Deal activity picked up this week, with 15 deals announced worth $4.7 billion, versus only 11 deals worth $1.4 billion the previous week. However, the value is still way down from the $16.5 billion high of the year achieved in January.
A lot of the action happened around oil and gas pipelines given rising production and possible takeaway restraints around certain parts of the country, including acquisitions and joint ventures.
Also being traded around were oil and gas assets, which sellers see as a way to bring in cash to fund operations or pay down debt and buyers see as an opportunity to build something or expand their positions. Note Dallas Cowboys’ billionaire owner Jerry Jones trading some of his oil and gas assets for a big stake in Comstock Resources.
There also was a good-sized resins deal this past week, one bank going public and another bringing in investors for a relaunch and a developer of immunogene therapy for cancer raising capital through a private placement. There even were transactions involving plumbing and car wash establishments, the later of which is being backed by billionaire investor David Bonderman. Below are the highlights.
Akin advises on Shell Midstream’s $1.22B Amberjack purchase
Akin Gump Strauss Hauer & Feld scored work on a big deal this past week, advising the conflicts committee of the board of Shell Midstream’s general partner on its purchase of interests in the Amberjack pipeline from Royal Dutch Shell plc for $1.22 billion.
Shell Oil handled the deal inhouse, including senior counsel Lori Muratta (who also is general counsel at Shell Midstream) and legal counsel Belinda Senneway.
Tudor, Pickering, Holt provided outside legal advice to the committee.
Amberjack is Shell Midstream’s largest acquisition to date. Its share of Amberjack’s net income is expected to jump to an annual run rate of about $145 million by the end of this year with an associated quarterly dividend of around $40 million.
Shell Midstream funded the acquisition with borrowings under its credit facilities.
The pipeline transports roughly 300,000 barrels per day due to the success of the deepwater Jack St. Malo and Tahiti projects in the Gulf of Mexico. Shell Midstream anticipates that volume to increase to 400,000 barrels per day by the end of next year from continued in-field development and new projects.
Norton Rose, Gibson Dunn aid on $1.12B Enbridge deal
As The Texas Lawbook reported last week, Canadian oil and gas pipeline giant Enbridge announced a large asset sale on May 9 and Texas lawyers from two different firms advised on it.
Norton Rose Fulbright counseled Enbridge’s U.S. affiliate on the sale of Midcoast Operating to ArcLight Capital Partners-backed AL Midcoast Holdings for $1.12 billion in cash.
Gibson Dunn & Crutcher partner Justin Stolte in Houston led the deal for ArcLight. He was assisted by corporate associates Matt Savage, Jordan Silverman, Graham Valenta and Lindsay Ellis along with Houston partners Shalla Prichard on finance and James Chenoweth on tax. An associate in the firm’s New York office also pitched in.
Citi was Enbridge’s financial adviser on the sale.
Analysts at Tudor, Pickering, Holt said the sale price came in below what Enbridge paid for Enbridge Energy Partners’ interest last year at $1.3 billion. They said the Ebitda multiple was disclosed in the high single digits, roughly in line with their expectations of 8 to 9 times Ebitda.
Enbridge plans to use the proceeds to either redeem trust units it holds in Canadian unit Enbridge Income Fund or pay back debt.
Gibson Dunn aids Jerry Jones on oil & gas asset sales to Comstock for $620M in stock
Gibson Dunn was involved in another good-sized deal this week, advising Dallas Cowboys owner Jerry Jones on the sale of North Dakota oil and gas assets out of his companies Arkoma Drilling and Williston Drilling to Comstock Resources for $620 million in stock. The definitive agreement was announced May 10 after a preliminary deal was revealed last month.
Gibson Dunn said Dallas Cowboys’ general counsel Jason Cohen worked closely with its team, which included corporate partners Doug Rayburn in Dallas and Tull Florey and Mike Darden in Houston.
Other Texas attorneys working on the deal were tax partner James Chenoweth (Houston), employee benefits/executive compensation associate Krista Hanvey (Dallas), corporate associate Lindsay Ellis (Houston), corporate associate Dave Cias (Houston), corporate associate Melissa Pick (Houston) and corporate associate Eric Pacifici (Dallas).
