Category Archives: E&P

Energy CEO rehired after 5-year SEC ban

Houston American Energy has rehired John Terwilliger as its new CEO. In April 2015, Mr Terwilliger was banned from serving as an officer or director of a public company for five years as part of a settlement with the Securities and Exchange Commission (SEC).



Houston American has a market capitalization of $10 million. It has working interests in four wells in Texas and Louisiana as well as some undeveloped acreage in Columbia. It went public in 2006. Mr Terwilliger is the largest single shareholder, owning 13.6% of the common stock

In August 2014, the SEC announced charges against the company and Mr Terwilliger. The charges alleged that, back in 2009, Mr Terwilliger claimed that a concession in Columbia was worth more than $100 per share. The SEC alleged that the valuation was wildly inflated and not based on any technical evaluation. During this time, the stock price rose from $4 to $20 and the company raised $13 million in a stock offering. The operator eventually drilled three dry wells and the concession produced no oil.

Shortly before a trial was due to start in January 2015, the parties settled. Without admitting or denying liability, the company paid a penalty of $400,000 and Mr Terwilliger agreed to resign as CEO and pay a penalty of $150,000.

Mr Terwilliger founded Houston American in 2001. At the time, he was also the founder and CEO of Moose Oil and Gas. Moose entered Chapter 7 bankruptcy in 2002. The bankruptcy trustee later alleged that Mr Terwilliger diverted funds from Moose to pay for the start-up legal and professional fees of Houston American. This case was also settled without admitting or denying liability.

 

SEC filing – Terwilliger CEO

New CFO at Houston E&P company

Ryan Stash has been appointed the new CFO at Evolution Petroleum. He replaces David Joe who has been at the company since 2005 and has been CFO since January 2016.



Evolution is an small E&P company with its head office in west Houston. It has an interest in the Delhi field in Northeast Louisiana, and an interest in the Hamilton Dome field in Wyoming. The company has a market capitalization of $72 million. It has no debt and $20 million of cash on hand.

Mr Stash joins from Harvest Oil & Gas where he had been CFO since October 2018. Prior to that, he spent eleven years in the Energy Investment Banking Group of Wells Fargo Securities. He will receive a base salary of $265,000.

According to the SEC filing, Mr Joe and the Board ‘agreed to the terms of his retirement as the Chief Financial Officer, effective December 31, 2020’. However, those terms were not disclosed in the filing. The annual proxy statement, filed last week, states that there are no employment agreements for executive officers.

SEC filing – Evolution CFO

 

Houston company to move to Fort Worth after acquisition

Contango Oil & Gas, based in Houston, has agreed to acquire Mid-Con Energy Partners, based in Tulsa for $43 million. After the deal closes, the headquarters of the combined company will move to Fort Worth.

The biggest shareholder in both companies is Goff Capital, based in Fort Worth.



Contango’s operations are mostly in Central Oklahoma and the nearby Western Anadarko Basin. Mid-Con’s assets are also primarily in Central Oklahoma. In fact, in June, Contango signed a management services agreement with Mid-Con to provide operational services as the operator of record on Mid-Con’s properties.

In an all-stock transaction, Contango is issuing shares worth $42.8 million to the unit holders of Mid-Con, a 5% premium. After the deal closes in late 2020 or early 2021, Contango shareholders will own 87% of the combined company.

John Goff and affiliated parties own 28% of Contango. The CEO of Contango, Wilkie Colyer, is also based in Fort Worth. Mr Goff acquired his stake in 2018 and installed Mr Colyer as the CEO shortly thereafter. Mr Wilkie was a non-executive director of Mid-Con until he resigned in June 2020.

That resignation was part of a recapitalization of Mid-Con. Mr Goff ended up owning 56% of it. He also appointed his son, Travis, to the Board.

