the Eagle Ford by year’s end.
Sanchez expects to maintain production growth as it moves from
delineation to development drilling while refining completion
techniques. It is also finalizing a new credit facility.
Earnings & Capex Briefs
Continental raises capex 30% to spur production growth According
to CEO Harold Hamm, Continental Resources is well ahead of plans
to
triple production from 2009 to 2014, but is increasing 2012
capex projections significant-ly to support that growth. Hamm said
the company was seeing higher production with fewer rigs and should
hit the five year target in 1H13, 18-24 months earlier than
original-ly planned. Production was a record 94,852 boepd, up 76%
YOY and 11% sequentially. Crude accounted for 69% of production and
was up 62% YOY. By region, the highest
sequential increases were the North Dakota Bakken, rising 13% to
47,166 bo-epd, and the Anadarko Woodford, which rose 30% to 16,672
boepd.
The company increased full-year pro-duction growth guidance from
a previous 47-50% to 57-59%, but also increased drilling capex
projections 30% from $2.3 billion to $3.0 billion (up 71% from
Continental’s pre-May target capex of $1.75 billion). Continental
said it was making the increase due to “accelerated spending to
drill high rate-of-return projects in the Bakken and increases
in Continental’s average working interests in the Bakken and
Anadarko Woodforw wells, which has helped boost production
growth.” Overall, the company reported Q2 adjusted net income of
$123 million, up 14% YOY but down 10% sequentially. Crude price
differential forecasts were increased 20% from midpoint to
$11-13/bbl, but production expense estimates were pared 15% from
midpoint to $5.25-5.75/boe.
Subsequently, Continental an-nounced a $1.2 billion private
offering of 5% senior unsecured notes due 2022, priced at 102.375%
of par for a yield to worst of 4.624%. The offering was upsized 71%
from an initially announced $700 million. Net proceeds will be used
to repay borrowings under Continental’s revolver and for general
corporate purposes. The issuance amounts to a 53% increase to Q2
long-term debt of $2.25 billion. The new notes came as an extension
of a prior March 2012 issu-ance of $800 million in similar notes,
which Continental subsequently exchanged for $800 million in
publicly registered, but otherwise identical, notes.
2012 capex projection up 71% ; production growth forecast raised
49%.
Continental’s ND Bakken & Anadarko Woodford production
growing fastest.
Private debt offering was upsized 71% to $1.2 billion.
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CapitalMarkets 8 August 30, 2012
•Superior Energy announced a subsidiary issued notice of
redemption for $150 million in 6.875% senior notes due 2014 on
August 21. The subsidiary also
extended an offer to exchange $800 million in
publicly-registered 7.125% senior notes
due 2021 for the existing $800 million worth of privately issued
but otherwise identical notes. The offer was extended from August
16 to August 22, with 99.7% of notes already having been received
when the extension occurred.
•Southwestern Energy reported 2Q adjusted net earnings of $90.8
mil-lion, down 46% YOY and 16% sequen-tially driven by lower
realized gas prices (down 27% YOY and 11% sequentially
post-hedges). Production was 1.5 Bcfed, near the upper range of
guidance, up 12% YOY and 3% sequentially. Fayetteville production
of 1.33 Bcfd was up 13% YOY and 4.5% sequentially, despite a
0.5-1.0 Bcf offset caused by extreme heat in Ar-kansas.
Southwestern recorded a $936 million pre-tax asset impairment, also
caused by lower gas prices.
•Vanguard Natural Resources reported Q2 adjusted net income of
$8.7 million (down 45% YOY and 60%
sequentially). Production was 12,338 boepd (down 7% YOY and 9%
sequentially). Gas production
dropped 31% YOY; oil rose 2%. Crude was 61% of the mix, gas was
27% and NGLs were 12%. Post-hedging impacts, gas prices were down
24% YOY, crude was down 2% and NGLs were down 32%, with “dramatic”
sequential liquids rev-enue declines. As of August 1, Vanguard had
borrowed 74% of the $975 million borrowing base under its
revolver.
Earnings & Capex Briefs
Oilfield Service Briefs
Chesapeake cuts capex & plans asset salesThe company said
its midstream acquirer would assume the commitment, but until
the deal is done there will be some resulting overhang.Second
quarter realized prices were $3.77/Mcfe, down 38% YOY and 6%
sequen-
tially. As a result of the impact of these lower prices,
Chesapeake took a 4.6 Tcfe reserve writedown to its Barnett and
Haynesville assets, a 7% decrease vs. year-end 2011. The
company shut in another 330 MMcfd in production in Q2, matching
Q1’s curtailment, but said it does not intend to make any addi-
tional curtailments. Chesapeake also cut its 2013 exploration
drilling budget 75% vs. prior estimates to $250 million, alongside
plans to cut a previously announced 47 operated gas rigs this year
to eight by year’s end. Instead of a planned 200 total rigs at the
beginning of 2013, CEO Aubrey McClendon said the company now plans
on 100. McClendon said gas prices would probably need to exceed
$5/mcf before gas becomes competitive with oil opportunities priced
at ~$90/bbl.
SunTrust Robinson-Humphrey analyst Neal Dingmann said the gas
rig cut was more aggressive than expected. No matter how much they
cut, however, Chesapeake is still likely to remain a top two
national gas producer according to Wunderlich’s Jason Wangler, if
only because no one else is trying to grow gas production at these
prices.
Adjusted net Q2 adjusted income was a meager $46 million, down
92% YOY and 66% sequentially. Production was
3.808 Bcfed, up 25% YOY and 4% sequentially, with gas at 79% of
total production (down from 84% YOY and 81% sequentially).
Meanwhile, oil production was 13% of total, up from 9% YOY and 11%
sequentially. The company projects an 18% YOY production increase
for 2012 – including asset sales -- to 3.855 Bcfed at midpoint (80%
gas), followed by a 1% YOY increase in 2013 to 3.895 Bcfed.
Management projects gas production to drop 7% YOY in 2013, to be
offset by 32% higher liquids production.
Meanwhile, certain Barnett leaseholders, MDU Barnett LP and Oil
& Gas Working Interests LP, filed suit against the company in
relation to its Founder Well Participation Plan, alleging CEO
Aubrey McClendon received preferential treatment in his 1-2% well
interests in the “sweet spot” of the play. The leaseholders assert
Chesapeake was contractually obligated to offer them a similar
opportunity to participate. They also assert Chesapeake otherwise
consistently underpaid on the leases.
