M&A

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    Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell

    In July MDN brought you the news that Rice Energy had bought out the assets of LOLA Energy (see LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush). NGI’s ace reporter Jamison Cocklin was the first to break the news. Since that time, neither Rice nor the company buying Rice, EQT, have talked about it. In fact, they have refused to comment on it. Last week other news sources observed that Rice Energy’s quarterly update contains information about purchasing LOLA Energy (although even the quarterly update doesn’t use the name LOLA). The interesting thing is that the quarterly update pegs the amount. Rice Energy paid $180 million for the assets of LOLA Energy. LOLA was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see New Marcellus/Utica Drilling Company is Born – LOLA Energy). Hmmm. Investors put up $250 million, but two years later the company sells for $180 million. We don’t pretend to be high finance experts, but it sure looks to us like a negative ROI on the transaction. Yet we read claims that “everybody who put in money made money.” How does that work?…

    Update: see a note in the comments. It appears that although $250M was promised by investors, not all of it is paid up front. Thx to MDN reader Venture Energy for enlightening us!
    Read More “Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell”

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    Rice Energy Investor Sues in Fed Court to Block Sale to EQT

    In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion. A few weeks after the announced merger, so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Instead of buying Rice, Jana is demanding that EQT split itself into two companies–upstream (drilling) and midstream (pipelines). Experts don’t give Jana much of a chance. However, we now have opposition on the other side of the isle–from a disgruntled investor in Rice Energy. On Wednesday, Rice Energy investor Patrick Gordon filed a lawsuit in Delaware federal court alleging that Rice, as part of the agreed merger, submitted incomplete paperwork (called an S-4) that “failed to include necessary financial information that would allow shareholders to make an informed decision when voting on the proposed sale to EQT.” Gordon says Rice’s sale price isn’t high enough. Gordon wants the court to stop a shareholder vote on the deal until an amended S-4 is filed, giving what Gordon says is the full financial picture…
    Read More “Rice Energy Investor Sues in Fed Court to Block Sale to EQT”

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    Anatomy of a Merger – The Years’ Long Road to EQT/Rice Deal

    In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion. Have you ever wondered how a massive deal like this comes together? Did the top brass at EQT phone up the top brass at Rice and say “let’s go for coffee” and a few months later there’s a deal? Nope. Doesn’t happen that way. In paperwork filed with the Securities and Exchange Commission, EQT (and Rice) outlined the chronology of how this deal came together. It’s far more complicated than the most complicated soap opera you can imagine. The story begins with EQT keeping a close eye on available acreage in the southwestern Marcellus region. EQT noticed an “accelerating trend” of consolidation. In 2015, a full two years before the EQT/Rice announcement, EQT lusted for more acreage and feared that if Rice combined with someone else, an important opportunity would be lost. So EQT got outside help (Wachtell Lipton) to begin the process of evaluating a buyout of Rice (June 2015). In July 2015, the muckety mucks from both Rice and EQT got together to talk, and “informally” discussed the potential benefits of a merger. But the talks went nowhere at the time. In early 2016, two other companies (unnamed) held similar talks with Rice. EQT then jumped back into the mix, in May 2016. EQT and Rice promptly got more serious about sniffing around each other, signing confidentiality agreements and beginning the due diligence process. Things moved quickly. Rice investigated mergers with two other companies and with EQT. EQT pressed Rice for an answer in July 2016. Talks broke down by the end of the summer in 2016. Rice then bought out Vantage and EQT snapped up more Marcellus acreage in various deals. And the soap opera goes on from there. We have the full script below…
    Read More “Anatomy of a Merger – The Years’ Long Road to EQT/Rice Deal”

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    PwC Report: Marcellus Dominates O&G M&A Deals in 2Q17

    According to one of the top accounting/consulting firms in the world, PricewaterhouseCoopers (PwC), mergers & acquisitions (M&A) activity in the oil and gas sector in the U.S. went from being red hot in 1Q17 ($73.04 billion) to just hot in 2Q17 ($37.01 billion). While some in the financial (and oil/gas community) may view the weaker M&A numbers as “cause for alarm,” PwC says to calm down. “Place that number in a longer-term historical context and it’s clear that the market is still robust. The $37.01 billion of deals in the second quarter is the third highest second quarter during the past eight years. Additionally, with over $110 billion in announced deals during the first half of the year, 2017 is off to the strongest start in the past eight years.” If you rank the number of deals done, the Permian comes out on top in 2Q17, with $4.49 billion worth of deals. However, the might Marcellus trumps that. With only four deals (one of them the huge EQT/Rice Energy deal), the Marcellus saw $10.22 billion worth of M&A deals in 2Q17–top dog. Here’s the latest quarterly M&A in the oil and gas sector update from PwC…
    Read More “PwC Report: Marcellus Dominates O&G M&A Deals in 2Q17”

