Noble Energy signs MoU regarding Leviathan partnership

Noble Energy Inc. (NYSE: NBL) has signed a non-binding memorandum of understanding (MoU) regarding the sale of interest in the Leviathan licenses, offshore Israel, to Woodside Petroleum. Each of the existing Leviathan partners – Noble Energy, Delek Drilling, Avner Oil Exploration, and Ratio Oil Exploration – are participating as sellers of a 25% interest in the licenses to Woodside. Noble Energy will convey a 9.66% working interest and will continue as upstream operator with a 30% working interest. Following completion of the transaction, Woodside will become the operator of any LNG development of the field.

Total compensation to Noble Energy is anticipated to include $525 million in cash payments plus $502 million in shared future revenues. The initial cash payment of $390 million is payable at closing of the transaction, which is expected in 2014. The remaining cash amount of $135 million is due when a final investment decision is made in relation to an LNG or FLNG development or as regional export contracts are executed in excess of a threshold volume amount, whichever occurs earlier. The shared future revenue represents 5.75% of export revenue attributable to Woodside's net export sales, commencing once the gross exported volume from the Leviathan field exceeds 2.0 trillion cubic feet (Tcf) of natural gas. 

An additional payment of $19 million, net to Noble Energy, will be made should ultimate recoverable Leviathan resources be determined to be in excess of 20 Tcf gross of natural gas. The determination and payment will occur no earlier than when cumulative field production reaches 4 Tcf.  In addition, the sellers will receive a royalty of 2.5% of Woodside's future oil revenues associated with the deep Mesozoic, should a commercial discovery and development result on the licenses. The royalty would go into effect following net payout of investment.

The MoU includes the agreed-upon commercial terms of the farm-out transaction and sets the time frame for execution of definitive agreements. The Leviathan project is located on the Rachel and Amit licenses offshore Israel in 5,550 feet of water. It has an estimated 19 Tcf of discovered natural gas resources.

Following completion of the transaction, working interests in the Leviathan project will be Noble Energy (30%), Delek Drilling (16.94%), Avner Oil Exploration (16.94%), Woodside Petroleum (25%), and Ratio Oil Exploration (11.12%).

The deal is viewed as positive by Global Hunter Securities analyst Mike Kelly who says that Noble “fetches > $1B (vs. $802 MM previously expected) and gains a world-class partner on the LNG development front, bringing the Leviathan project closer to sanction.”

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Murphy Oil makes new executive appointments

Murphy Oil Corp. (NYSE:MUR) has made a series of executive appointments, all effective immediately. Walter K. Compton has been promoted to executive vice president and general counsel. Kelli M. Hammock has been promoted to senior vice president of administration. John W. Dumas has been promoted to vice president of corporate insurance. Allan J. Misner has been promoted to vice president of internal audit. K. Todd Montgomery has been elected vice president of corporate planning and services, replacing Tom Mireles who has been promoted within Murphy Exploration & Production Co.

Compton joined the company’s law department in 1988 and was promoted to manager of law and corporate secretary in 1996. He was named vice president of law in 2009. In 2011, he was promoted to senior vice president and took on the role of general counsel. 

Hammock joined Murphy in 1993 as an associate accountant and subsequently received various promotions within the controller's department. In 2004, she was promoted to manager of purchasing and services in the administration department. Hammock was named general manager of administration in 2006 and was promoted to vice president of administration in 2009.

Dumas joined the company in 1988 as manager of corporate insurance. He was promoted to director of corporate insurance in 2005.

Misner joined Murphy in 2007 with over 22 years of experience in internal auditing. He is a certified public accountant, certified internal auditor, and certified information systems auditor.

Montgomery joined Murphy earlier this year and will oversee all corporate strategic planning, procurement, corporate reserves, and oil and gas marketing. He comes to Murphy with 25 years of experience from another major oil company. His experience includes global production and reservoir engineering, with management experience in development and strategic planning.  

