Category Archives: E&P

Battalion Oil appoints new CEO

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Battalion Oil has appointed Matt Steele as its new CEO, replacing Rich Little who leaves after nearly four years in the role.



The company is based in NW Houston and has working interests in approximately 40,000 net acres in the Delaware Basin. Its market capitalization is currently $108 million. Unfortunately, it also has $182 million of net debt that carries an interest rate of over 12.5%.

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. It changed its name to Battalion in January 2020.

The new CEO, Mr. Steele, founded Bruin E&P Partners in 2015. The company bought Halcon’s Bakken assets in 2017 for $1.4 billion. It filed for Chapter 11 bankruptcy in July 2020. Mr. Steele left when the company was sold to Enerplus in March 2021 for $465 million.

Mr. Steele will receive a base salary of $250,000, considerably lower than his predecessor ($500,000) and new CFO, Kristen McWatters, ($300,000) who joined in January. He will also receive the opportunity to earn unspecified incentive compensation bonuses.

Mr. Little will receive a severance payment of $1 million.

SEC filing – 8-K Battalion Oil CEO

CFO at Amplify Energy resigns

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Luca Pacioli – the father of accounting

Jason McGlynn has resigned as CFO of Amplify Energy, effective March 17, 2023. He had been the CFO for just over two years, following the promotion of Martin Willsher from CFO to CEO. The company made no mention of its plans for a replacement.



[According to LinkedIn, Mr. McGlynn is now the CFO at Monarch Bioenergy. The company is a PE-backed joint venture between Smithfield Foods and Roeslein Alternative Energy that converts methane emissions from hog manure into natural gas].

Amplify Energy was formed in 2019 from the all-stock merger of Tulsa-based Midstates Petroleum and what was Memorial Production Partners. It has its head office in downtown Houston. Mr. McGlynn joined Midstates in 2013 as its VP of Strategic Planning, Investor Relations and Treasury.

Although the business mainly focuses on mature assets, mainly in Oklahoma and East Texas/North Louisiana, it has been in the news in the past couple of years for a pipeline it operated in offshore California that ruptured in October 2021.

The rupture occurred four miles offshore from Newport Beach and caused 588 barrels of oil to leak. A Coast Guard investigation concluded that two ships, the MSC Danit and COSCO Beijing, had sheltered in San Pedro Bay, ahead of a January 2021 storm. The winds and the waves from the storm caused the ships’ anchors to drag across the seafloor and damage the pipeline.

Last week, the companies that operated the ships, agreed to pay Amplify $96.5 million to settle all claims. During 2022, the company settled claims against it by;

  • the Federal Government ($7.1 million fine and reimbursement of $5.8 million of costs)
  • State of California ($4.9 million fine)
  • a Class action lawsuit ($50 million settlement)

In total, Amplify estimates that it has incurred total costs of $120 million to $140 million, though it has received $87 million (through September 2022) from its insurance carriers. In addition the company has also received $46 million insurance proceeds related to the approved loss of production income.

The company is now in the process of repairing the pipeline. Before it can resume operations, it has to comply with requirements of the corrective action order of The Pipeline and Hazardous Materials Safety Administration (PHMSA), which is part of the US Department of Transportation.

SEC filing – McGlynn resignation

 

Houston E&P operator to be acquired for $2.5 billion

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[UPDATE 06-20-23 – The deal has now closed]

Ranger Oil, based in Houston, has agreed to be acquired by Calgary-based Baytex Energy for $2.5 billion or $44.36 per share. The price includes $650 million of debt.



Baytex has most of its E&P operations in Canada but it does have a 25% working interest in 78,000 acres in the Eagle Ford basin in South Texas. Ranger is a pure-play Eagle Ford operator with a gross acreage of 189,000 acres.

A third of the price price will be paid in cash, the rest in stock. Baytex shareholders will end up owning about 63% of the combined business and Ranger shareholders 37%.

The Baytex management team, led by CEO Eric Greager, who only joined the company in October, will run the combined business. However, Baytex intends to add one senior operational leader to the leadership team and retain the Ranger teams in Houston.

