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Customer Testimonial

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While working with a client over a 3 month period in Weatherford, Oklahoma one of the site leaders emailed our Operations Manager with the message below. Congratulations to all of the hard working men and women of Crown that make this happen!

“Hello, my name is Chris Bruhne; I’m a JSSL on a Production Enhancement crew. I am privileged to have the help of your men. Thus far, they have been the tops: mature, professional, safety conscious, extremely hard workers. For supplying men of good character to our cause, thank you.”

Chris Bruhne

WPX Energy to buy RKI Exploration & Production

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July 14–Tulsa-based WPX has agreed to buy Oklahoma City-based RKI Exploration & Production for $2.75 billion in cash, stock and debt.

WPX executives said the company plans to keep RKI’s Oklahoma City and New Mexico offices and their employees. RKI has about 100 employees in Oklahoma City and 30 in Carlsbad, N.M.

“RKI is highly attractive to WPX due to its core acerage, it’s substantial scaleable structure with excess capacity and a proven operational team that will remain in place,” WPX CEO Rick Muncrief said during a conference call Tuesday. “I simply can’t wait to get our hands on these assets.”

The deal is expected to close in the third quarter.

Most of RKI’s assets are in Loving County, Texas, and Eddy County, N.M, in the Permian Basin’s Delaware play. The assets produce 22,000 barrels of oil equivalent per day over 92,000 acres with more than 3,600 gross drilling locations.

The production is about 53 percent oil, 16 percent natural gas liquids and 31 percent natural gas.

“We weren’t looking for just any opportunity. We’ve been looking for the perfect fit,” Muncrief said. “We have charged our team with finding a new basin that could add the best returns to our portfolio, and everything pointed to the Permian, an incredibly hydrocarbon-rich environment characterized by stack play resorviors, extensive production history, long lived reserves and high drilling success rates.”

Under terms of the deal, WPX agreed to pay $2.35 billion in cash and stock and assume about $400 million of RKI debt. The deal comes at a time when much of the oil industry has been stalled by oil prices that are about half of what they were one year ago.

“I said in last quarter’s conference call that opportunities will abound for well maintained, financially strong companies with a clear and compelling business strategy,” Muncrief said. “All the progress we’ve made focusing our business and strengthening our balance sheet has allowed us to be opportunistic.

“Today, we’re a company out front. As with any business, the time to buy is when prices are down. When oil prices are strong again, we probably won’t be buying, we’ll be drilling.”

RKI’s top three executives, including founder and CEO Ronnie K. Irani, will stay on as consultants during the transition, WPX said.

“We’re very pleased that our high-quality Permian holdings will be managed and developed by WPX, a technically minded company that can take the potential of our acreage and infrastructure to significantly higher levels,” Irani said in a statement. “Turning over the reins of RKI to a proven operator is very important to me and our team because of the great pride we have in this exceptional asset base we have amassed and developed over the past 10 years. We’re also very pleased that WPX is an Oklahoma-based company with significant growth prospects which will continue to benefit the state.”

Directors at both companies unanimously approved the merger agreement, and the merger agreement was adopted and approved by the holders of about 85 percent of the issued and outstanding RKI LLC interests following the entry into the merger agreement by RKI.

Hess sale establishes Bakken midstream joint venture

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Hess Corporation is a global independent energy company, engaged in the exploration and production of crude oil and natural gas. The company has recently completed a transaction, selling a 50% interest in its Bakken midstream assets to Global Infrastructure Partners. The deal totals an amount of approximately US$2.675 billion.

Subsequently, Hess and Global Infrastructure Partners have created a midstream joint venture, namely Hess Infrastructure Partners. A five year Term Loan A facility has incurred a US$600 million debt for the joint venture. Once distributed across the companies, after-tax cash proceeds net to Hess of US$3 billion.

Hess midstream assets

The Hess midstream assets included in the joint venture are: a natural gas processing plant in Tioga, a rail loading terminal in Tioga and its associated rail cars, a crude oil truck and pipeline terminal in Williams County, a propane storage cavern and rail and truck transloading facility in Mentor, Minnesota and crude oil and natural gas gathering systems in North Dakota.