Chesapeake Cash Flow Outlook SummaryYE 2012E YE 2013E
Operating cash flow ($MM)1 & 2 $3,200-3,250 $3,750-4,750
Well costs on proved & unproved properties ($8.000-8,500)
($5,750-6,250)
Acquisition of unproved properties, net ($2,000) ($400)
Investment in oilfield service, midstream & other
($2,800-3,100) (850-1,100)
Subtotal of net investment ($12,800)-($13,600)
($7,000)-($7,750)
Asset sales & other transactions $13,000-14,000
$4,250-5,000
Interest, dividends & cash taxes ($1,100-1,350)
($1,000-1,250)
Total budgeted cash flow surplus $2,300 $0-7501. A non-GAAP
financial measure defined as cash flow provided by operating
activities before changes in assets and liabilities. We are unable
to provide a reconciliation to projected cash provided by operating
activities, the most comparable GAAP measure, because of
uncertainties associated with projecting future changes in assets
and liabilities. 2. Assumes NYMEX prices of $3.00-$3.25 and
$3.25-$4.25/Mcf in 2012 and 2013, respectively; oil prices of
$90/bbl in 2012 and 2013.Source: Chesapeake August 7 Presentation
via PLS docFinder www.plsx.com/finder
Chesapeake shut in another 330 MMcfd of gas production in
Q2.
CHK slashed 2013 exploration capex from ~$1.0 billion to $250
million.
Continued From Pg 1
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Volume 05, No. 11 9 energyFinanCeMidstream Capital Markets
•ConocoPhillips and Origin Energy are “working with” JP Morgan
to assist in the sale of a 15% stake in their $20 billion
Australia Pacific LNG project, ac-
cording to Bloomberg, which cited three anonymous sources.
Origin previously announced plans to cut its stake from 37.5% to
30%, while one of the sources
said Conoco would do the same. Origin told Bloomberg the
companies were close to
hiring an investment bank and were in final stages of
discussion. One source said Asian buyers may be interested.
•Plains All American Pipeline LP’s GP approved a 2-for-1 unit
split, to occur Oc-tober 1. As of August 15, PAA had 163.957
million common units outstanding.
Asian wealth funds pump $1.0 billion into Cheniere
China Investment Corp. and the Government of Singapore
Investment Corp., the sovereign wealth funds of the two nations,
have invested ~$500 million
each in Cheniere Energy Partners’ Sabine Pass LNG export
facility via Blackstone,
according to anonymous Financial Times and Reuters sources. The
State of Louisiana has also invested funds in the project via
Blackstone. FT said that because China’s $482 billion fund is a
passive investor through Blackstone, it will have no direct
influence on Cheniere.
Through a previous arrangement, Blackstone was slated to
purchase up to $1.5 billion in “Class B” units of Partners to
complete the $2.0 billion equity portion of the total $5.6 billion
cost of Sabine Pass. Blackstone had already purchased $500 million
of the units. Cheniere formally announced its decision to proceed
with construction on August 9. Hornbeck completes $300 million
notes offering
Hornbeck Offshore completed a private offering of $300 million
in 1.5% convertible senior notes due 2019. The underlying offering
was for $260 million in notes, but initial purchasers fully
exercised an option for $40 million in additional notes. Net
proceeds were $290.8 million. The notes are convertible to cash,
common Hornbeck
shares or a combination thereof at a rate of 18.5718 shares per
$1,000 in principal (or $53.85/share, a 37.5% premium to Hornbeck’s
common August 7 $39.16/share closing price).
Separately, Hornbeck entered warrant transactions with parties
including affiliates of the note purchasers resulting in $48.2
million in gross proceeds. The warrants have a strike price of
$68.53/share (75% above Hornbeck’s common August 7 closing price)
and cover the same number of shares of common as
contemplated by the convertible notes.Hornbeck used ~$73 million
in
combined proceeds from the note offering and the warrants sale
to fund convertible note hedge transactions with counterparties
including affiliates of its note purchasers. The hedges include
call options priced to limit stockholder exposure to dilution
should the notes ultimately be converted.
Hornbeck plans to use remaining net proceeds, along with other
sources of cash, to retire its $250 million in 1.625% senior
convertible notes due 2026, which are first subject to repurchase
at holder’s option in November 2013, and subject to corporate
redemption thereafter. Alternatively, Hornbeck may use remaining
proceeds for retirement of other debt or to fund vessel
acquisition, construction or retrofitting.
The offering represents a 35% increase vs. 2Q12 long-term
debt.
Plans to use proceeds to retire $250 million in 2013 convertible
debt.
Kinder Morgan sells $1.25 billion in bonds to fund buysAccording
to regulatory filings, Kinder Morgan Energy Partners sold a total
of
$1.25 billion in private debt to help fund a recent $6.22
billion in acquisitions from GP Kinder Morgan, consisting of the
Tennessee Gas Pipeline and a 50% stake in El Paso Natural Gas.
Partners said the acquisitions would “more than replace” lost cash
flow due to pending divestments related to a Kinder Morgan
agreement with the FTC pursu-ant to completion of its $38 billion
El Paso acquisition. Overall, Partners expects the net
effect to be slightly accretive to distributable cash flow this
year and “nicely accre-tive” next year and beyond.
The debt issuances consist of $625 million in 5.0% senior notes
due 2042 and another $625 million in 3.45% senior notes due
2023.
Additional funding for the $3.5 billion cash portion of the
acquisitions is being pro-vided by ~$650 million in proceeds from a
Kinder Morgan Management LLC equity offering and $2 billion in
revolver borrowings. Partners plans to use proceeds from the
aforementioned FTC-related divestiture (expected before year’s end)
to repay its revolver.
Partners is also issuing ~$387 million worth of equity to Kinder
Morgan to round out funding, and is assuming ~$1.8 billion in
assumed Tennessee Gas Pipeline debt
and $560 million worth of proportional El Paso Natural Gas
pipeline debt.
Meanwhile, Goldman Sachs, The Carlyle Group and Riverstone
Holdings liquidated another ~$2.0 billion of their col-lective
stake in Kinder Morgan via a secondary public offering of 58
million shares at $34.75/share, ~3% lower than the prior day’s
close. The sale represents a 34% reduc-tion in the three entities’
total investment in the company and follows a similar ~$2.0 billion
sale in June. The present offering has an overallotment option for
an additional 8.7 million shares. Barclays and Deutsche Bank are
underwriting.
