Category Archives: E&P

E&P company to be based in Houston after $5.7 billion merger

Independence Energy and Contango Oil and Gas have agreed to merge in all-stock transaction with an enterprise value of $5.7 billion.



Independence is an E&P business built and managed by KKR, a global investment firm. It consists of upstream oil and gas assets in North America, including those in the Permian, Eagle Ford, Rockies, Denver Julesburg and Barnett basins, as well as mineral and royalty interests and midstream infrastructure.

Contango operates in the Permian, Mid-Continent and Rockies areas. In October 2020, it moved its head office from Houston to Fort Worth, following its merger with Mid-Conn. Contango has made four acquisitions in the past 18 months and has a similar philosophy to KKR’s Energy Real assets team.

The Independence shareholders will own 76% of the combined business, Contango shareholders will own 24%. The combined business will be based in Houston with a new name.

The KKR Energy Real assets team will run the business, led by David Rockecharlie (CEO) and Brandi Kendall (CFO). They will remain employees of KKR. John Goff, the chairman of Contango, will be the chairman of the combined group.

The business is being positioned to be a leading consolidator in the US E&P sector and it will be KKR’s primary platform for pursuing upstream oil and gas opportunities. Unusually, the combined business, even as a public company, will be paying KKR a management fee of $53.3 million per annum plus 1.5% per annum of the net proceeds from all future issuances of equity securities.

The transaction is expected to close late in the 3rd quarter or early in the 4th quarter.

SEC filing – KKR Energy and Contango merger

 

Houston E&P company to merge with rival in $17 billion transaction

Cabot Oil and Gas, based in west Houston, has agreed to merge with Cimarex, based in Denver, in an all-stock transaction. The combined business will have an enterprise value of $17 billion. Cabot shareholders will own 49.5%, Cimarex 50.5% of the combined company.



Cabot has its operating assets in the Marcellus basin in NE USA, while Cimarex operates in Permian and Mid-Continent basins.

The combined company will be based in Houston with a new (as yet undetermined) name. Back office functions of Cimarex in Tulsa and Denver will be relocated to Houston.

Cimarex CEO Thomas Jorden will be the CEO of the combined company and will relocate to Houston. Dan Dingles, CEO of Cabot, will be the Executive Chairman until no later than December 2022. Cabot CFO Scott Schroeder will be the CFO of the combined group.

The Cabot management team have some rich change-of-control provisions. According to the most recent proxy statement CEO Dingles would be eligible for a payout of $40.6 million. Under the new employment agreement that Mr. Dingles has signed, he will be eligible for this payout when he steps down as Chairman.

Schroeder, the CFO who is staying on, has a change-of control package worth $19.3 million. Mark Burford, the CFO of Cimarex, has a change-of control package worth $7.9 million.

The companies are targeting $100 million of estimated annual G&A cost synergies. The markets have reacted badly to the proposed deal as there is no operational field overlap with Cabot primarily producing gas and Cimarex oil. The stock of both companies down more than 5% each.

The deal is expected to close in the fourth quarter.

SEC filing – Cabot – Cimarex merger

 

Callon Petroleum appoints new CFO

Callon Petroleum has appointed Kevin Haggard as its new CFO. He replaces Jim Ulm, who announced in March that would be retiring. Mr. Ulm will continue in an advisory role to assist with the CFO transition.



The company is an E&P company focused on the Permian and Eagle Ford Basins and it has its head office in the Westchase area of Houston. The company currently has a market capitalization of $1.9 billion. However, it has debt of $3 billion, so its stock price is very sensitive to the price of oil.

Between 2016 and October 2020, Mr. Haggard was the VP and Treasurer of Noble Energy. At that point, Noble was acquired by Chevron. Prior to Noble, he held senior financial roles at other E&P companies. He started his career as an investment banker with Credit Suisse.

Mr. Haggard will receive a base salary of $450,000.

As an aside, Correne Loeffler, who was VP, Finance and Treasurer at Callon between April 2017 and July 2019, was recently appointed the CFO at The Howard Hughes Corporation.

