Houston’s Terra Energy Partners buys Ursa Resources business in $60M deal

The biggest Western Slope natural gas producer is buying Ursa Resources’ business and wells two months after the company filed for Chapter 11 bankruptcy protection.

Houston-based Terra Energy Partners LLC agreed to pay $60 million to acquire Denver-based Ursa Piceance Holdings LLC and its subsidiaries after a bankruptcy court sale.

The sale of Ursa Piceance’s business includes its 41,000 acres of mineral rights and 579 operating wells.

Privately held Terra Energy Partners succeeded with a bid at auction in federal bankruptcy court in Delaware earlier this month. U.S. Bankruptcy Judge Brendan L. Shannon signed off on the deal Nov. 23, according to court documents.

Terra Energy, which operates as TEP Rocky Mountain, produces natural gas from 5,300 wells on 370,000 acres in northwest Colorado’s Piceance Basin.

The deal is the latest transaction in the oil and natural gas industry that has been shaken by a historic collapse in the demand for fuels triggered by the Covid-19 pandemic.

Coming off years of weak natural gas prices, the collapse of crude oil has pushed many companies into filing for bankruptcy protection.

Ursa Piceance Holdings and its operating and pipeline subsidiaries filed for bankruptcy protection Sept. 2 with $282 million in debt on its books.

A well pad it developed in 2017 proved disappointing and, afterward, Ursa could afford to drill no new wells with natural gas prices so low and creditors steadily reducing its lines of credit. The passage of Senate Bill 181 in 2019 clinched the inability of the company to raise more capital, said Jamie Chronister, the company’s restructuring officer, in bankruptcy filings.

Ursa Piceance had tried without success to sell the business or its assets outside of bankruptcy court. Buyers were troubled and ultimate dissuaded from buying by the financial obligations in a pair of Ursa Piceance’s pipeline agreements, the company said.

The 21-employee company has offices in Rifle and Denver and producing wells in the western Colorado areas of Boise Ranch, Battlement Mesa, Gravel Trend and Castle Springs.

Ursa Piceance was formed in 2012 after acquiring wells and mineral rights acreage from Denver-based Antero Resources, which was exiting northwest Colorado to focus its natural gas production on the Marcellus and Utica shale formation in West Virginia, Pennsylvania and Ohio.

By Greg Avery – Senior Reporter, The Denver Business Journal

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/11/30/terra-energy-ursa-piceance-natural-gas-bankruptcy.html

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McDermott secures funds for growth

Houston-based McDermott International Ltd. is making moves to secure $560 million in new liquidity to fund growth moving forward.

The company has reached an agreement to adjust its debt with a new letter of credit that will free up $390 million in cash that was previously unusable because McDermott had to hold it as collateral, according to a company press release. On top of that, McDermott is selling more common shares to some of its exiting investors, raising gross proceeds of about $170 million, the company said.

“This additional capital will further solidify our liquidity position, enabling us to continue to deliver superior project execution for our customers and consistently pursue new growth opportunities as demand for our expertise and capabilities increases,” said CEO David Dickson.

Both of the liquidity-raising transactions are expected to close before the end of the year. They have support from a group of investors and a steering committee comprising certain lenders, the company said in the press release. Dickson said in the press release that the support of those groups is indicative of their confidence in McDermott’s strategy.

This liquidity expansion activity comes on the heels of McDermott’s exit from Houston’s bankruptcy court in June. The in-court restructuring process cut away $4.6 billion of debt, leaving it at the time with $2.4 billion in letter of credit capacity and $544 million of funded debt. In exchange, McDermott turned ownership of the company over to creditors and cancelled the interests of its previous ownership, including common shareholders. The moves took McDermott off of the NYSE, where it had previously been traded as a public company.

Kirkland & Ellis LLP is serving as legal counsel to McDermott. AP Services, LLC, an affiliate of AlixPartners, is serving as operational advisor and Centerview Partners is serving as the company’s financial advisor.

By Joshua Mann – Senior Reporter

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/11/20/mcdermott-secures-funds-for-growth.html

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Texas energy data wrap: Oil field services sector adds thousands of jobs in October

The oil and gas industry is still trying to recover from sharp declines this year as the Covid-19 pandemic cuts into demand for fuel and manufacturing. That has, in turn, slashed demand for oil and gas, which has had effects that reverberate up and down the value chain.

Here are four data points to know in Texas Energy this week.

Oil field services sector adds jobs

The oil field services and equipment sector added 6,430 jobs in the U.S. during October, according to a Petroleum Equipment & Services Association analysis of Bureau of Labor Statistics data. Despite the increase last month, employment in the sector is still down a total of 101,087 jobs since October 2019. That’s a decline of 13.2% of all U.S. OFS&E jobs over the past year. PESA said in its analysis that while it thinks the worst of the cuts are in the past, the future is still uncertain because of a resurgence in Covid-19 cases.

Texas to add wind power generation

Project developers in Texas expect to add another 4 gigawatts of wind power generation capacity by the end of the year, extending Texas’ already prodigious lead in the metric over other states, according to a report by the U.S. Energy Information Administration. Texas had 29.1 gigawatts of wind capacity installed as of August, more than double that of Iowa, the next state on the list. “The impending phaseout of the full value of the U.S. production tax credit at the end of 2020 is leading to more capacity additions than average this year, just as previous tax credit reductions led to significant wind capacity additions in 2012 and 2019,” the EIA said in the report.