China & Singapore's sovereign wealth funds invested ~$500
million each.
Midstream Capital Briefs
New debt will account for 36% of the $3.5B cash portion of the
KMI dropdown.
A $2.0B revolver drawdown will be repaid on sale of Rocky
Mountain assets.
Oilfield Service Capital
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CapitalMarkets 10 August 30, 2012•Cimarex Energy has
appointed
Thomas E. Jorden as chairman of the board of directors and
CEO.
•Credo Petroleum announced the departure of Alford B. Neely as
CFO. Brian Mazeski has been appointed as chief accounting officer,
principal financial officer, and principal accounting officer.
•Crestwood Gas Services GP LLC has appointed J. Heath Deneke as
SVP and chief commercial officer. Steven M. Dougherty has been
appointed as vice president and chief accounting officer.
•Cub Energy announced the departure of Alyson Patrick Beicker as
CFO. Wally Rudensky will assume her duties until a replacement is
found.
•EnerJex Resources has appointed Douglas M. Wright as CFO.
•Express Energy Services announced the departure of Jim Davis as
CFO. John R. Beall has been appointed to replace him.
•Greenfields Petroleum Corp. announced the departure of David G.
Gullickson as treasurer, SVP and CFO. A. Wayne Curzadd has been
appointed to replace him.
•KLR Group LLC appointed Jason Meek as managing director, Energy
Investment Banking.
•L & L Energy Inc. appointed Y.P. Chan to its advisory
board.
•Macquarie Bank has appointed Randall Byrne as SVP.
•MicroSeismic Inc. has appointed Mark Murphy as vice-president,
Analysis. Mike Mueller has been appointed as vice-president,
Technology.
•Newco Energy Acquisition Holding LLC has appointed Jim Lister
to its Advisory board.
•Rowan Companies PLC appointed J. Kevin Bartol as executive
vice-president, Finance and Corporate Development.
•Santa Fe Petroleum Inc. has appointed Steve Crane as COO.
•Southwestern Energy announced the departure of Greg D. Kerley
as CFO. Craig Owen has been appointed to replace him.
People Briefs Midstream Capital Markets
MarkWest ups debt issue 50% in ~$1.0 billion offering In recent
weeks, MarkWest Energy Partners has rolled out public debt and
equity offerings grossing $1.05 billion. The midstreamer kicked
things off with a $750 million public debt offering of 5.50% senior
unsecured notes due 2023. The
offering priced at 99.015% of par, for gross proceeds of $743
million. It was also upsized 50% from an initially proposed
$500 million offering. Net proceeds are being used to repay
borrowings under MarkWest’s revolver and for general corporate
purposes including capex and general working capital. The offering
represents a 38% increase to partnership long-term debt of $2.0
billion, as of June 30. Joint book-running managers were Wells
Fargo, BofA Merrill Lynch, Barclays, Citigroup, Goldman Sachs, JP
Morgan, RBC, UBS and US Bancorp.
The MLP followed its large debt offering with a 6.9 million unit
public equity offering priced at $50.72/unit
for anticipated net proceeds of ~$338 million. Units sold
included full exercise of a 900,000-unit 30-day underwriter
overallotment option. Net proceeds will be used to fund capex,
working capital and other general partnership purposes. Units fell
4.3% the day after the offering was announced, while with exercise
of the underwriter option, the offering represents a 5.3% dilution
to equity holders. Joint book-running managers on the equity
issuance were Barclays, BofA Merrill Lynch, Citigroup, Goldman
Sachs, UBS, JP Morgan and RBC.
Williams LP raises ~$1.2 billion to pay down credit facility
Williams Partners announced $1.187 billion gross worth of debt and
equity
issuances recently, all aimed at paying down outstanding debt
under the partnership’s credit facility. It appears that between
the two issuances Williams expects to repay
all debt under the facility. Williams noted that if net proceeds
from the equity offering exceed the outstanding balance under the
facility the remaining proceeds will be used for general
partnership purposes.
The larger of the two offerings was Williams’ public debt
issuance of $750 million in 3.35% senior notes due 2022. The
offering priced at 99.975% of par for gross proceeds of $743
million. The offering represents a 10% increase to partnership Q2
long-term debt of $7.58 billion. Joint book-running managers for
the debt issuance were UBS, RBS, Wells Fargo, Credit
Agricole and RBC.The large debt offering was preceded
by announcement and pricing of an 8.5 million unit public equity
offering priced at $51.43/unit for anticipated gross proceeds of
$437 million. The offering includes a 1.275 million-unit 30-day
overallotment option, as well. Units fell 4.2% on news of the
equity offering, compared to a 2.5% dilution to equity barring
exercise of the underwriter option. Joint book-running managers on
the equity issuance are Barclays, BofA Merrill Lynch, Jefferies,
Morgan Stanley, UBS, Credit Suisse and Wells Fargo. Co-managers are
Deutsche Bank, Goldman Sachs, JP Morgan, RBC and Raymond James.
Williams accrued credit facility debt funding capex and working
capital.
The debt issuance was $750 million; equity was $437 million.
$750 million in new debt increases total long-term debt 38%.
MarkWest had $960 million in liquidity under its revolver as of
2Q12.
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Volume 05, No. 11 11 energyFinanCeMidstream Capital Markets
Kayne Anderson completes ~$143 million public offering Kayne
Anderson MLP Investment Co. priced and completed a public
follow-
on offering of 5,000,000 shares at $29.75/share. Net proceeds of
~$142.8 million will be used to make additional portfolio
investments consistent with Kayne’s investment
objectives and policies and for general corporate purposes. The
company’s primary investment objective is to obtain high
after-tax returns by investing 85% or more of assets plus
borrowings in energy-related MLPs and midstream energy companies,
primarily through equity security investments. A 750,000 share
underwriter option, exercisable within 45 days to cover
overallotments, could gross an additional ~$22.3 million. Shares
closed down 4.7% at the offer price of $29.75 on the news, vs. a
6.0% resulting equity dilution. Joint book-running managers were
BofA Merrill Lynch, Morgan Stanley, UBS and Wells Fargo.