Ranger was formerly known as Penn Virginia Corporation. The company entered bankruptcy proceedings in 2016 and eliminated $1.1 billion in debt (converted to equity). During Chapter 11, it moved its head office from Philadelphia to Houston.

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 the then major shareholders of Penn Virginia thought the deal undervalued the company.

Juniper Capital invested $188 million in Penn Virginia in November 2020 and became the largest shareholder with a 60% stake (now down to 54%). The following year the company bought Lonestar Resources for $370 million and renamed the combined company as Ranger Oil.

In November 2022, Reuters reported the Ranger had put itself up for sale following large deals for other operators in the Eagle Ford.

The deal is expected to close in Q2 2023.

Baytex Investor Presentation – Ranger

Battalion Oil appoints new CFO

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Battalion Oil has appointed Kristen McWatters as its new CFO, effective January 26, 2023. She replaces Kevin Andrews, who has agreed to stay on until April 13 in an advisory role. Mr. Andrews had been the CFO since August 2020.

The company is based in NW Houston and has working interests in approximately 40,000 net acres in the Delaware Basin. Its market capitalization is currently $193 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. It changed its name to Battalion in January 2020.

Ms. McWatters was previously the CFO at Goodrich Petroleum, a similar E&P company to Battalion. Goodrich went into Chapter 11 in 2016, she joined as Assistant Controller in 2017. The company regained its listing in April 2017 and Ms. McWatters became CFO in December 2020. She left after Goodrich was taken private by Encap Investments in a $480 million deal.

For the past few months, Ms. McWatters has been interim Chief Accounting Officer at Perella Weinberg Partners, a publicly-traded investment bank. Perella, through its subsidiary, TPH, happened to advise Goodrich on its sale transaction.

Ms. McWatters will receive a base salary of $300,000. No severance arrangements were disclosed for Mr. Andrews in the filing announcing Ms. McWatters’ appointment. According to the last proxy, Mr. Andrews is entitled to a payment of $500,000 if his employment is terminated without cause.

SEC filing 8-K Battalion CFO

 

 

 

 

Black Stone Minerals CFO to depart

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Jeff Wood, the President and CFO of Black Stone Minerals (BSM), is leaving the company at the end of February. Evan Kiefer, currently VP, Finance and Investor Relations, will become interim CFO upon Mr. Wood’s departure.

BSM has its head office in downtown Houston and is one of the largest owners and managers of oil and gas mineral rights in the USA. It has a market capitalization of $3.5 billion.

Mr. Wood joined the company in 2016 and added the additional duties of President two years later. It is not clear why Mr. Wood is leaving. The company has been performing well. It tends to hedge a big percentage of its production. That makes sense as it is primarily held as a yield stock, but does come in for occasional criticism for leaving money on the table when oil and gas prices rise rapidly, like they did earlier in 2022.

The 8-K filed with the SEC states that the company and Mr. Wood will be negotiating a severance agreement. That’s interesting because Mr. Wood already has a severance agreement in place. That would pay him 1x base salary ($358,000), plus target annual bonus (100%) plus pro-rata bonus for the year of termination. Restricted stock would also vest under the current agreement.

Mr. Kiefer joined the company in October 2013 as an analyst and was promoted to VP two years ago.

SEC 8-K filing – CFO departure

Coterra to pay $16 million to improve water quality

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PHOTO: ALEX BRANDON/ASSOCIATED PRESS

Houston-based Coterra Energy has agreed to pay $16.29 million to build a public water system for the township of Dimock in rural Pennsylvania. The company pleaded no contest to charges that it polluted residents’ water wells with methane and other contaminants. It did agree to pay a fine of $444,000 to the Pennsylvania Department of Environmental Protection.

By pleading no-contest, a defendant doesn’t admit guilt but accepts the punishment given by the court. A guilty plea could have been used as an admission of liability in any related civil cases, whereas a no-contest plea has no bearing in civil cases.



The new water treatment plant will take about 3 years to build. Coterra also agreed to pay the water bills for the next 75 years for impacted homeowners (about 20 in all).

Coterra was formed a year ago from the merger of Cabot Oil & Gas (based in Houston) and Cimarex Energy (based in Denver).