SEC filing – Callon Haggard CFO appointment

Houston oil and gas investor admits to fraud

Chris Bentley, who founded Bellatorum Resources in 2016, has shut the business and admitted to fraud. Based in Spring, TX, Bentley raised about $31 million from 150 wealthy individuals to buy mineral rights in Texas shale fields.



Unusually, he sent an email on April 9 to the investors admitting to acquiring ‘bad’ and ‘non-arms length’ deals, overspending on corporate overheads and failing to hire professionals to advise him. He has turned himself into authorities, though he has not been charged with anything yet.

Bentley is a former Marine, who became a landman (someone who negotiates to acquire oil and gas or mineral leases) in 2014. Only two years later, he started his own investment fund. In all, he raised eight funds. For the last fund, Bentley aimed to raise $100 million. He admitted that he was trying to raise funds to pay distributions on his earlier funds. Instead he only raised a couple of million. Much of that money was spent on expenses.

It’s not clear whether Bentley used the funds to enrich himself. However, it appears that all the $31 million raised has been lost.

https://finance.yahoo.com/news/exclusive-texas-energy-fund-shuts-102813500.html

 

E&P company to move senior management to London as CEO steps down

Vantage Jackup rig – offshore Gabon

Cary Bounds, CEO has stepped down as CEO of Vaalco Energy. He will be replaced by non-executive director, George Maxwell, who resides in London.



Vaalco is based in the Westchase area of Houston and has a market capitalization of $130 million. Its main revenue is from offshore Gabon in West Africa. It also has an undeveloped block in offshore Equatorial Guinea. So, the CEO being based in London makes sense.

Last month, the company announced that CFO Elizabeth Prochnow would be retiring and that it would be conducting a search for her replacement. The new CFO will also be based in London. For now, it appears the head office will remain in Houston as most of the shareholders are based in the US.

Mr. Maxwell joined the Board last year. He has worked for both E&P companies with African operations (Eland Oil & Gas, Addax Petroleum) and oilfield service companies (ABB Oil & Gas). He’s also worked in Nigeria, Geneva and Houston. Mr. Maxwell will receive a base salary of $450,000.

Mr. Bounds had been CEO since December 2016. He leaves with a cash severance of $1,164,500 and $95,000 for attorney fees. He also exercised his stock appreciation rights and employee stock options, making $1.5 million in profit.

SEC filing – Vaalco CEO

E&P company appoints new CFO as it relocates to The Woodlands

Ring Energy has appointed Travis Thomas as its new CFO as it relocates its head office from Midland to The Woodlands. Former CFO Randy Broaddrick, who had been CFO since 2012, elected not to relocate from Tulsa, Oklahoma, where the accounting office was based.



Ring is an E&P operator with properties in the Permian Basin. It has revenues of $108 million and a market capitalization of $245 million. In February 2019 it acquired assets in the Permian Basin for $300 million from Wishbone Energy Partners. $28 million of the consideration came through issuance of new equity at $6.20 per share, the rest came from a revolving line of credit.

Prior to the acquisition from Wishbone, the company had been conservatively run with little long-term debt. In February 2018, one year prior, it issued new stock at $14 per share. High debt and a declining share price is not good for management and shareholders and both Lloyd Rochford (Chairman and co-founder) and Kelly Hoffman (CEO) stepped down in September 2020.

New CEO and dissident shareholders

Paul McKinney was appointed CEO. He spent 23 years at Anadarko (hence The Woodlands connection) and 6 years at Apache. More recently he was CEO at Yuma Energy from April 2017 to January 2019 and at Sandridge Energy for 11 months in 2019.

Those short stints raised the ire of Dr. Simon Kukes, a 11% shareholder , who stated that Mr. McKinney was too connected to the old Board and was overpaid ($480,00 base salary). Dr. Kukes is the CEO of Pedevco, another E&P company headquartered in Houston, with properties in the Permian Basin.