The deal follows a recent spate of all-stock transactions in the E&P sector

  • ConocoPhillips, based in Houston, agrees to acquire Concho Resources (Midland) for $9.7 billion.
  • Pioneer Natural Resources (Dallas) buys Parsley Energy (Austin) for $7.6 billion. (Dad Scott Sheffield is the CEO of Pioneer, son Bryan is the founder and chairman of Parsley).
  • Devin Energy (Oklahoma City) agrees to buy WPX Energy (Tulsa) for $2.6 billion.

SEC filing – Contango – Mid-Con

Noble Energy delisted after acquisition by Chevron

Chevron has completed its all-stock acquisition of Noble Energy, whose shares have now been delisted from the NYSE. The stock was acquired for $5 billion. Including debt, the enterprise value of the transaction was $13 billion.



Noble’s primary assets are in the Eastern Mediterranean sea (Israel and Cyprus).  These will fit well with Chevron’s assets in Egypt. Noble also has 92,000 contiguous net acres in the Permian which are next to Chevron’s acreage. Noble also has 336,000 of net acres in the DJ Basin in Colorado. This would be a new onshore basin for Chevron.

Board sought to reduce debt in 2019

The deal was first announced in July 2020. Chevron also acquired Noble’s 63% stake in publicly-traded Noble Midstream Partners.

In July 2019. the Board of Noble decided to explore a sale of its interest in Noble Midstream in order to reduce leverage and explore potential transactions to reduce the company’s concentration risk in the Eastern Mediterranean.

In the fall of 2019, the company received offers from a strategic midstream operator and a private-equity-backed entity to purchase Noble Midstream. However, both offers were not acceptable.

At an industry event in October 2019, Kevin Haggard, Noble’s Treasurer met Frank Mount, General Manager of M&A for Chevron. Mr Mount requested a meeting with Noble regarding the Mediterranean assets. Discussions moved slowly over the next few months.

Pandemic spurred sale of company

After the pandemic hit, the Noble Board hired J.P Morgan to review strategic alternatives and the discussions with Chevron morphed into an outright purchase. Noble contacted 9 other E&P operators to see if they were interested in acquiring the company. Nobody was interested in getting into a bidding war, either for strategic reasons or because of Noble’s high debt levels.

Golden Parachutes

Under the terms of the merger agreement, David Stover, the CEO of Noble is in line to receive $25.2 million in severance and vested equity. COO Brent Smolik will get $14.1 million, while CFO Ken Fisher will get $8.6 million. These payments will be triggered if their employment is terminated within two years following a change in control.

In connection with the merger, Mr Smolil has resigned as CEO of Noble Midstream, He will be replaced by COO Robin Fielder. She joined the company in January 2020, having previously worked at Anadarko.

I’ve deleted Noble Energy from the list of Houston-area public companies, but added Academy Sports + Outdoors, following its IPO launch last week. Oasis Petroleum, which filed for bankruptcy last week, is scheduled to be delisted next week. You can see the complete list here

 

SEC filing – Chevron completes Noble acquisition

CEO out at Houston E&P company

Darrin Henke has been appointed the new CEO at Penn Virginia, replacing John Brooks, who had been the CEO since August 2017.

Penn Virginia has its head office in west Houston and has acreage in the Eagle Ford basin. The company was founded in 1882 in Philadelphia and began life leasing coal properties. In the 1980’s it acquired oil and gas companies and later spun off the coal operations. The company went bankrupt in 2016 and exited a few months later, having eliminated $1.1 billion in debt. As part of the restructuring, it moved its head office to Houston.



Takeover by Denbury

In October 2018, Denbury Resources announced it would buy Penn Virginia for $1.7 billion, including $400 million in cash. The deal collapsed in March 2019, as major shareholders of Penn Virginia thought the deal undervalued the company (oops!). Penn Virginia currently has a market capitalization of $157 million (and debt of $563 million). Denbury filed for bankruptcy last month.

Current activity

In April, the company elected to suspend all drilling and completions operations. In June it resumed such operations with the completion of three wells drilled but not completed. The company also took out PPP loans of over $1 million, but elected to pay them back, rather than seek forgiveness.