The Pennsylvania Attorney General (and soon-to-be Governor), Josh Shapiro charged Cabot in June 2020 following a grand jury investigation. Cabot began drilling in and around Dimock in 2006, and according to testimony given at the investigation, residents’ water soon turned black or orange and was often bubbling. A water well even exploded in January 2009.

The issue first gained national prominence In 2010 when Gasland, an HBO documentary, showed residents of Dimock lighting their tap water on fire.

Experts at the grand jury investigation testified that they believed the wellbore integrity was compromised by poor cementation in some of the wells that were drilled, allowing methane and other contaminants to escape into the groundwater.

Cabot had always denied the allegations, stating that the area around Dimock has a long history of methane in surface and ground water. The grand jury heard testimony that Cabot never tested for methane in its pre-drill sampling and so did not establish a methane baseline for what is known as “Swamp gas”. Other experts showed testified that the contamination far exceeded ‘normal’ local levels.

Cabot made a confidential settlement with thirty plus Dimock families in 2012 following the filing of a federal lawsuit by the families.  It settled with two more families in 2017.

In its most recent quarterly report filed on November 4, Coterra stated that it is “vigorously defending itself against such charges; however, the proceedings could result in fines or penalties against the Company. At this time, it is not possible to estimate the amount of any fines or penalties, or the range of such fines or penalties, that are reasonably possible in this case”.

The company had operating profits of $1.5 billion in the third quarter, so a settlement of $16 million is not material.

The same day as the quarterly earnings announcement, the company also stated that CEO Thomas Jorden would become Executive Chairman as well, effective January 2023. He replaces Dan Dingles. Pre-merger, Mr. Jorden was the Cimarex CEO and Mr. Dingles was the Cabot CEO. That succession plan was put in place at the time of the merger.

Mr. Dingles, who was appointed CEO of Cabot in 2002, will receive a $9.6 million payment, once he leaves, as a result of the change-in-control.

https://www.attorneygeneral.gov/taking-action/ag-shapiro-announces-plea-public-water-line-construction-for-victims-of-cabot-oil-gas/

 

 

Houston SPAC buys California assets from Exxon

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Flame Acquisition Corp, a Houston-based SPAC (Special Purpose Acquisition Corp) has agreed to buy the Santa Ynez oilfield from ExxonMobil. The business will be renamed Sable Offshore. (Technically, Exxon are selling the business to Sable Offshore, a company set up by Mr. Flores last year. In turn, Flame are buying Sable Offshore).



Flame completed its $250 million IPO in February 2021. 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 Permian. He also worked in the Oil and Gas division of Freeport-McMoRan, where Mr. Flores also worked for a time.

The Santa Ynez oilfield consists of 3 offshore platforms located in federal waters 12 miles off the coast near Santa Barbara and an onshore processing facility at Las Flores Canyon.

The offshore field had to stop production in 2015 after a corroded onshore pipeline that runs parallel to US Highway 101 ruptured, releasing 2,934 barrels of oil into the ocean. Plains All American (a separate company to Plains Exploration and Production)  were the owners of the pipeline at the time. In 2020, Plains were fined $60 million in relation to the spill.

Last month, ExxonMobil bought the pipeline from Plains and has now agreed to sell it to Sable, who will be responsible for repairing and maintaining the pipeline.

The assets are being acquired for $643 million. However, most of this is being financed by Exxon who are issuing a $623 million loan to Sable. The loan has a 10% interest rate and will not be repaid until the earlier of 5 years or 180 days after production is restarted. I

Sable is targeting a production start date for the Santa Ynez field of January 2024 and is estimating it will cost $172 million to repair the pipeline and get the offshore platforms ready. That money will effectively come from the cash that Flame raised in its IPO. Sable is also looking to raise a further $300 million in equity to provide it with cash reserves in case of delays.

Sable believes that they can repair the pipeline quickly by following the processes outlined in the the consent degree that Plains agreed to in its March 2020 settlement. It’s not clear to me how or whether the Californian state authorities can object or delay the repairs.

If production does not restart by January 2026, ExxonMobil has the right to take back the assets.