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    LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush

    NGI’s Shale Daily has done it again. Ace reporter Jamison Cocklin has unearthed news that (so far) no one else has: Rice Energy has quietly, confidentially, hush-hush purchased all of the assets of LOLA Energy. The sale raises a lot of questions. But first, who is LOLA? No, not the show girl in Barry Manilow’s 1978 hit song Copacabana. LOLA Energy was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see New Marcellus/Utica Drilling Company is Born – LOLA Energy). The name LOLA comes from the phrase Locally Owned, Locally Accountable. LOLA didn’t waste any time. They leased land in Greene County, PA–a prime location highly prized by both Rice Energy and EQT–and also in West Virginia, land in Monongalia, Wetzel and Marion counties. Shale Daily reports that rumors have been swirling for weeks, but NGI now has the goods–copies of transfer records going from LOLA to Rice. For some reason, perhaps related to EQT’s impending purchase of Rice Energy, Rice and LOLA have kept the deal hush-hush. But the lid is off now! Here’s what we know about the deal, sprinkled with some MDN speculation…
    Read More “LOLA Energy Sells Out to Rice Energy, Deal Kept Hush-Hush”

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    Select Energy, Rockwater Merge to Create Huge Shale Water Provider

    Rockwater Energy Solutions is a “leading provider of comprehensive water management solutions to the North American unconventional oil and gas industry” and the only company that provides complementary chemistry products and expertise in connection with its water solutions. Rockwater operates in the Marcellus/Utica region, among other shale plays. Select Energy Services is a billion dollar oilfield services company with three main divisions: water services, rentals, and wellsite completions. They operate in every major shale play in the country, including the Marcellus/Utica. Earlier this week the two companies announced they are merging in an all stock swap deal. It looks to be a true blending of the two companies, and not one company taking over the other. When the merger is done (later this year), John Schmitz, currently Chairman & CEO of Select, will become the full-time Executive Chairman and Holli Ladhani, currently the Chairman, President & CEO of Rockwater, will become the President & CEO of Select. The water parts of both businesses will be combined and branded with the Select name, but Rockwater branding will continue (as a division) for the chemicals business unit. Here’s the announcement of an impending marriage–made in heaven?…
    Read More “Select Energy, Rockwater Merge to Create Huge Shale Water Provider”

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    Thailand’s Banpu Investing Another $293M in Northeast PA Shale

    Banpu CEO Somrudee Chaimongkol (credit: Nikkei Asian Review)

    From May 2016 to May 2017, Banpu Pcl, Thailand’s largest coal producer, has invested in no less than four deals to grab ownership of Marcellus Shale wells and leases in northeast Pennsylvania (see Thai Company Banpu Invests in Another 34 Marcellus Wells in NEPA). So far Banpu’s total investment has been $207 million. The wells they own generate 46 thousand cubic feet (Mcf) of natural gas per day. It seems that Banpu can’t get enough of the Marcellus in northeast PA. In an article running in the Bangkok Post yesterday, Banpu CEO Somrudee Chaimongkol said her company will set aside $293 million to invest in more Marcellus wells from now until 2020, hoping to goose production to 78 Mcf/d (an increase of 70%)…
    Read More “Thailand’s Banpu Investing Another $293M in Northeast PA Shale”

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    Why Corp Raider Jana Won’t Succeed in Derailing EQT/Rice Deal

    One of our favorite oil and gas analysts, Richard Zeits, says it’s a long shot at best that the corporate raiders at Jana Partners will be able to scuttle EQT’s planned purchase of Rice Energy. In June, EQT announced a deal to buy out Rice Energy for $6.7 billion in cash and stock, and assume $1.5 billion in debt, for a total deal price of $8.2 billion (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Instead of buying Rice, Jana is demanding that EQT split itself into two companies–upstream (drilling) and midstream (pipelines). These kinds of machinations are far above our understanding when it comes to high finance. However, there is a guy who eats, sleeps and breathes this stuff–Richard Zeits of OIL ANALYTICS. In an analysis piece on the Seeking Alpha investors website, Zeits says, “Jana’s activism is unlikely to derail” the deal. Here’s his reasoning…
    Read More “Why Corp Raider Jana Won’t Succeed in Derailing EQT/Rice Deal”