Initial public offering of common units

In addition, the joint venture has independent access to capital including a US$400 million five year senior revolving credit facility. As previously announced, the joint venture plans to proceed with an initial public offering of Hess Midstream Partners LP common units.

Edited from source by Elizabeth Corner

Bill Barrett Corporation Announces Expanded DJ Basin Drilling Program, Updates 2015 Guidance, At-the-Market Equity Offering and Establishes Initial 2016 Production Growth Range

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in Daily Headline / Energy News by June 10, 2015

Bill Barrett Corporation (the “Company”) (BBG) announced today that it is increasing its 2015 capital program to expand and accelerate its extended reach lateral (“XRL”) drilling program in the Northeast (“NE”) Wattenberg area of the Denver-Julesburg (“DJ”) Basin and is establishing an initial 2016 production growth range.

The increased activity will include adding a second rig in the NE Wattenberg area early in the third quarter of 2015 that the Company expects will spud an additional 11 gross (8 net) operated XRL wells in the second half of 2015.  The Company now anticipates participating in 35-40 gross (28-32 net) operated development wells in the NE Wattenberg area during 2015, most of which are XRL wells.  The increased development activity will contribute only slightly to 2015 production due to the timing of completions associated with multi-well pad drilling, but is expected to have a greater impact in 2016 and DJ Basin production is anticipated to grow in excess of 60% and 25% in 2015 and 2016, respectively.  Incorporating the higher level of activity, the Company is increasing its 2015 production guidance to 6.0-6.4 MMBoe and raising its capital expenditure guidance to $320-$350 million, which includes capital for the second rig in NE Wattenberg, additional working interests in wells, and a small number of obligation wells related to the retention of leaseholds.  The Company is also providing an initial 2016 corporate production growth target of 10%-15% over 2015 based on an indicative 2016 capital spending level of between $225-$275 million, which assumes approximately 40 gross (32 net) operated XRL wells utilizing a two-rig drilling program at current service cost levels and is subject to board approval during the normal budgeting cycle.

Chief Executive Officer and President Scot Woodall commented, “We continue gaining operational momentum based on the results of our XRL drilling program.  The initial thirty-day production data from our latest completion design is yielding improved early well performance and attractive returns of nearly 40%1 at current commodity prices.  With a large and significant opportunity set in front of us, we recognize the benefit of increasing our XRL activity at this time to be better positioned for increased production growth and stronger cash flows in 2016.  We expect DJ Basin production to significantly increase as the full benefit of adding the second rig is realized.  Our financial position remains strong and is supported by an undrawn revolving credit facility and a significant cash position.  We also have over 90% of our 2015 oil and natural gas production and nearly half of 2016 hedged at favorable commodity prices.  We will remain capital disciplined and flexible in our capital policies as we utilize a two-rig program to efficiently create value from our DJ Basin acreage position.”

The capital budget is expected to be funded internally through operating cash flow, cash on hand, borrowings under the Company’s revolving credit facility, non-core asset divestitures and sales of common stock from time to time.

1 Calculated for an XRL well utilizing a 9,500′ lateral, 55-stage plug-and-perf completion, $6.25 million well cost, flat pricing of $65 NYMEX oil & $3.25 NYMEX gas and incorporates a $9/bbl long-term oil price differential

Bill Barrett Corporation (the “Company”) (BBG) announced today that it has filed a prospectus supplement with the Securities and Exchange Commission (the “SEC”) under which it may offer and sell from time to time and at its discretion shares of its common stock having an aggregate gross sales price of up to $100 million pursuant to an “at-the-market” offering program (the “ATM Program”).  The shares would be offered pursuant to an equity distribution agreement between the Company and Goldman, Sachs & Co. (the “manager”).

The Company intends to use the proceeds from any sales for general corporate purposes, including additional capital spending associated with the accelerated development of the Company’s Denver-Julesburg Basin properties.

A registration statement relating to the shares has been filed and was declared effective on April 2, 2015. The offering will be made only by means of a prospectus supplement, dated June 10, 2015, and the accompanying base prospectus, copies of which may be obtained on the SEC website atwww.sec.gov. Alternatively, you may request that the manager send you the prospectus supplement and accompanying base prospectus by contacting Goldman, Sachs & Co. (By mail: 200 West Street, New York, NY 10282, Attention: Prospectus Department; by phone: (866) 471-2526; or by email: prospectus-ny@ny.email.gs.com).

