Deal activity involving Texas lawyers continued to slide this past week, with only nine transactions worth $1.8 billion announced versus 11 deals worth $2.5 billion the previous week.
More Texas lawyers were involved in the latest set of transactions, however, with 10 firms and 44 attorneys working them versus eight firms and 32 lawyers the previous week.
M&A lawyers say oil and gas dealmaking has been slow due to the capital markets largely being shut off to equity issuers looking to raise money for acquisitions (some investors are still skeptical of the industry’s turnaround).
Exacerbating the situation is the general volatility of the stock market as well as oil prices, which makes it difficult for buyers and sellers to agree on a price, observers say.
A few deals squeaked through last week, including a stock offering by a small oil and gas producer looking to make acquisitions in the Rockies.
The week’s highlights included the establishment of a $1 billion infrastructure fund advised by a lawyer in a New York law firm’s Houston office that recently launched a funds practice; a bankrupt oil and gas company selling assets to a Norwegian oil giant; and a Woodlands-based private equity firm selling a power plant to a Japanese gas company that’s expanding its energy business in North America. There also were deals in the real estate, sand and water sectors.
Simpson Thacher advises Macquarie on $1.04B fund
Simpson Thacher & Bartlett said April 11 it advised Macquarie Infrastructure and Real Assets, or MIRA, on establishing and fundraising for MIRA Infrastructure Global Solution, known as MIGS.
The team was mostly in New York but included counsel James Hayes in Houston, where the firm recently launched a funds practice.
The Brooklyn Law School graduate, who hails from Dallas, was an associate at Simpson Thacher in New York from 2011 until 2015. He left to work as a vice president in Blackstone’s real estate group for two years before rejoining the firm last year in Houston.
MIRA is a unit of Macquarie Asset Management, an arm of Macquarie Group, which claims to be the world’s largest infrastructure asset manager.
MIGS said it exceeded its fundraising target, closing on about $1.04 billion in capital commitments, including from the Macquarie Group. MIGS is MIRA’s first globally diversified umbrella infrastructure fund.
The new fund will seek equity and equity-related investments in infrastructure businesses in North America, Europe, Australia, Asia and Latin America. It also will make capital commitments to MIRA-managed private regional infrastructure funds and may invest alongside such funds or MIRA in discretionary direct investments.
Orrick, Kirkland and Latham aids in Statoil’s $339M Gulf of Mexico purchase from Cobalt
Orrick said April 11 that a team in its Houston office advised Statoil on its acquisition with Total of a 60 percent interest in the Gulf of Mexico’s North Platte discovery from bankrupt Cobalt International Energy for $339 million.
The team included partner Joe Roger, associate Adam Kowis, partner Carlos Treistman and Houston associates Ryan Wooten, Andrea Memovic and Grace Lentz. They had help from attorneys in the firm’s New York and Washington, D.C. offices.
Kirkland & Ellis assisted Cobalt with restructuring partners in its Chicago office as well as partner Rahul Vashi in Houston.
Latham & Watkins counseled Total with restructuring partners in Chicago and New York as well as partner Robin Fredrickson in Houston.
Statoil and Total presented the winning bid for the asset in a bankruptcy auction of some of Cobalt’s assets on March 6.
The U.S. Bankruptcy Court for the Southern District of Texas in Houston confirmed Cobalt’s Chapter 11 plan and the sale of the assets April 5. The divestiture closed April 10.
Statoil now owns a 40 percent non-operated interest in North Platte and Total has boosted its 40 percent interest to 60 percent and will take over operatorship.
North Platte is a Paleogene oil discovery covering four blocks in the Garden Banks area of the U.S. Gulf of Mexico. It has been fully appraised since its discovery in 2012 with four drilled wells and multiple sidetracks.
Orrick said the Cobalt bankruptcy is one of the most complex the firm has seen in the oil and gas industry while the North Platte asset is one of the largest oil and gas discoveries in the U.S. Gulf of Mexico.
As a result of this acquisition, Statoil and Total will be at the forefront of deepwater drilling innovation in the industry, as developing the asset will present technical challenges because of the high pressure, high temperature wells. They will work together to clarify the resource potential and hope to start production in the mid-2020s.
As part of the Cobalt bankruptcy auction, Total also purchased a 20 percent stake in the Chevron-operated Anchor discovery in the Green Canyon area for $181 million, boosting its stake to 32.5 percent, and 13 offshore exploration blocks in the Gulf of Mexico for $25 million.