CFO compensation

Mr. Thomas joined the company in October 2020 as its VP of Finance. Prior to that, he was the Chief Accounting Officer and Treasurer at Paradox Resources, a private E&P company with its head office in downtown Houston. Mr. Thomas will receive a base salary of $290,000. His predecessor had a base salary of $195,000.

I’ve added Ring Energy to the list of Houston-area public companies. You can see the complete list here.

SEC filing – Ring Energy CFO appointment

CFO at Vaalco Energy to retire

Elizabeth Prochnow has decided to retire from her role as CFO of Vaalco Energy, effective March 31, 2021. She is the second Houston E&P CFO to retire this week, following Jim Ulm at Callon Petroleum.



Vaalco’s primary source of revenue is from offshore Gabon in West Africa. It also has an undeveloped block in offshore Equatorial Guinea. The company has revenues of $67 million and a market capitalization of $139 million.

Ms. Prochnow joined the company in May 2015 as its Chief Accounting Officer and was promoted to CFO in April 2019.  According to the press release issued by the company, her husband has recently retired and they wish to spend more time traveling and with her family.

The company has initiated an executive search for a new CFO. In the meantime, Jason Doornik, the company’s Chief Accounting Officer, will serve as the interim CFO.

SEC filing – Prochnow retires

Callon Petroleum CFO to retire in May

Jim Ulm, the CFO of Callon Petroleum, has told the company he plans to retire from the company in May 2021 due to personal and health reasons. The company has commenced a search for his successor.

The company is an E&P company focused on the Permian and Eagle Ford Basins and it has its head office in the Westchase area of Houston. Due to its high leverage, the company’s stock price is very sensitive to changes in crude oil prices. Its shares have risen eightfold since October as crude prices have risen. The market capitalization is now $1.8 billion. Callon took over Carrizo Oil and Gas in an all-stock transaction in December 2019 that valued Carrizo at $765 million.

Mr Ulm, 57,  joined Callon in December 2017 as its CFO. He was previously the CFO at other large E&P companies such as Fieldwood Energy and Pogo Producing.

SEC filing – Callon CFO retirement

 

Another Houston E&P blank check company files for IPO

Flame Acquisition Corp has filed for a $250 million Initial Public Offering. It has its head office in downtown Houston.



The company is led by CEO and Chairman James Flores, the former CEO of Sable Permian Resources and prior to that, CEO of Plains Exploration and Production. The CFO is Gregory Patrinely, the former CFO of Sable. He also worked in the Oil and Gas division of Freeport-McMoRan, where Mr. Flores also worked for a time.

Sable Permian was formed in 2017 after it was spun off from American Energy Partners, which was formed by the late Aubrey McClendon, after he left Chesapeake. Sable filed for bankruptcy in June 2020. Mr. Flores and Mr. Patrinely left Sable days after if exited from Chapter 11 bankruptcy in February 2020.

The company is targeting opportunities in the the exploration and production and midstream sectors.

Cowen and Intrepid Partners are the joint bookrunners on the deal.

Last week, another Houston E&P blank check company, HNR Acquisition, filed for a $100 million IPO.

S-1 filing – Flame Acquisition Corp

E&P blank check company files for $100 million IPO

HNR Acquisition, a blank check company, has filed for an Initial Public Offering (IPO). It has its head office in the Greenway Plaza area of Houston.



The company plans to raise $100 million. Its sponsor and current 100% stockholder is Houston Natural Resources (HNR).  Its founder and CEO, Donald Goree, will also be the CEO of the blank check company.

HNR is currently involved in the recycling and remediation of oil-produced contaminates. It trades over-the-counter and has a market capitalization of $46 million. The company is currently completing two years of audited statements and has not yet filed to become an SEC reporting company.

The blank check company intends to focus on acquiring a business involved in exploration and production.

Kingswood Capital Markets is the sole bookrunner on the deal.

If HNR Acquisition completes its IPO, it will be the 8th Houston-area blank check company. Last week, one of those, Landcadia Holdings III announced a a proposed reverse takeover with The Hillman Group.

S1 filing – HNR Acquisition Corp