How to Create High Performing Teams. The 5 keys to success

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Article written by:

Designs & Delivers Winning Strategies & Business Transformations

High performing teams are behind major Mergers and Acquisitions, complex & innovative New Product Design and Introductions, and multiplex company change transformations.

In fact, whenever a firm needs a complex strategic game changer involving creativity, multidisciplinary & cross functional skills, fast implementation and superior performance, then an executive level High Performing Team is needed.

But how exactly do you rapidly assemble a world class executive high performing team?

In particular, how does the ‘C’ suite  create the framework that provides the challenge, the incentive and the opportunity for cross functional initiatives, together with external professional advisors,  to become multi-disciplinary high performing teams….  and deliver success ahead of the competition?

Of course, it’s easy to convene a team of senior leaders and experts, hold a ‘kick-off’ and ‘team building’ meeting off site and set the hares running, but it’s surprising  just how many senior level high performing teams fail… either through politics, poor objective setting, communications breakdown or personality & style clashes.

However, with a bit of thought and some judiciously applied management and control techniques the ‘C’ suite could set up up High Performing Teams that are not only able to do the job, but do the job better than the rest of the sector.

Here’s how to do it:
In essence, there are 5 main elements to setting up successful High Performing Teams: 1) Articulating theTeam Challenge, 2) Gaining Ownership, 3) Developing Relationships, 4) Acquiring & Applying Knowledge and 5) Maintaining Discipline.

1) Articulating the Team Challenge:  By developing a Team Performance Challenge the ‘C’ suite and the team together create a clear common objective.This process of  building, refining and clarifying the challenge, enables the ‘C’ suite and team members together to understand the objectives and barriers whilst gaining collective ownership of the issue.
Once the challenge is agreed the team needs to determine what external skills/knowledge is needed to to deliver the challenge.. e.g. external Strategy Consultants, Lawyers, Merchant Bankers.
Finally, how will the team work together and how will it measure itself is discussed and agreed. The summary of all these elements is held within a ‘Team Charter’
Both the challenge and the charter need to be living documents that are amended over time
If the Team  Challenge is appropriately set, it will only be achieved by using the knowledge in the team, maintaining discipline, working towards team ownership and developing relationships

2) Gaining Ownership: This is around two main ideas, firstly to gain commitment of the whole team to the outcome, which means articulation of the challenge into individual commitments, driven by recognition and reward for success,  and secondly to make explicit mutual and individual accountability, which may involve the setting up of smaller ‘sub’ teams

3) Developing Relationships:  People with different skill sets, backgrounds and styles are not only common in High Performing team, they are often the essential component for success. Therefore, some tools and techniques to help team members understand each other,  value each other’s contributions and resolve differences are essential.  Feedback, Coaching and Learning are other areas where specific techniques are useful for the team, to encourage them to recognise opportunities to support others and give constructive feedback, especially in group meetings.

4) Acquiring and Applying Knowledge: This is about selection of the right functional and technical skills before start-up, and it’s especially important that people with the right skills are selected on merit, not politics. Additionally, there may be some group competencies (e.g. negotiation techniques) that the team may need to develop with external help.

5) Maintaining Discipline:  The team will need tools and techniques to manage two issues; Agreement of a common approach, especially in things like meeting management and how team decisions are taken, and secondly how the team monitors and measures performance, including tracking progress, measuring results and taking remedial actions.

Recently, I have been asked to advise Boards in situations where expensive and important high performing teams are failing to deliver. It’s surprising that in many cases the whole project has failed at the very first hurdle… that is not properly defining the challenge and the outcomes….  but in all cases the remedial  answer to failing Executive teams lies in looking at the big picture, rather than the surface symptoms of why teams succeed or fail.

By following the 5 steps above, Boards and Executives have a much better chance of strategic success with their high performing executive teams

If you would like a discussion, together with some innovative ideas, tools and techniques,  about how to set up High Performing Teams, then contact Peter M. Scott.