Eagle Rock raises $84.5 million to fund Texas acquisition
Eagle Rock Energy Partners closed a 10.12 million unit public
offering expected to net $84.5 million in proceeds. The offering
included
full exercise of a 1.32 million unit underwriter overallotment
option. The
base 8.8 million unit offering was priced at $8.72/unit, which
on its own would have grossed $77 million. The offering was also
upsized 10% from an originally announced eight million units.
Net proceeds will help fund Eagle Rock’s proposed $228 million
acquisition of two BP-owned Texas Panhandle gas processing
facilities and a related 2,500-mile gathering system. The deal also
includes a 20-year fixed fee gas gathering and processing agreement
between the companies, to include nearby future-drilled wells for a
period of two years
from closing. Eagle Rock anticipates volume growth and
integration benefits from the acquisition will support meaningful
accretion to distributable cash from 2014 onward. The company
recently announced early termination of antitrust review for the
deal.
Pending completion of the BP deal (expected in October),
proceeds will repay a portion of outstanding borrowings under Eagle
Rock’s credit facility. Should the acquisition not be completed,
net proceeds will support future acquisitions, capex or other
general partnership purposes. Units rose 4.9% on the news vs. what
ultimately amounted to a 7.4% dilution to equity interest holders,
although shares had dropped the previous day on news of the
acquisition. Joint book-running managers are UBS, BofA Merrill
Lynch, Citigroup, RBC and Wells Fargo.
Underwriters fully exercised a 13.2 million-unit overallotment
option.
Summit Midstream files for ~$302 million IPO Summit Midstream
submitted filings notifying of intent to raise up to $301.875
million in an IPO. The number of units to be sold and price/unit
have not yet been determined. Net proceeds will be used to repay
outstanding debt under the company’s revolver and make a cash
distribution to Summit Investments (sole owner of general partner
Summit GP) to reimburse it for capex related to assets contributed
to
Summit. Summit had $302 million drawn against its revolver as of
Q2. Summit is a gas midstreamer operating in the Piceance Basin
and
Barnett shale with ~385 miles of gas gathering line and 147,600
hp of compression capacity. During 1H12, Summit gathered ~909 MMcfd
of gas with ~64% containing NGLs extracted by a third party. A
substantial majority of revenues are generated under long-term
fee-based gathering contracts, with customers including Encana,
Chesapeake, Total, Carrizo, WPX Energy, Bill Barrett, ExxonMobil
and EOG. Nearly all contracts
are underpinned by AMIs covering ~330,000 acres and ranging from
10-25
years, with 2.5 Tcf of minimum volume commitments through 2020
averaging ~639 MMcfd. It reported $16.7 million in net income for
1H12, on $75.9 million in revenues, compared to $38 million in
income and $103.6 million in revenues for all of 2011. Summit added
72% of its total gathering lines and 64% of average daily
throughput in October via acquisition of the Grand River gathering
system in the Piceance from Encana for $590.2 million, which
appears likely to be a significant contributor to revenues going
forward.
Summit was formed in 2009 by management and Energy Capital
Partners, a $7.0 billion PE firm focusing on North American energy
infrastructure. It is currently owned by management, Energy Capital
and GE Energy Financial Services. Company chief Steven Newby has
over 15 years of oil and gas experience, including positions with
SunTrust Corporate Energy and managing a $300 million ING
Investment Management energy infrastructure fund.
Summit intends to trade on the NYSE under SMLP. Underwriters are
Barclays, BofA Merrill Lynch, Goldman Sachs and Morgan Stanley.
Proceeds will repay revolver debt & reimburse GP for asset
contributions.
Summit gathered 909 MMcfd in 1H12.
Average MVC agreement duration is 11.4 years.
Eagle Rock valued BP’s assets at 5.5 to 6.5x estimated 2014
EBITDA contribution.
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CapitalMarkets 12 August 30, 2012•According to regulatory
filings,
Carl Icahn has withdrawn his August 6 $29/share offer to buy the
remaining 18% of CVR Energy shares he does
not yet own. Icahn Enterprises said since
making the offer “a number of market conditions have changed,
including a significant widening of crack spreads,” and the company
no longer considers the transaction feasible. Icahn had previously
indicated willingness to pay up to $30/share for the remaining
interest after failing to find a buyer for the company during a
two-month, 30-company search.
•HollyFrontier announced it would redeem all $199.985 million of
its 8.5% senior notes due 2016, paying 104.25% of par for a total
overall payment of $208.484 million. Holly will fund the redemption
with cash on hand. The redemption represents a 16% reduction to the
company’s Q1-reported long-term debt of $1.286 billion. Wells Fargo
is trustee and paying agent for the transaction.
Downstream Briefs
Refined Q2 for independents driven by crude spread Barclays
noted that independent refiners saw a 29.6% sequential EPS increase
and
more than doubled earnings per share YOY. Some of this movement
has been driven by aggressive share buybacks (not to mention other
cash returns to shareholders) funded by the ongoing significant
inland/coastal crude spread. Both Phillips 66 and Tesoro
launched sizeable buyback programs this quarter, while
HollyFrontier, Marathon Petroleum and Valero increased dividends,
Tesoro reinitiated its dividend and Delek US Holdings and
HollyFrontier issued special dividends.
Barclays anticipates a shift toward a LLS/Brent discount could
bring about re-valuation of the sector, with refiners supporting
higher dividends throughout the cycle. It believes margins will
remain higher through Q3 until headwinds including full Seaway
reversal, the Motiva expansion restart and other line starts roll
out in 1H13.
Downstream held up particularly well last quarter when compared
to upstream. Barclays notes Q2 EPS for major oil companies dropped
11.5% vs. Q1 and 16.1% YOY, compounded by future concerns regarding
production misses and cost increases. Barclays upstream coverage
universe production was down 2% YOY overall, pulled by the
supermajors which dropped 3.5% vs. other majors which rose 3.7%
YOY. Capex for its upstream universe rose 7.5% YOY (4.7%
sequentially), again pulled by supermajors who increased spending
9.8% vs. other majors at 2.7%.
Inergy to distribute ~$525 milion in Suburban units Inergy LP
announced plans to distribute 14,048,418 units of Suburban
Propane
Partners LP to Inergy unitholders with a record date of August
29 to occur September 14. Inergy received ~14.2 million shares as
partial consideration for contribution of
its retail operations to Suburban, and agreed under the contract
to distribute ~14.1 million units pro rata to Inergy unitholders.