Frisco-based Comstock was represented by Locke Lord partner Jack Jacobsen in Dallas. Comstock’s general counsel is Dale Gillette, who previously practiced at Gardere Wynne Sewell (now Foley Gardere) and Locke Liddell & Sapp (now Locke Lord).
Deutsche Bank was Comstock’s financial adviser.
Arkoma and Williston will get 88.6 million shares of Comstock at $7 per share and own 84 percent of the company. The deal has to clear the shareholders of Comstock, which also has to refinance its debt.
Bracewell represents Ferrellgas on $575M credit facility
Bracewell said May 8 it represented propane provider Ferrellgas on a $525 million senior secured credit facility, which will replace a $575 million facility that was set to mature in October.
Some of the team was based in Bracewell’s New York office. But the group included Houston partners Scott C. Sanders and Charles H. Still Jr. and Austin managing partner Timothy A. Wilkins. Other Houston team members were associates Kristen A. Wong, Caitlyn N. Dockendorf, Mary Isensee and Lindsey E. Chapman.
Durham Capital Corp. was Ferrellgas’ financial adviser and Schulte Roth & Zabel counseled the lending group.
The new five-year facility includes a $300 million cash flow revolver – with commitments from TPG Capital unit TPG Specialty Lending and PNC Bank – and a $275 million term loan. Ferrellgas said that the new facility will result in $75 million of surplus cash on its balance sheet.
The new facility relieved many stockholders, who feared a near-term debt crisis. Management has said it will try to refinance its debts due 2020 as well.
Baker Botts advises Transocean on $500M rig purchase
Baker Botts said May 10 it advised Transocean on its $500 million purchase of a 33.3 percent interest in the West Rigel, a newly built harsh environment semisubmersible rig.
The group from Baker Botts included partners Gene Oshman, Jim Marshall, Jonathan Bobinger, Derek Green and Jon Lobb and associates Jude Dworaczyk and Kelton Miller, all of Houston. Dallas partners Jim Prince and Luke Weedon assisted. Attorneys from the firm’s London, Washington, D.C. and Brussels offices helped out as well.
Transocean’s general counsel is Brady Long, who joined the company in 2015 after serving in the same post at Ensco for four years after the Pride International merger. The UT Law grad previously practiced at Bracewell.
The deal was done through a joint venture with funds managed and/or advised by Hayfin Capital Management. Macfarlanes and Reed Smith counseled Hayfin.
Transocean initially invested $83 million in the joint venture with another $83 million to be made at a later date. Transocean also invested $8 million for working capital, which includes upgrades and activation costs with additional amounts to be funded later.
Sembcorp Marine Jurong Shipyard built the rig, which is expected to be delivered in the fourth quarter of this year and available for charter in the first quarter of next year.
Transocean managers have indicated that the company will continue to evaluate more M&A targets this year with similar traits to its $1.2 billion acquisition of Songa Offshore last year, RBC Capital Markets said in a recent note. However, analysts at Simmons & Co. said the company will be “loathe to similarly over-equitize” any future transactions given improved market visibility and its new capital structure and cash flow profile.
Jones Day advises Arsenal on sale of IGM Resins to Astorg
Jones Day said May 7 it advised Arsenal Capital Partners on the sale of IGM Resins Cooperative and its group to European private equity firm Astorg.
Terms weren’t disclosed but reports say Arsenal was hoping to sell the company for more than $600 million at auction.
Arsenal typically invests in companies with enterprise values ranging from $100 million to $500 million while Astorg targets companies with enterprise values of $238 millon to $1.19 million.
Houston partner Stephen Olson led the deal team along with an attorney in the firm’s Amsterdam office.
Paul Hastings in Paris, Dechert in the U.K. and Loyens & Loeff in the Netherlands provided outside legal counsel to Astorg.
Houlihan Lokey and Emendo Capital were Astorg’s financial advisers while Moelis was Arsenal’s and IGM’s financial adviser.
The deal was announced May 7 and is expected to close in the second quarter.
IGM is a producer of raw materials for the ink and coatings industry. It has operations globally, including in the Netherlands, the U.S., China and Italy.
Willkie Farr advises Samson on $44.4M oil and gas property sale
Willkie Farr & Gallagher said May 9 it advised Tulsa-based Samson Resources II on the sale of oil and gas assets in Converse, Wyoming, to an unnamed buyer for $44.4 million. Samson also will get 15,000 net acres in Johnson County, Wyoming, to add to its core positions.