Nighthawk Energy Expects Performance To Be In line

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Nighthawk Energy’s (LON:HAWK) group revenues increased by 81% to US$47.5m in the year to the end of December following record production and sales volumes. Gross oil sales for 2014 totalled 703,414 barrels (575,275 bbls net to Nighthawk’s net revenue interest), nearly double 2013 sales volumes (2013: 358,294 gross bbls; 290,664 net bbls). Gross daily oil sales for 2014 averaged 1,927 bpd (1,576 bpd net to Nighthawk). 12 new wells successfully drilled and completed. Nighthawk said normalised EBITDA for 2014 of US$27.4 million or US$39.01/bbl per gross barrel sold (year ended 31 December 2013: US$15.8 million or US$44.05/bbl) reflected the highly profitable nature of the group’s oil producing assets. Chairman Rick McCullough said: “Despite the deteriorating oil price in Q4, 2014 was a successful year with record production and sales levels. Production nearly doubled over 2013 levels and revenues increased by 81%. We also successfully drilled and completed 12 wells during the period, with new oil discoveries in our Snow King field. “Since the year end, we completed what we believe will prove to be two very valuable strategic joint ventures and shot 3D seismic over these areas. Although the analysis of the data is still ongoing we have already been encouraged by the certain features we have identified similar to those in our Arikaree Creek and Snow King fields. We expect that these JVs will provide many more drilling locations to add to our inventory. “As we outlined earlier this year, following processing and interpretation of the 3D seismic and selection and permitting of well locations, we expect to complete the first four wells of our six well drilling commitment later this year.”

Hess To Outperform Peers With Oil At $70

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Summary

  • Hess is a play more on rising oil prices than integrated oil majors. It is doing outstanding work in its Bakken acreage that will definitely reward shareholders going forward.
  • Hess is currently the most efficient producer in the Bakken. This project is key for Hess as it is 4 times more valuable than any other oil and gas play.
  • Financials are good. Debt to equity ratio has fallen substantially in recent years. Long-Term Debt of $6 billion will become less important when revenues rise once more.

I see Hess Corp (NYSE:HES) as a growth play in the energy space and not necessarily a value play. Investors may see this stock as a long term value play as the stock currently has a price to book ratio of 0.9 which is seriously low and much lower than its peers in this sector. However this stock would probably go much lower than its peers if the price of crude oil rolls over substantially from here. The reason being is that the company is less diversified due to the sale of retail and downstream assets in the last few years. This leaves the company less “hedged” to lower oil prices. Downstream activity gives energy companies some protection when oil prices plummet. Unfortunately for Hess in Q1 of this year, it didn’t have that protection. However, I personally believe oil prices will rise from here and if they do, Hess seems poised to outperform many of its peers. Therefore if you are an investor who believes that crude will go back to $70+ in the next 12 to 18 months, this company may be for you. However income investors (Hess only pays out a sub 1.5% annual dividend) have better options in this space with companies such as Chevron Corporation (NYSE:CVX) or Exxon Mobil Corporation (NYSE:XOM). Let’s discuss..

Firstly the company decided to divest its downstream division recently and is slowly evolving from being integrated into to becoming an exploration and production company. The company seems to now be only focusing on low-risk unconventionals and a more focused exploration portfolio. Less upstream and more midstream definitely limits some risk in an energy company but limiting exploration definitely limits potential reward down the line. Remember that this company pulled out of a drilling program in Australia back in 2013. They lost $80 million in the process which really upset shareholders. When I rang the company, it stated that there was simply too much risk of losing more capital on the project. This is the problem with unconventional exploration. Its all or nothing. Since then, new oil companies have gone into that asset in Australia and are due to start drilling shortly. Only time will tell if Hess made the right decision to bail but as shareholders we must respect the new direction the company has taken. Since 2013, this new direction seems to be working with the stock price up 30%+