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Oil and gas: CLS Offshore opens new office in Hull

Business is already brisk at the new Hull base for energy sector services company CLS Offshore, which was officially opened by city councillor Martin Mancey today.

Guests at the official unveiling and open day at the Marfleet Environmental Industries Park, were told that since CLS moved in on January 2nd there had been several serious enquiries from major existing and potential clients.

"We've had many messages of welcome along with potential business opportunities, which could be worth around £20m over the next five years," said Scott McMillan, managing director of CLS Offshore.

"The next stage is that from July we hope to progress plans for a fabrication workshop on an adjacent site, which will mirror our head office facility in Great Yarmouth, and employ up to 75 onshore and offshore personnel, mainly recruited locally. We're happy to be in Hull, delighted by what is has to offer and excited by the prospects ahead."

The company is keen to work with local educational facilities regarding future prospects for students and has already been in discussion with the University of Hull and HETA (Humberside Engineering Training Association) on working together.

Cllr Mancey, cabinet portfolio holder for Hull City Council, said: "The decision by CLS to come to the area represents a significant investment locally and clearly demonstrates the potential of the area to secure new highly skilled employment opportunities.

"As such I would like to officially welcome CLS to the city and wish them every success in the future."

Hull East MP Karl Turner MP said he was delighted to hear that CLS had extended its successful operation in Great Yarmouth to Hull.

“It has a solid track record in the energy sector and this move will strengthen the region's energy credentials. This is exactly the type of company we need to attract to Hull, a developing company with confidence. This extension will help to stimulate the local economy and create jobs.”

More than 90 business, education and political guests visited the new premises during the open day and reception which was highlighted by councillor Mancey unveiling a commemorative plaque.

CLS staff were on hand to meet visitors and discuss the wide and varied services of CLS within the oil, gas, marine and renewable energy sectors.

Steady expansion has been the CLS brief over the last two years; seven new employees have started since the beginning of 2014, boosting the company workforce to more than 160.

It is currently recruiting experienced offshore personnel from riggers through to technicians and an onshore team ranging from pipefitters to welders.

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BNSF approves $5 B capital commitment program

BNSF Railway Co. (BNSF) has approved a new single-year record capital commitment plan of $5 billion for 2014, a $1 billion increase over its 2013 capital spend.

The largest component of the capital plan is spending $2.3 billion on BNSF’s core network and related assets. BNSF also plans to spend $1.6 billion on locomotive, freight car, and other equipment acquisitions. In addition, the program includes about $200 million for continued installation of positive train control (PTC) and $900 million for terminal, line, and intermodal expansion and efficiency projects.

BNSF handled more than 50% of the volume increases for the rail industry in 2013. The growth was led by an 8% increase in domestic intermodal units, an 11% increase in industrial product volumes led by crude-by-rail traffic, a 3% increase in coal volumes, and a fourth-quarter surge in agricultural products. This growth is on top of a 2012 BNSF total volume base of more than 9.6 million units. Much of the capacity expansion in the 2014 capital plan is for infrastructure investment on BNSF’s Northern Corridor to put the company in position to meet all customer service expectations, including Amtrak.

BNSF’s expansion and efficiency projects will be primarily focused on line capacity improvements to accommodate growth in agricultural products, intermodal, automotive, and industrial products volumes related to crude oil production, and other terminal improvements to enhance productivity and velocity. More than $900 million of the capital plan is for expansion and maintenance in the Northern Corridor.

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Baytex acquires Aurora Oil & Gas for $2.4 billion

Baytex Energy Corp. said it will acquire Australia-based Aurora Oil & Gas for $2.4 billion, which is the largest acquisition ever for the Canadian natural gas development and exploration company. Baytex will also take on Aurora Oil & Gas' debt of about $672 million. In the agreement with Aurora Oil & Gas, Baytex will be able to operate in Sugarkane field in south Texas, which is at the core of the Eagle Ford shale, Reuters reported.