W&T Offshore won Cobalt’s Heidelberg assets in the Green Canyon area for $31.1 million and Navitas Petroleum US grabbed its Shenandoah properties in the Walker Ridge area for $1.8 million.
Baker Botts, Norton Rose work on Ashford’s $203M Remington acquisition
Baker Botts confirmed Tuesday it represented Remington Holdings and its owners, CEO Monty Bennett and chairman Archie Bennett, on their sale of Remington’s project management unit to Dallas-based Ashford for $203 million.
The leads were corporate partner Neel Lemon and tax partner Josh Mandell, both of Dallas.
Norton Rose Fulbright partner Glen Hettinger in Dallas represented Ashford’s special board committee, which was needed because of the affiliated party nature of the transaction. He received assistance from senior associates Henry Stark and Craig Oliver and associate Rebekah Yurco in Dallas, along with attorneys in the firm’s New York office.
In-house counsel included Remington chief legal officer Rob Haiman in Dallas and Ashford’s recently deceased general counsel David Brooks as well as Jim Phlog, who is Ashford’s associate general counsel.
Ashford announced Brooks’ passing on April 2, saying it was “sudden.” He was also chief operating officer at Ashford, which he helped take public in 2003 with a stock raise of $220 million. Before coming on board in 1992, the University of Houston-trained lawyer practiced law in Houston and Dallas at Sheinfeld, Maley & Kay.
Ashford tapped Janney Montgomery Scott as its financial adviser while Robert W. Baird assisted Remington.
Ashford said the transaction values the unit at a trailing 12-month EBITDA multiple of 12.5 times. The purchase price included preferred stock convertible at $140 per share, a 45 percent premium over the price of Ashford’s common stock.
The buyer expects the deal to immediately boost its adjusted net income per share and the breadth of services provided to its managed real estate investment trusts.
Last year, the unit had sales of around $29 million and adjusted EBITDA of $16.3 million.
The parties expect the transaction to close in the third quarter if stockholders approve it.
Ashford provides asset and investment management and related services to the real estate and hospitality sectors.
Hunton Andrews Kurth aids underwriters on $93.4M Northern Oil stock offering
Hunton Andrews Kurth said April 10 it advised the underwriters on Northern Oil & Gas’ $93.4 million stock offering.
The team included partners Phil Haines, Taylor Landry, O’Banion Williams, Ashley Muehlberger, Robert McNamara and Jocelyn Tau and associates Mike Hoffman, Oliver Fankhauser and Ming Lei, all of Houston. An attorney in the firm’s New York office also assisted.
The underwriters were Stifel Nicolaus, Capital One Securities, Imperial Capital, Northland Securities, Petrie Partners Securities and Seaport Global Securities.
Jones Day advised Minneapolis-based Northern Oil out of its Cleveland office.
The offering was originally expected to fetch $105 million, which later dropped to $88 million. But the underwriters exercised their option to purchase more shares, which boosted it to $93.4 million. The issue priced April 6 at $1.50 per share and closed April 10.
Northern Oil & Gas focuses on the Williston Basin and Three Forks play in North Dakota and Montana. It expects to use the net proceeds to continue pursuing acquisitions, fund its drilling program and for general corporate purposes other than debt repayment.
Latham, Baker Botts work on U.S. Silica’s $75M asset sale to CIG
Latham and Baker Botts worked a deal in which sand supplier U.S. Silica sold thee transload facilities to Energy Capital Partners-backed CIG Logistics for $75 million.
Latham partner Thomas “Thom” Brandt represented Fort Worth-based CIG, while Baker Botts partner Efren Acosta counseled U.S. Silica. CIG Logistics’ general counsel is Beau Patterson, who joined last year from McAfee & Taft.
U.S. Silica tapped Simmons & Co.’s Sanjiv Shah in Houston as its financial adviser.
The parties announced the deal March 19 and closed it last month.
The facilities are located near Odessa, Texas, San Antonio and Benwood, West Virginia, and have 70,000 tons of storage capacity. U.S. Silica will continue to service customers through the transloads.
Founded in 1900 and based in Frederick, Maryland, U.S. Silica produces and sells commercial silica in the U.S. The company offers whole grain commercial silica products such as fracturing sand in connection with oil and natural gas recovery and also provides its products to the foundry and building products industries.
U.S. Silica CEO and president Bryan Shinn said in a statement that the sale continues the company’s strategy of using partners like CIG to manage its transloading operations while it concentrates on customer service.
Both U.S. Silica and CIG have been involved in transactions recently.