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    Corp Raider Jana Sends Nastygram to EQT Demanding it Split in Two

    Earlier this week MDN told you the news that corporate raider Jana Partners, along with the Cohen family (of Atlas Energy fame), are colluding to try and stop the merger/sale of Rice Energy to EQT (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). The two groups together now own nearly 6% of EQT’s stock. Jana is trying to get two people added to EQT’s board. Their demands? Abandon the buyout/merger of Rice Energy, and that EQT needs to split itself in two, right now, into upstream (drilling) and midstream (pipelines). Jana filed the required paperwork with the Securities and Exchange Commission on July 3rd. On July 5th, Jana’s founder and managing partner, Barry Rosenstein, sent a letter (i.e. nastygram) to EQT–his list of demands. It’s going to be a long summer for EQT…
    Read More “Corp Raider Jana Sends Nastygram to EQT Demanding it Split in Two”

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    Rice Midstream Investors Hope Deal with EQT Doesn’t Happen

    When EQT and Rice Energy announced a deal in June for EQT to buyout and merge in Rice to create the largest natgas-producing company in the U.S., it seemed like a match made in heaven (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). However, not everyone is in favor of the merger, including a corporate raider who know owns nearly 6% of EQT’s stock (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). You can add another group–from the “inside”–that doesn’t want to see the merger happen either: investors in Rice Midstream. Rice Midstream is an MLP, or master limited partnership, a different structure from the usual stockholding corporation. In an MLP, investors hold “units” instead of shares, and those units are tax-advantaged. The bottom line is that Rice Midstream investors are, according to a Bloomberg Businessweek article, concerned that they will get the short end of the stick in a post-merger EQT world. Already the value of their units has fallen 20% since the announcement of the merger. It wouldn’t hurt Rice Midstream investors’ feelings at all if Jana (evil corporate raider) prevents the merger from happening. For Rice Midstream investors, the enemy of my enemy is my friend…
    Read More “Rice Midstream Investors Hope Deal with EQT Doesn’t Happen”

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    Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal

    So-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) has started a proxy fight and is trying to block EQT’s takover/merger with Rice Energy. Jana is the same company that recently helped Amazon buy Whole Foods. In a filing with the Securities and Exchange Commission on Tuesday (embedded below), Jana disclosed the company has purchased ~5% of EQT’s stock and is launching an effort to block EQT’s proposed buyout of Rice Energy (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). As a quick reminder, here’s what corporate raiders (aka “activist investors”) do: They buy up enough stock in a company to control board decisions, getting several of their own people appointed to the board of directors. Typically corporate raiders will collude with another large stockholder or two to accomplish a board coup d’état. The corporate raider then forces the target company to sell off assets and layoff people. The resulting company is, they claim, “healthier” and more streamlined. The stock price bumps up, the raider sells its stock, pocketing a nice profit. And then moves on to the next target. Meanwhile, good people are standing in the unemployment line, in the wake of the raider’s “improvements.” There is nothing moral or righteous or just about the actions of corporate raiders. It is immoral, unjust and disgusting. In the words of Whole Foods CEO John Mackey, Jana are “greedy bastards.” That about sums it up. It’s distressing to see the Cohen clan collude in this kind of behavior. They should stick to their own knitting. Maybe if they had, their own company (Atlas Energy) wouldn’t have gone bankrupt (see Atlas Resource Partners Filing for Bankruptcy Tomorrow). Here’s the developing story of the effort to derail EQT’s deal with Rice Energy, and force EQT to break itself into pieces…
    Read More “Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal”

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    Baker Hughes and GE Complete Merger, World’s 1st Fullstream Co.

    The new Baker Hughes logo, released Monday

    As of Tuesday, the world now has its first and (so far) only “fullstream” company–a company that ticks all of the boxes in the oil and gas section–upstream, midstream and downstream. In October 2016 MDN brought you the news that GE Oil & Gas was making a play to buy out and merge in Baker Hughes Inc. (see Breaking: Who Needs Halliburton? Baker Hughes Merging with GE O&G). The merger faced its share of challenges, but compared to Halliburton’s attempt to buy Baker Hughes, which was denied by the Obama Dept. of Justice, this merger was a piece of cake. The newly merged company, flying under the name Baker Hughes, a GE company (NYSE ticker symbol of BHGE) has sailed by oilfield services company Halliburton to become #2 OFS company in the world. It may even be larger that #1 Schlumberger (we haven’t heard yet). As we pointed out in June, this is not some sort of 50/50 merger, this is a takeover/buyout of Baker Hughes by GE. Most of the new top management at the merged company comes from GE (see Baker Hughes, GE Release Roster of Coming Management Changes). Today is the first day the newly merged company’s stock begins to trade. It will be interesting to see at what price it trades…
    Read More “Baker Hughes and GE Complete Merger, World’s 1st Fullstream Co.”