Crude production to move down until second half of 2021

The EIA expects crude oil production in the U.S. to decline through the first half of 2021, then increase back to current levels in the latter half of the year, according to a report. The U.S. was producing 12.7 million barrels of crude oil per day in March, up until the president declared a national emergency because of the Covid-19 pandemic. After that, production fell to 10 million barrels per day, then rose back to 10.6 million barrels per day by August.

Rig count up on week, way down on year

The Texas oil and gas rig count reached 145 rigs on Nov. 13, down 263 from the comparable week in 2019, according to data published by Baker Hughes Co. (NYSE: BKR). The Texas rig count is up by six over the past week, however. The broader North American rig count is up 15 for the week to 401 rigs, but it’s down 539 rigs from a year ago, according to the data.

By Joshua Mann – Senior Report

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/11/14/oil-field-services-adds-jobs-in-october.html

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NRG Energy plans hundreds of millions of dollars’ worth of divestment

NRG Energy Inc. (NYSE: NRG) is expecting to draw at least $250 million from asset sales in the near term.

That would be the net proceeds, after associated debt repayment, for divestments in the next six to 12 months, CEO Mauricio Gutierrez said during his company’s quarterly earnings conference call.

“We have significantly rebalanced our portfolio by reducing generation and growing retail, but we’re not done yet,” Gutierrez said.

The electricity generator and retailer isn’t providing additional detail on what it might target for divestment, but the first $200 million will go toward NRG’s $3.6 billion acquisition of Direct Energy Inc., Gutierrez said. That deal is on track to close by the end of the year, he noted.

NRG will issue a more comprehensive update on its divestment plans as it gets further along in the process. In the past, the company has generally cut portions of its power generation business in favor of expansions to its retail arm.

NRG produced $2.81 billion in revenue during the third quarter, according to the company’s financial report. That translated to $249 million in net income during the period.

NRG reached its Direct Energy deal in the third quarter. Direct Energy, a subsidiary of London-based Centrica PLC since 2000, is a retail provider of electricity, natural gas, and home and business energy-related products and services.

The deal is the latest in a series of changes for Direct Energy over the past few years. In 2019 alone, the company announced it would move its headquarters from Greenway Plaza to downtown’s 2 Houston Center, sell its Clockwork home services business unit and cut local jobs. The company moved its headquarters from Toronto to Houston several years ago, and it has since shaken up its business structure and sold off other business units.

Meanwhile, NRG has had dual headquarters in New Jersey and Houston since December 2012, when it acquired Houston-based GenOn. NRG is also the parent company of Houston-based Reliant Energy.

By Joshua Mann – Senior Reporter

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/11/05/nrg-energy-divestment-plans.html

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Exxon Mobil to cut 1,900 U.S. jobs, primarily in Houston

Irving, Texas-based Exxon Mobil Corp. (NYSE: XOM), which employs thousands of people in the Houston area, has announced more details of its previously anticipated U.S. layoff plans.

The energy giant expects about 1,900 U.S. employees “will be affected through voluntary and involuntary programs,” an Oct. 29 press release states.

Exxon’s management offices in the Houston area will feel the biggest impact, the release notes, but a specific number of local layoffs was not disclosed. Exxon’s Houston presence includes its 385-acre corporate campus in Springwoods Village, between Houston and The Woodlands, as well as offices in The Woodlands’ 66-acre Hughes Landing mixed-use development. It also operates the ExxonMobil Baytown Complex, which is one of the largest integrated and most technologically advanced refining and petrochemical complexes in the world, according to the company.

Beyond the U.S. layoffs, Exxon expects to reduce its global workforce by about 15%, according to reports. The Wall Street Journal reports that the company projects cutting about 14,000 jobs, including employees and contractors, through 2021.

“The workforce reductions are the result of ongoing reorganizations and work-process changes that have been made over the past several years to improve efficiency and reduce costs,” Exxon said in its Oct. 29 press release. “These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions. The impact of Covid-19 on the demand for ExxonMobil’s products has increased the urgency of the ongoing efficiency work.

“The company recognizes these decisions will impact employees and their families and has put these programs in place only after comprehensive evaluation and thoughtful deliberation. Employees who are separated through involuntary programs will be provided with support, including severance and outplacement services.”

In May, Exxon CEO Darren Woods said the company was cutting its expenses but not its jobs.

But news surfaced last week that Exxon would announce U.S. layoffs soon. Exxon already said this month that it expects to cut as many as 1,600 jobs in Europe.

Plenty of other oil and gas companies have cut jobs during 2020, including some of the biggest.

California-based Chevron Corp. (NYSE: CVX) confirmed to Reuters in May that the company expected to reduce its global headcount by 10% to 15% to “match projected activity levels.” Based on Chevron’s May headcount, that plan translates to about 4,500 to 6,750 jobs eliminated worldwide. Around 700 Houston employees were expected to be let go this month.

Additionally, Chevron will cut about 25% of former Noble Energy employees now that its acquisition of the Houston-based company is complete. Although the exact number was not disclosed, cutting Noble’s 2019 workforce of 2,280 employees would mean eliminating about 570 positions.

In late September, Royal Dutch Shell PLC (NYSE: RDS-A, RDS-B) said it expects to have eliminated 7,000 to 9,000 jobs worldwide by the end of 2022. That includes around 1,500 people who have already agreed to take voluntary redundancy but excludes anyone who might leave Shell because of divestments.

In June, BP PLC (NYSE: BP) said it will cut about 15% of its global headcount, or about 10,000 of the company’s 70,100 positions worldwide. The cuts will mainly target office jobs at BP and are expected to impact senior levels significantly, making the senior structure flatter.

By Olivia Pulsinelli – Assistant Managing Editor

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/10/29/exxon-mobil-us-job-cuts.html

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