Compensation

Mr Henke joins from Gary Petroleum, a private E&P company, where he was CEO for almost five years. Prior to that, he worked for Encana for 11 years. His base salary will be $500,000. Mr Henke was also granted 115,000 restricted stock units (worth over $1 million). 50% will vest over three years, the rest dependent on performance.

Mr Brooks, who joined the company in 2002, will receive a lump-sum payment of $690,000 (1.5 times base salary). He will also get a pro-rated bonus for 2020 (for reference, thee 2019 bonus paid was over $400,000). 34,000 restricted stock units also vest, worth over $350,000.

In November 2019, the company replaced its CFO.

SEC filing – Penn Virginia CEO

New CFO appointed at Battalion Oil

Kevin Andrews has been appointed CFO at Battalion Oil Corporation. He replaces Ragan Altizer, who plans to retire.

The company is based in downtown Houston and has working interests in approximately 52,000 net acres in the Delaware Basin. Its market capitalization is currently $126 million.



The company was formerly known as Halcon Resources. It went into bankruptcy in August 2019. The company emerged in October 2019, having eliminated over $750 million of debt. In return, the debt holders got 91% of the newly reorganized equity.

The company changed its name to Battalion Oil Corporation in January 2019 and regained its listing on the NYSE American the following month.

Halcon hit the headlines in February 2019 when Floyd Wilson (then CEO), Mark Mize (CFO) and Steve Herod (Corporate Development) all left on the same day. This happened two weeks after an activist investor had criticized the excessive corporate overhead at the company. Under the terms of their contracts, the terminations were considered terminations without cause. Combined, the three executives got over $9 million in cash severance.

Quentin Hicks was promoted to CFO, following the departure of Mr Mize. However, he resigned in July 2019, after four months, to become CFO at Gulfport Energy.

Mr Altizer became CFO in August 2019. He and CEO Richard Little (appointed in June 2019) worked together at Ajax Resources, an E&P company whose assets were sold to Diamondback Energy in October 2018.

Mr Andrews has spent most of his career in investment banking. Most recently, he was the Head of Energy Investment Banking at Imperial Capital. He will receive a base salary of $350,000.

SEC filing – Battalion Oil CFO appointment

Another Houston E&P company files for bankrutpcy

Rosehill Resources, which has its head office in west Houston, has filed for bankruptcy in the Southern District of Texas. At the beginning of the month, the company had stated it had a pre-packaged plan agreed with most of its creditors.



History of the company

The company operates in the Delaware Basin, a sub-basin of the Permian Basin where it had 15,785 gross acres. It currently operates or owns working interests in 133 oil and gas wells, though, back in March, it announced the suspension of all drilling and completion activity for the rest of 2020. The company was formed in 2017 when KLR Energy Acquisition, a blank check company, acquired Tema Oil & Gas in a deal valued at $445 million.

Amounts owed

At the time of filing, the company owed $226 million on a revolving credit facility. In March the company had drawn $340 million on the revolving credit facility, however it monetized all its hedges for $88 million to pay the balance down. The company also owed  $106 million on second lien 10% Secured Notes due January 2023. The notes are owned by EIG Management Company or its affiliates, an investment firm.

The main terms of the bankruptcy plan are

  • The Secured Noteholders will get 68.60% of the equity in the reorganized company
  • The Secured Noteholders and Tema have agreed to provide a $17.5 million debtor-in-possession financing facility. In return they will get 25.84% of the equity.
  • Tema will get 4% of the equity. This is because, at the time of sale, it had a tax receivable that Rosehill agreed to collect on its behalf, for a 10% administrative fee. At the time of filing, this was valued at $89 million.
  • The Preferred Series A stock holders will get 1.48%, provided none of the stock holders objects to the plan.
  • A new revolving credit facility of $235 million will be put in place.
  • All unsecured creditors will be paid in full

Rosehill Chapter 11

Chevron to acquire Noble Energy for $5 billion

Chevron has agreed to buy Houston-based Noble Energy for $5 billion in an all-stock deal. The price is $10.38 per share. Including debt, the deal values Noble at $13 billion.