Based on outstanding Inergy units, distribution will be ~ 0.108
Suburban units per Inergy unit.
Suburban units have traded in the $37-38/unit range for most of
August. Inergy also authorized repurchase of up to $100,000,000 in
common units through
March 31. The program will be conducted through open market
transactions, without specific price targets, and may be modified,
suspended or terminated at any time.
Downstream Capital Markets
•Anadarko Petroleum announced settlement efforts for its $25
billion litigation with the US government over Anadarko subsidiary
Kerr-McGee’s previ-ous unit Tronox were at an impasse and chance of
settlement was now remote. The company said “reasonable” loss
esti-mates were between zero and $1.4 billion. The high end of the
range represents the estimate of $985 million Kerr-McGee was paid
when Tronox was spun off in 2005, plus interest. The government
accuses Kerr-McGee of fraudulently loading Tro-nox with
environmental liability expo-sure before separating it from the
rest of the company.
•Exco Resources was fined $47,500 by the Pennsylvania DEP for
operation of unpermitted residual waste transfer stations in
Lycoming and Sullivan Counties from 2011-2012 in violation of
Pennsylvania’s Solid Waste Management Act. Regulators reportedly
discovered unapproved and leaking frac tanks as well as waste
sand.
Legal & Regulatory Briefs
Growth Capital for Small Production-Based Oil & Gas
Ventures
Let us help your company grow...
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Volume 05, No. 11 13 energyFinanCe
SEC freezes assets on Nexen-linked trading charges The SEC
obtained a court order to freeze assets of traders it alleges make
over $13
million in illegal profits by frontrunning news of the proposed
$15.1 billion CNOOC-Nexen deal. The regulator said Hong Kong-based
Well Advantage Ltd. and other unknown traders with confidential and
“material nonpublic” information regarding the deal hoarded shares
of Nexen leading up to the announcement, then moved to liquidate
the entire position afterward. Shares of Nexen closed nearly 52%
higher on news of the proposed deal.
Well is controlled by Zhang Zhi Rong, who also controls a
company engaged in a strategic cooperation agreement with CNOOC.
The trades, which SEC called “extremely timely” were being made
through accounts in Hong Kong and Singapore. Well bought over
830,000 shares and was up over $7.0 million the day of the
announcement. The other traders bought over 676,000 shares, which
they successfully sold for ~$6.0 million in gains. The SEC is
seeking disgorgement of ill-gotten gains plus interest and
penalties.
Fraud a factor for BP spill compensation fund A noteworthy
amount of fraudulent claim activity took place targeting BP’s
Gulf Coast Claims Facility set up to help those experiencing
damages from the Macondo spill. DOJ data shows ~110 people
nationwide have been charged with
defrauding the fund. Former fund administrator Kenneth Feinberg
said “anytime you
establish a very generous public compensation program, it will
trigger a certain amount of fraudulent activity.” Feinberg said
that, of 1.1 million total claims, the facility found ~18,000
applications which “satisfied our suspicions of fraud.” Of those,
~4,000 were referred to the DOJ for criminal review due to
containing “doctored” paperwork.
Feinberg said the fraud in absolute terms has been substantial,
but modest in relative terms, according to The Miami Herald. The
facility said that 414,000 claims to 226,000 claimants were
approved, paying out a total of $6.5 billion before the facility
was dissolved in March. The majority of denied claims failed for
lack of valid documentation and a fraction for fraud.
Legal & Regulatory News •EIG Global Energy Partners
filed
in California federal district court to enjoin the acquisition
of TCW Group from Societe Generale by funds
managed by Carlyle Group and TCW management. EIG said the deal
subverts certain
EIG consent rights granted as part of its consensual 2009
spin-out from TCW. EIG CEO R. Blair Thomas said the injunction was
necessary because the parties elected to proceed with the
transaction despite awareness of EIG’s position.
•New York Governor Andrew Cuomo recently told reporters the
state had no timetable for issuing new frac regulations. Cuomo said
he wanted science and facts to dictate the state’s conclusion. A NY
Department of Environmental Conservation spokeswoman told Reuters
the department’s review was continuing and no decisions had yet
been made. In June, the governor said a final report would soon be
issued.
•Preferred Financial Holdings of Ohio is paying the SEC $4.5
million for fraud and sale of ~$10 million in unregistered
securities. Preferred filed Chapter 11 in response to the SEC suit
claiming co-founder and former CFO Michael Bodanza, who was also
sued, depicted the firm’s oil and gas assets in a positive light to
investors, not disclosing the company’s significant losses from
2007-2010. Investors were purportedly also not informed of the
departure of the firm’s COO, nor of the irreparable breakdown of
the firm’s only drilling rig (Preferred’s only revenue stream).
•The official Republican party platform is expected to adopt
planks calling for an audit of the Federal Reserve and a commission
to explore restoring the link between gold and the dollar. It seems
likely the moves were made, in part, to appease Rep. Ron Paul, who
never officially dropped out of the race to become the Republican
nominee and has delegates to pledge. However, platform committee
co-chair Rep. Marsha Blackburn told the Financial Times, “These
were adopted because they are things that Republicans agree
on.”
Legal & Regulatory Briefs
SEC passes foreign payment disclosure ruleThe SEC approved a
final rule requiring US multinational companies and
subsidiaries to publicly disclose oil, gas, and mineral
development-related payments or series of payments made to foreign
governments in excess of $100,000. Payments keyed to exploration,
extraction and processing fall under the rule, and may include
taxes, royalties, licensing fees, production entitlements, bonuses,
dividends and infrastructure improvements. The requirement takes
effect in October 2013. The rule was approved 2-1, with Mary
Schapiro and Tony Paredes abstaining due to industry ties.
SEC projects initial compliance costs for the industry will
range between $44 million and $1 billion, with ongoing costs of
$200-400 million.
SEC Commissioner Daniel Gallagher, the sole dissenting vote,
said the rule would put US companies at severe competitive
disadvantage to competitors in Russia, China, Iran and Venezuela.
He said it could also force US companies to violate rules in
foreign jurisdictions barring disclosure. API agreed the rule would
hurt the competitive advantage of US companies as well as US job
growth and government revenue.