Partners Michael De Voe Piazza and Cody Carper led the deal team. Vinson & Elkins counseled the buyer.
Samson expects to close the deal by May 31, after which it will own rights to more than 152,000 net acres in the Powder River Basin.
Samson CEO Joseph Mills said in a statement that the sale is an important step in the company’s strategy of selling non-core assets and increasing focus on its core assets in the Powder River and Green River Basins of Wyoming. He plans to use the proceeds to partially fund the company’s 2018 drilling program.
Samson has done quite a lot of portfolio shuffling in the last year. It sold its East Texas assets to Rockcliff Energy in September for $504 million, which allowed it to pay off $210 million in debt, and its Wamsutter assets in Carbon and Sweetwater counties, Wyoming, in January for $34 million.
In late 2017, the company also bought a nonoperating partner’s position in 20,000 gross acres in Converse and a working interest in 74 wells, 62 of which Samson operated, for an undisclosed sum.
At the NAPE industry conference this past February in Houston, Mills said the onetime bankrupt company was “back from the dead,” having paid off its debt in 11 months thanks to $550 million in asset sales and its focus on oil rather than natural gas.
The CEO also predicted the Powder River Basin could be “the next Permian” and that the company could either merge with another player in the region or go public. “Hedge funds [who took over the company in the bankruptcy] want their money back,” he said.
JW, Bracewell aid on $42M Spirit of Texas Bank IPO
Jackson Walker said May 8 it counseled Conroe-based Spirit of Texas Bankshares on its $42 million initial public offering, which was three years in the making.
Austin partner James L. Pledger, a former commissioner at the Texas Department of Savings and Mortgage Lending, was lead attorney on the offering. Other JW attorneys involved were partner Alex Frutos in Dallas, associates Jane E. Magnuson and Taylor McDowell in Austin and partner Michael F. Meskill, also of Austin.
Bracewell said it represented the offering’s underwriters, who included Stephens, Keefe, Bruyette & Woods, Piper Jaffray and Sandler O’Neill.
The Bracewell team was made up of partners William S. Anderson and Jason M. Jean in Houston and associates Joshua T. McNulty (Dallas), Kate Barrington McGregor(Houston) and Tyler Lohse (Houston).
The offering, which closed May 8, involved 2.3 million shares at $21 per share. The bank plans to use the proceeds to fund growth and for potential acquisitions.
In an interview with The Texas Lawbook, JW’s Pledger said he got to know Spirit of Texas CEO Dean Bass in 2001 when he formed Royal Oaks Bank, which was later sold to St. Louis-based First Banks for $38.6 million in cash. Pledger expects more IPO’s and acquisitions in the Texas banking industry due to the state’s strong economy as well as rising interest rates and improved margins for banks in general.
Spirit of Texas Bank has $1.03 billion in assets and 15 full-service branches in Houston, Dallas/Fort Worth and Bryan/College Station.
Fenimore aids rebooted Bank of Houston on $16.1M capital raise
Fenimore Kay Harrison Ford advised BOH Holdings on its raising of $16.1 million in capital out of a $17 million target. The details of the fundraising were revealed in a filing with the U.S. Securities and Exchange Commission.
The lawyers included managing partner Chet Fenimore and attorney Brent Standefer.
BOH is the holding company for Bank of Houston, which is being re-formed by original founder Jim Stein. Stein sold the first Bank of Houston to Independent Bank Group in 2014 for around $170 million, staying on as vice chairman and head of the Houston region before leaving two years ago.
Besides Stein, the 47 investors in the bank include Jim Hamilton, John Santasiero, Dan Silvestri and Chris Stein.
Streusand Landon & Ozburn advises Genprex on $10M in funding
Austin law firm Streusand Landon & Ozburn represented Genprex on a $10 million private placement with unnamed institutional investors.
Partner Chris Ozburn advised the Austin-based company on the capital raising after working on its $6.4 million initial public offering earlier this year.
Maxim Group was the placement agent.
Genprex’s general counsel is Elizabeth Han, who joined in 2016 from Norton Rose Fulbright, where she focused on health care matters. Before that the University of Michigan-trained lawyer was a judicial intern for Judge Lee Yeakel at the U.S. District Court for the Western District of Texas.