The price represents a premium of nearly 8% over the closing price on Friday. However it is considerably lower than the 52-week high of $27.31.



Noble’s primary assets are in the Eastern Mediterranean sea (Israel and Cyprus).  These will fit well with Chevron’s assets in Egypt. Noble also has 92,000 contiguous net acres in the Permian which are next to Chevron’s acreage. Noble also has 336,000 of net acres in the DJ Basin in Colorado. This would be a new onshore basin for Chevron.

Chevron will also acquire Noble’s 63% stake in publicly-traded Noble Midstream Partners.

Chevron expects to generate annualized operating and cost synergies of $300 million, though there were no details of how this is broken out.

The deal represents the first major acquisition by Chevron since it decided not to get into a bidding war with Occidental last year for Anadarko. Chevron did, however, walk away with a $1 billion termination fee from that contest.

Severance payments

The executive management of Noble will receive large payments if they are terminated becasue of a change of control. Chairman and CEO David Stover will receive a severance payment of $8.2 million, representing 2.99 times base salary and target annual bonus. He will also get close to $10 million in pro-rated bonuses and stock that vests. Likewise COO Brent Smolik will get a $4 million cash severance and another $5 million in pro-rated bonuses and stock vesting. The figures for CFO Ken Fisher are $1.2 million and close to $3 million, respectively.

The deal is expected to close in the fourth quarter of 2020.

SEC filing – Chevron to acquire Noble Energy

 

ConocoPhillips CFO to retire after 39 years at the company

Don Wallette, the CFO of ConocoPhillips, is retiring effective August 31, 2020. He will be replaced by Bill Bullock, currently the President, Asia Pacific and Middle East.

Mr Wallette retires after 39 years with the company. He joined Phillips Petroleum in 1981 as a staff drilling engineer in Houston. He was appointed to the CFO position in February 2016 after stints in Russia and as President, Asia Pacific.



The company has the second-largest market capitalization of a Houston-area company ($46 billion), behind only Crown Castle. And Mr Wallette is the only the CFO of a Houston-area public company with a base salary of over $1 million.

Mr Wallette has a defined benefits retirement plan worth $2.6 million. He also has a Key Employee Supplemental Retirement Plan that was worth $23.6 million at December 31, 2019. The Supplemental Plan will be paid out as a lump sum cash payment six months after Mr Wallette retires.

In his current role Mr Bullock has a base salary of $717,000. He joined ConocoPhillips in 1986 and has had spells in many different parts of the company. Like Mr Wallette, he has a bachelor’s degree in Chemical Engineering (from Texas A&M). Mr Bullock also has a Master’s degree in business administration with an emphasis in finance from Oklahoma City University.

SEC filing – ConocoPhillips CFO

Houston E&P company files for bankruptcy

Yuma Energy has filed for bankruptcy. It becomes the first publicly-traded Houston-based E&P company to file since the recent oil price crash.

The company has its head office in the Galleria area. Historically operations were focused on SE Texas and Louisiana, though it does have some acreage in the Permian basin.  For the nine months ended September 30, it had revenues of only $7 million and a net loss of $6 million (ignoring impairments).

The company intends to liquidate its assets within 90 days.

The company has been struggling for some time. Eighteen months ago, it hired an investment banking firm to advise the company of strategic alternatives. In March 2019, it hired Anthony Schnur as its Chief Restructuring Officer and interim CEO.

In September 2019, the company thought they had found a solution when Red Mountain Capital Partners bought the outstanding debt of $35 million with the intent of converting most of the debt to common stock. Unfortunately, the stock conversion piece of the deal unraveled in March as the deterioration in market conditions caused Yuma to breach its covenants.

Anthony Schnur resigned from his positions with the company. He recently joined Ankura Consulting Group, who were promptly hired by the company as its financial advisor!

https://www.prnewswire.com/news-releases/yuma-energy-inc-files-for-chapter-11-protection-301041610.html