[EDITED 11-10-22 to make clear that Plains Exploration and Production, the former employer of Mr. Flores, is a separate company from Plains All-American).

Flame – Investor Presentation

 

Magnolia Oil & Gas promotes from within for CFO role

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Magnolia Oil & Gas has promoted Christopher Stavros from CFO to CEO.  Brian Corales becomes the CFO, having previously been VP, Investor Relations. The promotion for Mr. Stavros was announced on September 21, two days before founder and CEO, Stephen Chazen, died.

Magnolia has its head office in Greenway Plaza and operates wells in South Texas around Giddings and in Karnes County. It has a market capitalization of $5.6 billion.

The company began as a SPAC (Special Purpose Acquisition Company) formed by Mr. Chazen (ex-CEO of Occidental Petroleum). Mr. Stavros worked with Mr. Chazen at Oxy for 12 years, eventually becoming the CFO, before leaving in 2017.  The SPAC acquired the South Texas properties from Enervest, a PE firm, in 2018 for $2.7 billion and Mr. Stavros became CFO of Magnolia at that point.

Enervest remains the largest shareholder in Magnolia at 18%. Mr. Chazen owned 3% at the time of his death.

Mr. Corales joined Magnolia in November 2018. Prior to that, he had spent many years in investment banking including Johnson Rice & Co and Scotia Howard Weil. He will receive a base salary of $367,500.

SEC filing – 8-K Magnolia CFO appointment

BP to acquire renewable gas company for $4.1 billion

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BP has agreed to acquire Houston-based Archaea Energy for $26 per share in an all-cash deal that values Archaea at $4.1 billion, including $800 million of debt. The deal values the company at 20 times the expected 2023 EBITDA.



Archaea develops, constructs and maintains renewable natural gas facilities (RNG) that capture waste emissions from landfills and converts them into low-grade fuels and electricity. It currently has 13 of them. The company also has 33 landfill gas to electric facilities, some of which were added after a recent acquisition.

The company is based in the Galleria area and was taken public in September 2021 by a SPAC based in Pennsylvania, Rice Acquisition Corp.  The SPAC actually acquired Archaea LLC for $347 million and Aria Energy LLC for $680 million, with the combined business being renamed Archaea Energy. So, its a tremendous return for its investors.

It is not surprising that they have been acquired by a traditional oil and gas company. Due to high oil prices, they are generating lots of cash, but are under tremendous pressure to invest in anything but traditional oil and gas.

The company appointed Brian McCarthy as its new (old) CFO in August 2022.

The deal is expected to close by the end of 2022.

SEC filing – Archaea – BP

Houston E&P appoints new CEO and CFO

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Epsilon Energy, based in Greenspoint area of North Houston, has appointed a new CEO and CFO.

Jason Stabell is replacing the retiring Mike Raleigh as CEO while Andrew Williamson replaces Lane Bond as CFO.

Mr. Stabell and Mr. Williamson worked together for many years at Merlin International, LLC, an E&P business with its primary operations in Egypt. The business was sold in 2019 to a SOCO International, a UK-listed company. Mr. Stabell stayed on as a consultant until 2021 while Mr. Williamson became the Corporate Development Manager at a small E&P company.

Epsilon primarily owns properties in the Marcellus basin in Pennsylvania. A few years ago, it started acquiring acreage in the Anadarko Basin in Oklahoma. However it is not the operator of those wells. The company has revenues of $48 million and a market capitalization of $130 million.

The departing executives were among the lowest paid executives for their positions. Mr. Raleigh, who had been CEO since 2013, had a base salary of $150,000, though between 2018-2020 he did not take a salary. He will receive a severance of $150,000 plus $480,000 in lieu of equity awards for 2021 and 2022.

Mr. Bond, who had been CFO since 2012 and is also retiring, had a base salary of $200,000. He will receive no severance, but will receive a pro-rata bonus for 2022 of $37,500. However, he will be engaged as a consultant until March 2023 at a monthly rate of $16,667.

Incoming CEO Stabell will have a base salary of $300,000 while Mr. Williamson will have a base of $230,000.

SEC filing – Epsilon Energy CEO CFO change