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    Fracker Keane Group Completes Buyout of RockPile Energy for $276M

    Keane Group is a Texas-based oilfield services company that provides fracking, wireline and top-hole air drilling services to oil and gas companies in the Marcellus/Utica as well as several other major basins. In January 2016, Keane announced they were buying out Canadian-based Trican Well Service for $247 million (see Oilfield Serv. Co. Keane Group Buys Trican Well Service for $247M). The expansion tripled Keane’s fracking capacity and gave it access to proprietary new technology. The buyout, and Keane’s hard work, bore fruit. Last December the privately-held company announced it will go public with an initial public offering (IPO) of stock, hoping to raise $287.5 million with the IPO (see Oilfield Services Co. Keane Group Floats $288M IPO). Then in May of this year, Keane announced it is expanding again, buying out fracker RockPile Energy Services for $284.5 million (see Fracker Keane Group Continues Expansion, Buys RockPile Energy). The deal has closed, although for slightly less money than the original announcement. RockPile is no more after merging with Keane for $276 million. RockPile’s former CEO, Curt Dacar, is now the COO (Chief Commercial Officer) at Keane…
    Read More “Fracker Keane Group Completes Buyout of RockPile Energy for $276M”

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    Pro Oil & Gas “Recapitalizes” with PE Firm Intervale Capital

    Pro Oil & Gas Services (formerly Pro Oilfield Services) is an oilfield services company (OFS) providing wireline, pumping services, flowback, frac stacks, wireline lubricators and pressure control, surface drilling and more. The company is headquartered in Houston, TX operating in a number of shale plays, including the Marcellus/Utica. We were unaware of the company until spotting a press release that announces the company has been “recapitalized” by Intervale Capital, a private equity (PE) firm that invests money in companies, adding them to its “portfolio.” The terms of the recapitalization were not disclosed. What all of this high finance language means is this: Pro Oil & Gas was just bought out by Intervale Capital. We expect all of the personnel to remain the same, including the founder/CEO. But make no mistake, Intervale now pulls the strings. It’s their money at risk, and they are now calling the shots…
    Read More “Pro Oil & Gas “Recapitalizes” with PE Firm Intervale Capital”

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    Will the Merged EQT/Rice Energy be Too Big for Investors?

    A week ago yesterday, EQT and Rice Energy announced some of the biggest news we’ve every reported: EQT is buying out and merging in Rice Energy, to create the largest natural gas producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). The combined company will not only be the country’s largest shale gas producer, it will also jump to become the Marcellus/Utica region’s #1 producer/driller. Some analysts and investors are concerned about that. Since EQT/Rice is 100% focused on the Marcellus/Utica, does that put the company at risk? The market got a bit jittery following the announcement. Two days after the news EQT’s stock price tanked, down about $8/share. However, the stock price has since rebounded (see the chart below). Zacks Investment Research issued a research note last Friday analyzing the deal and what it may mean for investors…
    Read More “Will the Merged EQT/Rice Energy be Too Big for Investors?”

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    Exclusive: CONSOL Energy Sells WV Acreage/Wells to Antero Resources

    A week ago a sharp MDN reader (landowner) in West Virginia emailed us to ask about news of a sale by CNX Gas (i.e. CONSOL Energy) of their leases and wells in Doddridge County to Antero Resources. We were stumped. We’ve neither heard nor read anything about it. We searched. And searched. And searched. Nothing. She wrote again a few days later–had we heard anything? Nope. Then we got a second email from another MDN reader asking about the same thing. Our second questioner is in the oil and gas industry. When we questioned him, he gave us a few more clues: It may not only be in Doddridge, but also Tyler County too. There’s something happening in both areas. So we put our feelers out to a number of industry contacts and heard back from one of them–a highly placed source–who confirmed our tipsters. So we now have three people confirming. We know something has been sold and deeds are getting transferred from CNX to Antero in at least one county. Our best guess is that a sale is happening not just in Doddridge, but also in Ritchie, Tyler and Pleasants counties too. We have not (yet) been able to confirm this with Antero, but we feel we have enough to share with you, our valued readers. Here’s what we know, the evidence we have, and a map of the acreage we believe has been/is getting transferred from CNX to Antero…
    Read More “Exclusive: CONSOL Energy Sells WV Acreage/Wells to Antero Resources”