"Baytex will acquire premier acreage in the core of the Eagle Ford, one of the leading shale oil plays in the U.S.," James Bowzer, president and chief executive officer of Baytex said in a statement.

Aurora's Sugarkane field includes 22,200 acres and 166.6 million barrels of reserves. U.S. oil production is expected to ultimately grow to a 25-year high with the help of major shale regions like the Eagle Ford, according to Reuters.

"This is a highly accretive transaction on a per share basis to reserves, production, and funds from operations,"Bower said. "The Eagle Ford play provides not only exposure to light oil, but also to Gulf Coast crude oil markets with established transportation systems."

More information on the Eagle Ford shale can be found on PennEnergy's research area.

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Baytex to acquire Aurora for $2.6 billion

Baytex Energy Corp., Calgary, has agreed to acquire Aurora Oil & Gas Ltd., Subiaco, Western Australia, for $2.6 billion, providing Baytex with 22,200 net contiguous acres in the Sugarkane field in the Eagle Ford shale of South Texas.

Aurora’s fourth-quarter 2013 gross production was 24,678 boe/d (82% liquids) of predominantly light, high-quality crude oil. The company forecasted this year’s average gross production at 29,000-32,000 boe/d, about a 43% increase from 2013.

Baytex said Sugarkane field has been largely delineated with infrastructure in place, facilitating low-risk future annual production growth. The company added that the assets have future reserves upside potential from well downspacing, improving completion techniques, and new development targets in additional zones.

Following the purchase, Baytex’s 2014 production is expected to reach 85,000 boe/d, comprised of 53% heavy oil, 34% light oil and liquids, and 13% natural gas.

The deal gives Baytex additional proved reserves of 106.7 million boe and proved plus probable reserves of 166.6 million boe.

Baytex in 2012 purchased 100% working interest in 46 sections of undeveloped oil sands leases in the Cold Lake region of northeastern Alberta for $120 million (OGJ Online, Oct. 4, 2012). Provincial authorities had conditionally approved the company’s 1,200 steam-assisted gravity drainage (SAGD) pilot and a 10,000-b/d development that was expected to launch in 2013.

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L.A.'s Creative Office Hotspots for 2014

Three commercial real estate experts share with The Hollywood Reporter about how they would cast their votes for Los Angeles' next wave of entertainment office deals:

George Garfield, President, West Region, Transwestern:

Perhaps the hottest entertainment real estate story of 2013 came from L.A.'s nontraditional entertainment firms. As we look at the Internet's influence on entertainment, this is the most interesting: Online distribution platforms for YouTube, Netflix and Amazon Studios shook up the scene with plans to produce branded content separate from that of TV, cable and movie studios. They require their own kinds of studios and are among the largest new space users in the city. YouTube Space LA in Playa Vista is a prototype of creative studios set within formerly obsolete buildings. And there is new office demand from digital media firms and advertising agencies looking to capitalize on the growth of these nontraditional studios. Santa Monica and the Lower Westside are still hot markets. But 2014 might be the year that the Hollywood submarket takes off, with increased development on Sunset Boulevard near Sunset Gower Studios, as well as Hollywood and Downtown.

Additionally, large studios will continue consolidation into real estate footprints they own and control. For example, as Comcast completes its acquisition of NBC Universal, it too may consolidate Los Angeles operations. Following Comcast's recent purchase of 10 Universal City Plaza -- the 35-story tower adjacent to Universal Studios -- additional NBC Universal personnel moved into the building. Such moves may serve as an example of how consolidation could proceed in 2014 and the years to come.