Last month, U.S. Silica agreed to acquire EP Minerals from Golden Gate Capital for $750 million in cash (Baker Botts’ Acosta advised U.S. Silica). And CIG bought the Sandstorm product suite from Propell Oilfield Equipment, a unit of Tycrop, for undisclosed terms (Kirkland partner Bill Benitez in Houston counseled CIG).
Hunton Andrews Kurth, Latham work on $50M Landmark unit offering
Hunton Andrews Kurth said April 10 it represented the underwriters on a $50 million preferred unit offering by real estate and infrastructure firm Landmark Infrastructure Partners.
The team included partners Jordan Hirsch, Phil Haines, Robert McNamara and Jocelyn Tau and associates Chris Adcock, Amanda Thienpont, Oliver Fankhauser and Anna Booth, all of Houston. They had help from the firm’s New York office.
The underwriters were Raymond James, UBS Securities, B. Riley FBR and Janney Montgomery Scott.
Latham advised the issuer, including partner John Greer in Houston and an attorney in the firm’s Costa Mesa, California, office.
The offering involved Series C floating-to-fixed rate cumulative perpetual redeemable convertible preferred units representing limited partner interests. The partnership plans to use the net proceeds to repay debt.
Jones Day advises Granite Construction on LiquiForce acquisition
Jones Day said April 11 Dallas partner Alain Dermarkar advised Granite Construction on its acquisition of Canada’s LiquiForce for undisclosed terms.
Miller Canfield in Windsor, Ontario, assisted LiquiForce.
Granite tapped its revolver to pay for the all-cash acquisition, which closed April 3.
LiquiForce provides contracting services to public and private sector water and wastewater companies in Canada and the U.S., including underground contracting services and its patented LiquiForce Junction Lateral Liner.
The private company has $40 million in annual sales with low double-digit EBITDA margins. It employs 100 in offices in the cities of Kingsville and Hamilton in Ontario, as well as Rumulus, Michigan.
Watsonville, California-based Granite, one of the U.S.’s largest infrastructure contractors and construction materials producers, expects the deal to boost its earnings per share this year.
CEO James Roberts said in a statement that the move positions Granite to build upon its position as the national leader in CIPP lining technology and trenchless pipe rehabilitation and aligns with its recent announcement to acquire Layne Christensen.
Demarkar also advised Granite on the $565 million Layne Christensen purchase, which is getting some flack from activist investors who are unhappy with the price.
Bracewell assists Rockland on power plant sale to Osaka Gas
Bracewell said April 13 it advised Rockland Capital and its affiliate, Wolverine Power Holdings, on the sale of Michigan Power to Osaka Gas USA.
Terms weren’t disclosed. The deal has to clear regulators.
The team included partners Ryan S. Holcomb and Bruce R. Jocz and associates Sidney Troy Nuñez and Jason W. Keating, all of Houston. They had assistance from attorneys in the firm’s New York and Washington, D.C. offices.
Holcomb and Jocz also advised Rockland on its purchase of six power plants from AES Ohio Generation, a unit of DPL, for $241 million last month.
Pillsbury counseled Osaka Gas out of New York.
Michigan Power owns a 125-megawatt, gas-fired cogeneration facility in Ludington, Michigan, that provides electricity to Consumers Energy under a purchase agreement. The facility also sells steam to a neighboring calcium chloride manufacturing plant on a long-term contractual basis.
Rockland bought the plant from ArcLight Energy Partners Fund II and Fund V in 2015, also for undisclosed terms.
Kimmeridge Energy ups Carrizo stake, urges asset sales
Private equity firm Kimmeridge Energy Management Co said on April 5 it increased its stake in Houston-based Carrizo Oil & Gas by 65 percent and wants the company to sell assets or combine with a rival to boost its share price.
Carrizo said in a statement that it agrees with Kimmeridge’s assessment that its assets are currently undervalued relative to peer companies with similar-quality acreage. But the company believes that executing on its development programs in the Eagle Ford Shale and Delaware Basin while continuing to strengthen its balance sheet will reduce the current discount valuation in its shares and create significant value for shareholders.
“While the company expects to continue to supplement its development program by evaluating other opportunities in the market, it will only pursue any of these if it deems them to be accretive to, and in the best interest of, all shareholders,” the company said.
Carrizo general counsel Gerry Morton wouldn’t comment on who is advising the company on the matter. But observers suspect it’s Baker Botts, which has assisted the company before on M&A and capital markets transactions, including Houston partners Jeremy Kennedy and Gene Oshman. A Baker Botts spokeswoman said the firm didn’t have any information to provide on the Carrizo matter.