Genprex said in an announcement May 7 that the purchase price of the common stock in the placement was equal to $12.07 per share and the initial exercise price for the warrants was equal to $15.62 per share. Its share price closed at $14.20 per share the last trading day before the announcement.
Genprex is a developer of immunogene therapy for lung cancer.
Locke Lord represents Alta Mesa on Cimarron Express Pipeline formation
Locke Lord said May 11 it represented Alta Mesa Resources and unit Kingfisher Midstream on an agreement to form Cimarron Express Pipeline with publicly traded Blueknight Energy Partners and affiliates of privately held Ergon.
Kingfisher didn’t disclose terms on the deal, which closed May 9.
The Locke Lord team included partners Eric Larson, Hunter Summerford and Bill Swanstrom and senior counsel Max Stubbs, all of Houston.
Kingfisher and Ergon will split ownership of Cimarron Express, which will build and operate a new crude oil pipeline serving STACK producers in central Oklahoma. The pipeline will extend from northeastern Kingfisher County, Oklahoma, to Blueknight’s Cushing, Oklahoma, crude oil terminal.
Kingfisher COO Craig Collins said in a statement that the Cimarron Express will give producers the opportunity to maximize the value of their crude oil production in the STACK region, which has experienced increasing activity in recent years.
Kingfisher said the pipeline will provide direct market access at Cushing for producers with an initial capacity of 90,000 barrels per day, which could be expanded to more than 175,000 barrels per day. The pipeline is expected to be completed in mid-2019.
Alta Mesa agreed to a long-term dedication and transportation agreement with the new pipeline to incorporate about 120,000 net acres in Oklahoma’s Garfield and Kingfisher counties.
Bracewell, Latham, V&E, T&K aid on Epic deal with Apache, Noble
Bracewell said May 11 it represented Apache on its partnership with Ares Management-backed Epic Midstream and Noble Energy for the Epic crude oil pipeline.
The team was made up of partners Charles Still, Alan Rafte, Dale Smith and Bruce Jocz; senior counsel Allison Perry; and associates Derek Speck, Kate McGregor and Sidney Nunez. Attorneys in the firm’s New York and Washington, D.C. offices pitched in.
Latham & Watkins partner Michael Chambers advised Epic and Ares while Vinson & Elkins partner Doug Bland and Thompson & Knight partner Doug Pedigo assisted Noble. All three are in Houston.
P. Anthony Lannie is Apache’s general counsel. The Vanderbilt-trained lawyer joined the company in 2003 after serving as president of Kinder Morgan Power and president of Coral Energy Canada, where he served as general counsel between 1995 and 1999. He had previously been general counsel of Tejas Gas before it merged with Coral in 1998.
Deputy general counsel Aaron Carlson has been leading Noble’s legal department after the departure of general counsel Arnold “Arne” Johnson in November.
Apache and Noble, both of Houston, committed to anchor the pipeline and have secured capacity on it.
Apache will have an option to acquire up to 15 percent of the equity of the pipeline and Noble will have an option to buy up to 30 percent and up to 15 percent of the EPIC NGL Pipeline, which is anchored by BP. The options expire in the first quarter next year.
The pipeline will run side-by-side with Epic’s natural gas liquids pipeline for 730 miles from southeastern New Mexico to Corpus Christi.
More than 500,000 acres have been dedicated to the pipeline, including from Apache and Noble Energy. At least 10 percent of system capacity will be reserved for uncommitted shippers.
Epic is negotiating for more volume commitments and acreage dedications for the pipeline, which may be enlarged to a 30-inch line. The parties expect construction to begin in the fourth quarter and for the pipeline to be in service in the second half of next year.
Tudor, Pickering, Holt said the Epic pipeline along with those being built by Phillips 66 Partners and Plains All American Pipeline could bring takeaway and in-basin refining capacity to 5.7 million barrels per day by the second half of next year versus an estimated 5.1 million barrels of production by the end of 2020, raising the specter of an overbuilt situation in the Permian.
V&E, Akin Gump advise on ETP-Enterprise JV for Old Ocean pipeline
Vinson & Elkins said May 8 it advised Energy Transfer Partners in connection with a 50/50 joint venture with Enterprise Products Partners to resume service on the Old Ocean natural gas pipeline, which has been essentially idled since 2012. Terms weren’t disclosed.