STORY: Silicon Beach Boom Hits the Playa Vista Housing Market

Andrew Jennison, Partner, Industry Partners:

When vacancy rates for true creative and soft creative space in Santa Monica hover around 6 percent, then the natural migration is for tenants to look east and west at options that are potentially more abundant and less expensive. A typical tenant evaluating the marketplace will strongly consider relocating out of their desired geographic if there is a $0.30-$0.50/square foot savings in rent. Right now, I envision more creative tenants will consider tertiary markets for creative space given the lack of availability on the Westside. The submarket I see attracting creative tenants this year are El Segundo and DTLA. Both offer unique creative options at a very competitive price point. For so many years, DTLA was never considered an option unless you were in the service business. With all of the real estate activity taking place there -- residential, hospitality like the Ace Hotel and the influx of restaurants -- it is becoming a lively epicenter. Businesses see the transformation and know about it and will respond to it by moving their offices there.

Eric Sussman, UCLA School, senior lecturer, Ziman Center of Real Estate, UCLA Anderson School of Management:

There is no question that downtown L.A. is going to be super hot and a magnet for entertainment tenants. It has got a coolness factor -- these are the kind of tenants who don't just want vanilla shell, yawner office space. It has to have polished concrete floors, open space and exposed vents -- that kind of thing. Downtown L.A. is getting that cool factor, and you combine that with a 15 percent vacancy rate and reasonably affordable high-density housing, and it makes sense they you're going to see creative office deals there this year.

Playa Vista also hits a lot of those factors. It's the whole package, with that cool factor and office space that isn't your dropped-ceiling, traditional tower thing. That's another area where we're likely to see more deals this year.

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New Line Cinema to Move to Warner Bros. Lot

New Line Cinema will move onto the Warner Bros. lot in Burbank in June 2014, taking over offices formerly occupied by Legendary Entertainment.

The Warners-owned studio, which produced Oscar Award-winning The Lord of the Rings trilogy as well as Wedding Crashers, Horrible Bosses and We're the Millers, has operated out of a Los Angeles headquarters at Robertson Plaza in West Hollywood.

STORY: Comcast Purchases Universal's 'Black Tower' Building

The separate offices date back to New Line's origins as an independent studio run by Bob Shaye and Michael Lynne, who left the company in 2008 as its operations were folded into Warner Bros. 

Now New Line, run by Toby Emmerich, is preparing to move into the plush offices of building 76, which was used by Warner Bros. Records from the late 1950s until 1978 and later, during the 1980s, housed offices for producer Paula Weinstein, James Garner and John Travolta. Most recently, Thomas Tull's Legendary Entertainment occupied the building until its high-profile breakup with Warner Bros. last year. 

Tull signed a deal with Universal and moved the studio to The Pointe, a LEED Gold-certified office tower located less than a mile from the Warner Bros. lot.

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Noble to farm out part of Leviathan interest

Noble Energy Inc. has signed a nonbinding memorandum of understanding regarding the sale of 9.66% interest in the Leviathan licenses offshore Israel to Woodside Petroleum Ltd.

Leviathan’s current partners—Noble Energy, Delek Drilling, Avner Oil Exploration, and Ratio Oil Exploration—are each participating as sellers of 25% interest in the licenses to Woodside.

Noble will continue as upstream operator with 30% working interest. Following completion of the transaction, Woodside will become the operator of any LNG development of the field.

The Leviathan project is on the Rachel and Amit licenses offshore Israel in 5,550 ft of water. It is thought to contain 19 tcf of discovered natural gas resources.

Total compensation to Noble is expected to include $525 million in cash payments, including $390 million payable at this year’s closing of the transaction, plus $502 million in shared future revenues.

Noble started drilling at Leviathan in 2010 (OGJ Online, Oct. 19, 2010), later estimating production of as much as 750 MMcfd for Israel via a northern entry point in 2016 (OGJ Online, Dec. 7, 2012).

Working interests in the Leviathan project after the transaction is complete will be Noble 30%, Woodside 25%, Delek Drilling 16.94%, Avner Oil Exploration 16.94%, and Ratio Oil Exploration 11.12%.

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