We have to discuss recent earnings which showed increased production but poor cash flow figures. Because of the lower oil prices and the lack of a productive downstream division, free cash flow for Q1-2015 was negative $800 million. The adjusted net loss for Q1 came in at $279 million for the quarter. The company is obviously hemorrhaging cash in this oil environment and as a result it has reduced its capex commitments this year to $4.4 billion, down $300 million from $4.7 billion. So where is the majority of this $4.4 billion going? Well, a whopping 39% ($1.7 billion) will go into its Bakken acreage and I think it will be a move that will pay off in spades for shareholders. Why? Because the drilling and completion costs of its wells are coming down very substantially in the Bakken compared to other producers. First quarter complete drilling costs per well averaged $6.8 million per well. This is down from $7.5 million compared with Q1-2014. The company’s target is to average between $6 and $6.5 million per well for 2015 which would really impact the company’s bottom line

Hess seems to have the ratio correct between the amount of “proppant” that is needed when it is pumped into the wells in order to extract the maximum oil and gas possible. The cost of “proppant” (which is a mixture of water, sand and additives) in a well varies widely and the amount pumped usually dictates whether a well is profitable or not. Well, Hess presently is the most efficient producer in North Dakota (as the chart shows) when you measure the amount of oil and gas extracted per proppant short ton.

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Nevertheless Hess averaged 17 rigs in the Bakken last year but at the end of April of this year, the rig count stood at eight even though the average rig count was 12 for the first quarter of this year. However even with fewer operational rigs, the company still plans to drill 178 wells this year. Therefore I believe this number of wells will keep the Bakken production numbers at about 100,000 to 105,000 boepd for 2015 (108,000 boepd or 30% of company production came from Bakken in Q1). Bottom like on Hess in the Bakken? The company has the infrastructure in place. If oil rises in price, the idle rigs will get operational once more (I think we need to see around $63+ for those idle rigs to become operational) which would really boost production. This is why I see this company definitely outperforming integrated oil majors if oil manages to get to $70+ a barrel

The price to book ratio of 0.9 mentioned above really comes into play if oil prices move from here. The company has really got its act together with its debt as overall long term debt has decreased by approximately $2 billion since 2013. This is evidenced by the decreasing debt to equity ratio which is currently 0.27 (see chart below). A healthy balance sheet is essential if oil prices remain muted for a sustainable period of time. Furthermore Hess has a multiple billion dollar credit facility that it hasn’t tapped which gives it extra financial muscle if needed.

 

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To sum up, I see Hess with plenty of upside potential from here. Production is up and it is currently the most efficient producer in the Bakken. Furthermore Hess is being ruthless in its cost cutting initiatives as supplier agreements are all being re-negotiated. I acknowledge that revenues are down 60% compared to 2012 and that there are also probably “safer” investments in energy at the moment but this stock offers the investor substantial upside if oil rallies 10 to 20% from here.

Apache Promotes Executives, Shutting Tulsa Office–Update

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Apache





By Erin Ailworth

Apache Corp., one of the biggest U.S. independent oil companies, has promoted several executives as it reorganizes leadership under a new chief executive, and is shutting down its Tulsa, Okla., office as it consolidates to Houston.

The company expects to offer more than half of its 160 workers in Tulsa jobs within the organization’s other offices, and lay off rest.

Apache has been in a yearslong process of selling off many international oil and gas fields while boosting its drilling and production in North America. John Christmann IV, who took the role of chief executive officer in January, said the changes announced Monday will help further streamline operations, cut costs and increase efficiency.

As part of the reorganization, Apache will roll its U.S. onshore and Canadian operations into two super regions managed from Texas. The company is also combining its Gulf of Mexico, North Sea, and Egyptian operations into one international division.

Over the last five years, Apache has divested energy properties in places like Argentina and Australia, and shed expensive liquefied natural gas operations to focus on drilling in U.S. shale fields and Canada. Today, 65% of the company’s operations are in North America, up from 35% in 2009.

Among several leadership changes, James House, managing director of Apache’s North Sea operations, will become senior vice president of the company’s new Houston super region, which includes the South Texas Eagle Ford shale and Canada.

The company’s reorganization is expected to be complete by the end of the third quarter, and details about cost savings will be detailed in the company’s second-quarter conference call this summer.

Despite the increased investment in North America, Apache’s operations in Egypt and the North Sea remain important, said Castlen Kennedy, a spokeswoman for the company.