72% of money went to Fla. & La.; majority of fraud charges
in Alabama.
The SEC values the frozen assets at over $38 million.
Initial industry compliance costs could be up to $1 billion.
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CapitalMarkets 14 August 30, 2012•Sinclair Oil will pay the EPA
$3.8
million in penalties and spend $10.5 million on pollution
control equipment to settle allegations of exceeding
nitrogen oxide emission limits at the company’s 74,000 bpd
Sinclair and
24,500 bpd Evansville refineries in Wyoming. Sinclair also
allegedly missed compliance requirements regarding a flare gas
recovery system in Sinclair. Under a 2008 consent degree, Sinclair
agreed to a $2.45 million fine and over $72 million in pollution
controls at the two refineries and a third, subsequently divested,
plant in Tulsa.
•Valero Energy has sued KBR, KBR subsidiary BE&K, Mustang
Engineers and Constructors and Berry Contracting over alleged
design, engineering and construction defects which Valero said led
to a 2008 tank explosion at the company’s Houston refinery. The
explosion caused the leakage of ~3,500 lbs. of sulfur dioxide and
health complaints by local residents. Valero said it has so far
incurred over $5,000,000 in damages. The suit was filed just before
expiration of a statutory deadline, and a Valero spokesman said the
company hopes to settle.
Legal & Regulatory Briefs Moratorium-weakened ATP files
Chapter 11ATP said cash flow and shareholder value resulting from
the additional produc-
tion would have mitigated or prevented the need for the company
to enter many of the post-moratorium financings in which it has
engaged. Those financings, with relatively high return requirements
and monthly payments, exacerbated ATP’s problems. The company sued
the US government in June for $68 million in moratorium-related
dam-
ages; the case is still pending. That said, ATP has also
suffered from disappointing well results,
missed production targets and other execution problems in the
GOM and Mediterranean including equipment failures and
unanticipated geological difficul-ties over the past few years. The
company took steps to free up cash, including payment renegotiation
with a Chinese manufacturer, sale of convertible preferred shares,
delaying projects and arranging to pay vendors with well royalties,
but to no avail. In June, new CEO and former Dynamic Offshore chief
Matt McCarroll resigned a week after accept-ing the job, also
canceling a one-million-share stock buy.
Judge Marvin Isgur gave ATP prelimi-nary approval of its
requested $617.6 million in DIP financing through Credit Suisse and
other lenders. Isgur said, “What we have is a situation where the
debtor is absolutely out of cash, and the alternatives we are left
with are to allow the debtor to proceed in a disorderly or orderly
liquidation now or to give the debtor an opportunity to get back on
its feet.”
The financing consists of $250 million in new financing (of
which Isgur prelimi-narily approved up to $80 million; final
approval of the remainder is slated for Sep-tember 20) and a
now-approved refinancing of $367.6 million in first-lien debt. The
financing will allow ATP to complete a Gulf pipeline for its two
Clipper wells, which
tested at a combined 13,700 bopd and 50.2 MMcfd in December. ATP
called
the pipeline a very promising low-risk project that would
generate “immediate” cash flow and considerable potential value to
creditors.
Although it appears ATP will get the money, Isgur said the
company was prejudiced under the refi due to a requirement to repay
in full in cash. However, he deferred to ATP’s judgment that the
risk of that payment was worth the benefits of $250 million in new
cash. Isgur also gave ATP discretion to choose its chief
restructuring officer, as opposed to deferring to lender approval
as originally anticipated. Other lenders include Fortress Credit
Opportunities I LP and MSD Credit Opportunity Master Fund LP.
ATP is receiving financial advice from Jefferies and Opportune
LLP. Its bank-ruptcy case is being heard in the Southern District
of Texas (Houston) Bankruptcy Court.
Financials—Had Isgur not allowed the refi, ATP would have owed
an $89 million interest
payment in November. Its Q1 long-term debt was ~$2.0 billion,
and its bankruptcy petition showed $3.6 billion in assets and $3.5
billion in debt. Prior to filing, ATP had arranged a $700 million
revolver.
In August, ATP received $372 million in bankruptcy loans. It
projects $613 million in revenues and payment of $167.5 million to
creditors over the next 18 months, according to filings, alongside
$210 million in net operating cash flow and total capex of $224
million. ATP said these projections should not be relied on,
however, and it would begin publishing monthly operating reports
through the court in September.
ATP shares have been in a tailspin from its one-year high of
$14.06/share on August 30, 2011. After finishing out a volatile
2011, shares settled in down ~46% from that high in the $7.50
range. In May, shares began a steady decline, recently pushing
intraday prices to a one-year low of $0.20/share.
ATP bond values rose on news the DIP financing was likely to
occur, according to FINRA’s bond-pricing system Trace.
ATP Oil & Gas (UK) Ltd. is not part of the bankruptcy
filing.
Shares peaked above $57 in 2007.
Continued From Pg 1
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Volume 05, No. 11 15 energyFinanCe
Anadarko (APC; $70.97 – Aug 16; Outperform; Range:
$100-110)Wattenberg Highlighted At Enercom. The play is full speed
ahead and continues to
beat expectations. Lower end of resource estimate increased to 1
billion BOE from 500MM with 2,000+ drilling locations. The Codell
is performing in lock step with the Niobrara so far and should
continue to garner about 25% of drilling activity going forward.
With 400 sections in the core and a potential for 12-16 wells per
section, an average EUR of 350 MBOE, and an NPV of $8 million, the
math is pretty straightforward on how big this asset will be.
Production headed towards 100,000 Boe/d around yearend. Company
contin-ues to look at JV options for the non-core acreage. With a
project the size of Mozambique and the international interest APC
has received, we would not be surprised to see the company monetize
some portion of the asset in the near future. Probably would not
sell the entire inter-est due to the tax leakage, but a farm-in/JV
would avoid that and seems to be a likely outcome. No new update on
Tronox. At this point, a court decision seems more likely than a
settlement, in our view, given the commentary following the
quarter. —David Tameron, Wells Fargo
Kodiak Oil and Gas (KOG; $9.09 – Aug 16; Outperform; PT:
$12)Management remains confident about its 2012 full year
production guidance of
17,000-21,000 boe/d. This guidance is production volume, not
sales volume. Recall the difference is due to flared gas volume and
it was about 1,302 boe/d during 2Q12. Kodiak sold only 60-65% of
its gas volumes during 2Q due to lack of processing capacity. This
number has potential to reach 80-85% by 2012 year-end. We believe
KOG has suffi-cient liquidity on its revolver and do not anticipate
Kodiak to access equity markets in 2012, barring any acquisitions.