The 24-inch diameter pipeline, which originates at Maypearl, Texas, in Ellis County and extends south about 240 miles to Sweeny, in Brazoria County, Texas, is expected to resume service in the second quarter.
The V&E corporate team was led by partners Matt Strock and Shay Kuperman with assistance from senior associate Danielle Patterson and associates Sara Bloom and Kathryn Hastings, all of Houston. Also advising was a tax partner in the firm’s Washington, D.C. office.
The Energy Transfer in-house team included general counsel Jim Wright and assistant general counsel Shawna Flynn, both of Houston. The Enterprise in-house team included assistant general counsel Charlie San Miguel, also of Houston.
Advising Enterprise were Akin Gump Strauss Hauer & Feld partner Steve Davis, counsel Stephen Boone and Cynthia May Mabry and associate Niki Roberts, all of Houston.
The parties announced the joint venture on May 4. ETP will operate the pipeline. Both parties are expanding their jointly owned North Texas pipeline, which will provide more capacity from West Texas for deliveries into the Old Ocean Pipeline.
Jim Teague, CEO of Enterprise’s general partner, said in a statement that bringing the Old Ocean pipeline back into service will help meet the immediate demand for takeaway capacity from the growing Delaware and Midland basins. ETP COO Mackie McCrea said that more transportation capacity is much needed for one of the most prolific and active basins in the world.
V&E advises Morsco on sale to the Reece Group
Vinson & Elkins said May 7 it advised senior management of Advent International-backed plumbing and HVAC company Morsco on its sale to Australia’s Reece Group for an undisclosed sum.
The V&E corporate team included Dallas partners Mike Saslaw (M&A and private equity) and David D’Alessandro (executive compensation/benefits) with help from the firm’s London office on labor and employment matters. DLA Piper assisted Reece.
John Tomasso is general counsel of Morsco, which he joined in 2017 after practicing at Locke Lord. He received his law degree from New York Law School.
Fort Worth-based Morsco is a top U.S. distributor of commercial and residential plumbing, waterworks and HVAC supplies. It has annual sales of around $2 billion and operations in California, Arizona, Texas, Oklahoma, New Mexico, Kansas, the Carolinas, Colorado and Georgia, among other states.
Founded in 1920, Reece Group is the largest provider of plumbing, HVAC and Waterworks products in Australia and trades on the Australian Securities Exchange. The company has 5,300 employees in 600 branches in Australia and New Zealand servicing the plumbing, bathroom, building, civil, irrigation, heating, air conditioning and refrigeration industries.
Winston aids Bonderman’s Wildcat Capital on car wash investment
Wildcat Capital Management, the family office of TPG Capital’s billionaire co-founder David Bonderman, invested an undisclosed sum in Ohio car wash businesses Moo Moo Express and Flying Ace Express, which will become part of the Express Wash Concepts platform.
Winston & Strawn partner Billie Ellis – longtime outside counsel to Bonderman – advised Wildcat along with partner David Lange, both of whom are in Dallas. Other Dallas team members included partners Andrew Betaque and Jeff Cole and associates Masae Ellis, Lauren Crouch, Matt Olson and James Waters.
Ice Miller and Crowe Horwath advised the sellers on the transaction. Plante Moran and Aon assisted Wildcat while central Ohio-based Park National Bank provided financing.
Moo Moo founder and managing partner John Roush will become chief executive of Express Wash Concepts. Flying Ace co-founders Dan Eisenhauer and Jeff Gilger will become vice president of operations and vice president of development, respectively.
Moo Moo and Flying Ace operate 16 locations with additional ones planned for this year.
Update:
Bracewell announced May 11 an expanded team representing Credit Agricole as lead arranger for the financing of McDermott International’s all-stock combination with Chicago Bridge & Iron. The deal was announced in December and closed May 10.
The team included partners Manuel Vera, Bruce J. Jocz and Constance Gall Rhebergen, counsel Leslie Hansen and associates Shannon I. Lindamood and Caitlyn N. Dockendorf, all of Houston.
Attorneys from the firm’s New York, Washington, D.C., London and Dubai offices also pitched in.