“They’re areas where we still have running room,” she said.

Given the downturn in oil prices since last summer, crude pumped outside the U.S. is particularly advantaged because its price is based on Brent, the global benchmark price, which has been higher than U.S. West Texas Intermediate prices.

Write to Erin Ailworth at Erin.Ailworth@wsj.com

Access Investor Kit for Apache Corp.

Synergy Resources appoints new President

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  • Mr. Lynn Peterson has joined the executive team at Synergy as President of the company.

Synergy Resources Corporation (NYSE MKT: SYRG), a U.S. oil and gas exploration and production company focused in the Denver-Julesburg Basin, announced that Mr. Lynn Peterson has joined the executive team at Synergy as President of the company. Mr. Peterson will work closely with co-CEOs Ed Holloway and William Scaff as Synergy evaluates asset acquisitions and growth opportunities in the Wattenberg Field and the NE Wattenberg Extension Area. Mr. Peterson is the former Co-Founder, President & CEO of Kodiak Oil and Gas Corp. Kodiak a Bakken shale company producing over 42,000 barrels of oil equivalent per day and an enterprise value over $6 billion at the time of its merger with Whiting Petroleum in 2014.

Ed Holloway, co-CEO of Synergy, remarked, ‘I have often said that Synergy’s greatest asset is our people. I believe the addition of Lynn Peterson to our team will prove to be one of our most significant acquisitions. Lynn is a native Coloradoan, whom I have known since the early 1970’s when we were both attending the University of Northern Colorado, and he fits well into our corporate culture. Lynn’s experience in building Kodiak from the ground up into a multi-billion dollar company will be invaluable to Synergy as we continue our rapid growth.’

Lynn Peterson commented, ‘I am very pleased to be joining the Synergy team and working with Ed and Bill, as well as the entire Synergy staff. Synergy offers a unique opportunity with the strength of its balance sheet, and significant acreage position across the Greater Wattenberg Area. The Wattenberg continues to deliver some of the best economics under current industry conditions. The combination of all of these attributes should provide us the opportunity to grow the Company and create additional shareholder value during the coming years.’

William Scaff, co-CEO of Synergy, added, ‘We have been positioning Synergy for this ‘reset’ of the industry for the past nine months focusing on lowering costs in a lower commodity price environment. We believe our strong balance sheet, which is in a net cash position, and the low interest rate on our revolving line of credit allows us to take this company to the next level due to many opportunities we have before us. With Lynn joining our team, we will continue our keen focus on growing this company both through the drill bit and through capitalizing on opportunities in one of the most prolific, economic oil and gas fields in North America — the Wattenberg Field. We look forward to Lynn’s experience and leadership in helping us to achieve the next level for Synergy Resources.’

WPX Energy Closes USD 200m Sale of US Marcellus Shale Assets

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28 May 2015 – US-based oil and gas producer WPX Energy (NYSE: WPX) has completed its third divestiture of the year, closing the sale of a package of Marcellus Shale marketing contracts and the release of certain related firm transportation capacity to an undisclosed buyer, the company said.

WPX said it received in excess of USD 200m cash for various long-term natural gas purchase and sales agreements and was released from approximately USD 390m in future demand payment obligations associated with 135m Btu per day of firm transportation capacity on Transco’s Northeast Supply Link project.

The company has been active on the acquisitions and divestiture front, reaching more than USD 1.5bn in transactions over the past 12 months that increased the company’s financial flexibility.

During 1Q15, WPX used proceeds from sales to repay prior borrowings on its USD 1.5bn senior unsecured credit facility and reduce its long-term debt by 12%.

WPX plans to exit the Marcellus Shale as it focuses its portfolio on oil and gas properties in the western United States.

The company’s only remaining assets in the Marcellus Shale primarily consist of its physical operations in Westmoreland County in southwestern Pennsylvania. These assets remain targeted for divestiture.

Earlier this year, WPX also monetized additional Marcellus Shale holdings in Northeast Pennsylvania and completed the exit of its international interests in Argentina and Colombia.

WPX Energy develops and operates oil and gas producing properties in North Dakota, New Mexico and Colorado.