Based on its current drilling schedule, nearly all Kodiak acreage
will be HBP by 2012 year-end. Services availability continues to
im-prove in the Williston Basin. KOG is using zipper fracs on
multi-well pads to complete wells rapidly. Well cost has decreased
from $11.5-$12MM range to $11MM due to water sourcing/disposal
efficiencies and pad drilling. Management commented that it is
seeing gradual improvement in well costs due to lower service costs
and efficiency gains, which are likely to drive 5-10% cost savings
in 2H12. —Hsulin Peng, Robert W. Baird
Transocean (RIG; $48.02 – Aug 15; Overweight; PT: $77)The
Dayrate Trend is Your Friend; Buy RIG. Transocean released
another
positive fleet status report, highlighted by lower downtime
expectations and numer-ous favorable extensions at higher dayrates.
RIG is currently our favorite offshore driller due to substantial
leverage to rising dayrates and compelling valuation (~65% NAV/sh,
versus the group at ~95%, ex-SDRL and HERO). Clarity on its Macondo
liability and progress on non-core asset divestitures offer further
catalysts in the com-ing months, in our view. Good Execution for 2Q
Bodes Well for 2012 and 2013: Transocean continues to realize
operational improvements and win new con-tracts and extensions at
higher dayrates. These trends provide improved visibility and bode
well for renewed investor confidence in management’s ability to
execute in 2012 and 2013. Transocean downwardly revised its
previously disclosed 2013 downtime estimate by roughly two months
net. We are increasing our 2013E EPS to $4.80 (from $4.65)
reflecting new awards and lower downtime. We are increasing our
12-month price target to $77 from $75. —James C. West, Barclays
Financial Takes
Our CapitalMarkets editors are working hard to keep their
fingers on the pulse of the latest funds, pricing, news and
professional opinions pertaining to the oil and gas finance sector.
Whether it's through a one-on-one interview, heard-it-on-the-street
feedback or energy conference coverage, each issue of the
CapitalMarkets contains insights about how things are shaping up
for current and future financial trends. Below is a round up of
current thoughts from some of the sector's well-known analysts and
portfolio managers. Read On!
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CapitalMarkets 16 August 30, 2012
Find more on energy finance at
Sinopec hit by refining margins & rising oil prices
Sinopec earnings for the first half of 2012 were pressured lower
by depressed refining margins. The company’s net profit for the
first half of the year dropped more than 40% from the comparable
period last year to $3.85 billion.
The low refining margins resulted from a rise of 5.8% in crude
cost in the first half. The year-on-year rise in oil cost was more
drastic considering the
price of Nymex oil futures was $75.63/bbl on June 30 2011,
compared with $84.96/bbl on June 29 2012. Prices have since
increased to $96.68/bbl.
Rising fuel costs in China are exacerbated because of the price
controls and fuel pricing system.
This narrowed refining margins for all refiners in China because
the fuel-pricing system prevented the company from passing the
higher costs to consumers. Because refining margins were down cash
operating costs rose 5.7% to $22.89/ton.
Sinopec refining margins will remain pressured through the
remainder of 2012 because of weak demand for oil products as the
economy in China struggles. Beijing-based Sinopec has the largest
refining capacity in Asia and the second most capacity
globally.
The $3.85 billion in Sinopec net profit for the first half of
2012 exceeded analysts’ expectations of $3.40 billion, despite the
drop in profit from last year. The operating profit for the
oil-and-gas production segment climbed 17% to $6.37 billion.
In the second half of 2012 Sinopec plans a 2% increase in
refining volume to 112 million tons.
International Capital Markets
Analysts' view on select stocksKey: Ticker/Current Price/52-Week
Low/52-Week High/Market Cap
Upgrades:•Cabot Oil & Gas (COG/$41.22/$27.77/$45/$8.63B)
from Neutral to Overweight. •Copano Energy LLC
(CPNO/$30.58/$24.24/$38.03/$2.21B) from Reduce to
Neutral by Global Hunter Securities.•Harvest Natural Resources
Inc. (HNR/$8.95/$4.85/$12.75/$335.88M) from
Accumulate to Buy by Global Hunter Securities. •Northern Oil and
Gas Inc. (NOG/$16.71/$14.40/$28/$1.04B) from Accumulate
to Buy by Global Hunter Securities. •Plains All American
Pipeline LP (PAA/$85.82/$54.90/$88.75/$14.07B) from
Accumulate to Buy by Global Hunter Securities.
New Coverage:•Bonanza Creek Energy Inc.
(BCEI/$20.07/$12.39/$22.66/$803.02M) at
Sector Perform by RBC Capital Mkts.•C&J Energy Services Inc.
(CJES/$19.69/$12.65/$28.09/$1.04B) at Buy by
Global Hunter Securities.•Cabot Oil & Gas
(COG/$41.22/$27.77/$45/$8.63B) at In-line by Imperial Capital.
•CGGVeritas (CGV/$28.31/$15.08/$31.48/$4.3B) at Buy by Dahlman
Rose.•Cimarex Energy (XEC/$57.66/$46.19/$87.85/$4.95B) at
Outperform by Imperial Capital. •CIRCOR International Inc.
(CIR/$32.45/$26.61/$42.79/$564.79M) at Buy by
Capstone Investments. •Energen (EGN/$51.76/$37.22/$58.24/$3.73B)
at Outperform by Imperial Capital.•Energy Transfer Equity
(ETE/$43.84/$30.78/$44.47/$12.26B) at Outperform by
Robert W. Baird.•Energy Transfer Partners
(ETP/$42.40/$38.08/$51/$10.4B) at Neutral by
Robert W. Baird.•Gastar Exploration
(GST/$1.61/$1.55/$4.45/$101.67M) at In-line by Imperial
Capital.
Warburg Pincus & partner back HawkwoodHawkwood intends to
target plays with secondary targets (e.g., multi-pay columns)
and also expects to participate in JVs and farm-ins. Hawkwood
has set a 3-5 year production target of 3,000-6,000 boepd.
Warburg said Hawkwood’s team has over 230 years of oil and gas
and financial experience, with a focus on geosciences, reservoir
engineering and land, project and financial management. Hawkwood’s
CEO is Patrick Oenbring, who has nearly 40 years of industry
experience, largely deriving from positions at ConocoPhillips,
Occidental (where he led Oxy Permian) and Harvest Natural Resources
(where he served as western ops VP and obtained Uinta Basin
experience). Leonard Gurule, a former SVP of Mid-Continent assets
at Forest Oil (where he helped develop the company’s Permian and
Granite Wash assets) who before that spent many years at Arco, will
serve as president and COO.
Teachers SVP Jane Rowe called Hawkwood a compelling long-term
value creation opportunity, noting it is being guided by a leading
and proven management team.
Warburg, with over $35 billion in AUM, has provided over $6.0
billion in equity to the energy sector over the past 20+ years, and
has acted as the lead founding investor for several dozen
upstreamers including Newfield Exploration, Bill Barrett, Antero,
Laredo Petroleum, Targa Resources and Kosmos Energy. The Hawkwood
investment builds on Warburg’s recent leadership of a consortium
investing up to $1.125 billion in PE backing in GoM-focused
deepwater E&P startup Venari Resources in May.
Teachers, the largest single-profession pension plan in Canada,
manages $117.1 billion in assets with $12 billion in invested
capital.
Warburg led $1.1 billion PE investment in deepwater E&P
startup Venari in May.
Who's Hot, Who's Not
Continued From Pg 1
Better results could come in Q3 from China's economic stimulus
programs.
Operating profits for the chemical segment lost $196 million in
H1.
Read more on Sinopec & other international energy finance
news.
Next InternationalCapital
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inquiries, e-mail [email protected]
Volume 05, No. 11 17 energyFinanCe•Magnum Hunter Resources Corp.
(MHR/$4.49/$2.33/$7.71/$761.8M) at
Outperform by Imperial Capital. •Memorial Production Partners LP
(MEMP/$17.75/$15.71/$19.09/$394.69M) at
Outperform by RBC Capital Mkts.•Northern Tier Energy LP
(NTI/$18.39/$13/$18.94/$1.69B) at Buy by Dahlman Rose.•Oasis
Petroleum (OAS/$29.38/$17.99/$35.46/$2.75B) at Outperform by
Imperial Capital.•ONEOK Partners LP
(OKS/$56.16/$43.05/$61.58/$12.34B) at Neutral by Robert W.
Baird.•PDC Energy (PDCE/$28.10/$15.08/$40.26/$833.87M) at In-line
by Imperial Capital.•Pioneer Natural Resources Co.
(PXD/$98.47/$58.63/$119.19/$12.15B) at
Outperform by Imperial Capital. •Plains All American Pipeline LP
(PAA/$85.82/$54.90/$88.75/$14.07B) at
Outperform by Robert W. Baird.•Rex Energy
(REXX/$12.50/$8.80/$18/$660.13M) at In-line by Imperial Capital.
•Rosetta Resources, Inc. (ROSE/$42.83/$30.42/$54.58/$2.25B) at
Outperform by
Imperial Capital. •Saratoga Resources
(SARA/$5.44/$4.06/$7.81/$168.51M) at Buy by C.K. Cooper.•SM Energy
(SM/$47.21/$39.44/$88.50/$3.07B) at Outperform by Imperial Capital.
•Sunoco Logistics Partners LP (SXL/$46.51/$27.39/$44.84/$4.82) at
Outperform
by Robert W. Baird.•Triangle Petroleum Corp.
(TPLM/$6.82/$3/$8.26/$302.62M) at Outperform by
Imperial Capital.•U.S. Silica Holdings Inc.
(SLCA/$11.86/$9.02/$22.14/$627.64M) at Buy by
BB&T Capital Mkts.
Downgrades:•Abraxas Petroleum (AXAS/$2 /$1.86/$4.45/$183.62M)
from Buy to Hold by Wunderlich. •Diamond Offshore Drilling Inc.
(DO/$66.62/$51.16/$72.80/$9.26B) from Buy to
Neutral by Guggenheim.•ENGlobal (ENG/$0.72/$0.68/$3.40/$1941M)
from Buy to Hold by KeyBank Capital Mkts.•Ensco PLC
(ESV/$56.64/$37.39/$59.90/$13.15B) from Outperform to
Market Perform by Clarkson Capital.•Pioneer Southwest Energy
Partners L.P. (PSE/$25.96/21.34/$31.73/$927.11M)
from Neutral to Sell by UBS. •Robbins & Myers
(RBN/$59.87/$31.54/$60.19/$2.55B) from Buy to Hold by
BB&T Capital Mkts.•Robbins & Myers
(RBN/$59.87/$31.54/$60.19/$2.55B) from Buy to Hold by
Capstone Investments.•Robbins & Myers
(RBN/$59.87/$31.54/$60.19/$2.55B) from Buy to Neutral by
Global Hunter Securities.•Robbins & Myers
(RBN/$59.87/$31.54/$60.19/$2.55B) from Buy to Hold
by Maxim Group.•Robbins & Myers
(RBN/$59.87/$31.54/$60.19/$2.55B) from Outperform to
Neutral by Robert W. Baird.•Robbins & Myers
(RBN/$59.87/$31.54/$60.19/$2.55B) from Buy to Hold by
Stifel Nicolaus.•Rosetta Resources, Inc.
(ROSE/$42.83/$30.42/$54.58/$2.25B) from Buy to
Accumulate by Global Hunter Securities. •RPC Inc.
(RES/$12.45/$8.75/$17.58/$2.73B) from Hold to Sell by Dahlman
Rose.•Shaw Group Inc. (SHAW/$41.95/$18.98/$43.70/$2.77B) from Buy
to Hold by
BB&T Capital Mkts.•Ultra Petroleum Corp.
(UPL/$20.48/$17.62/$36.72/$3.13B) from Neutral to
Underperform by Sterne Agee.
Key: Ticker/Current Price/52-Week Low/52-Week High/Market
CapSource: Yahoo! Finance
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Latest Service Sector News ` NOV buying diversified Robbins
& Myers for ~$2.5 billion
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` Fighting underpriced imports, Carbo edges up profits
` Halliburton’s acquisitions spree continues integration
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