Baker Hughes to use breakup fee to repurchase stock and cut debt

Baker Hughes Inc. sought to reassure investors on Monday by announcing a $2.5bn plan to buy back stock and pay down debt, using the breakup fee it will receive following the collapse of its long-stalled takeover by oilfield services provider Halliburton Inc.

Baker Hughes stated that proceeds from a $3.5bn breakup fee from Halliburton would fund its $1.5bn share buyback and repayment of $1bn of debt.

Baker Hughes also stated its plans to refinance it’s $2.5bn credit facility maturing in September 2016.

Separately, the company also announced a further 2,000 job cuts as part of its attempts to cut costs by $500m this year.

Source: Reuters

 

Ultra Petroleum files for bankruptcy

Ultra Petroleum Corp., an oil and gas explorer, filed for bankruptcy with $1.3bn of assets and $3.9bn of debt on a prolonged downturn in oil prices.

The company has requested, in courts, to permit it to continue with its surety bonding programme ($12.6m outstanding), which secures its obligations on plugging of wells, environmental damage and road damage.

Previously,  the company missed certain interest payments on its debt. Further, Sempra Rockies Marketing LLC, a pipeline operator sued Ultra for failure to pay it transport fees.

Source:  Bloomberg

 

 

Halliburton and Baker Hughes call off $28bn deal

Oil giants Halliburton Co. and Baker Hughes Inc. terminated their $28bn merger deal amid regulatory pressures.

The companies had announced the deal in November 2014 to compete with no. 1 firm Schlumberger Ltd. The companies had set a deadline by end of April 2016, to either come up with an outcome or end the deal.

Baker Hughes would receive a termination fee of $3.5bn from Halliburton by 4 May 2016.

The U.S. Justice Department filed a lawsuit in early April to stop the merger, saying it threatened to eliminate head-to-head competition in 23 products and services used in oil exploration.

Source: Bloomberg

Transocean defers delivery of two drillships to 2020

Rig supplier Transocean stated that it would delay the delivery of two ultra-deepwater drillships to 2020 in an agreement with manufacturer Jurong Shipyard.

Transoceanic stated that the proprietary Jurong Espadon 3T designed rigs would be scheduled to be delivered between the first and third quarter of 2020.

Deferrals have been on the rise for the company as it anticipated fewer drilling contracts in 2016 due to oversupply of rigs in the market and falling crude oil prices.

Source: UPI

Saudi Arabia raises $10bn bank loans

Oil rich Saudi Arabia is raising a $10bn, five year loans, as it battles falling crude oil revenues and reserves. According to bankers close to the deal, the loan has a spread of 120bps over Libor.

The issuance was upsized from $6-8bn to $10bn on stronger investor demand.

The issuance provides the kingdom funds as it has burned about $150bn of foreign reserves since 2014 due to the worst slump in crude oil prices.

Leading lenders HSBC, Bank of Tokyo-Mitsubishi and JP Morgan, pledged about $1.3bn each. Minimum bids for the loan were at $500m to qualify as a participant.

This issuance, a first by the kingdom since 25 years, could prompt further issuances by other neighboring nations such as Abu Dhabi which has mandated banks ahead of its third international bond issuance.

Source: FT

 

 

 

Pemex CEO on a US roadshow to provide assurance to investors

State-owned Mexican petroleum company Petróleos Mexicanos’ (Pemex) CEO Jose Antonio Anaya and Mexico’s finance minister Luis Videgaray will travel to New York this week to assure investors about the company’s financial health following a $4.2bn liquidity injection.

Juan Pablo Newman, the oil company’s chief financial officer, would also be accompanying the two on the roadshow.

Pemex has faced steep budget cuts in the last two years as crude oil prices have plunged globally and its output in 2015 has declined by over a third to an average of about 2.2m barrels per day (bpd) from 3.4 million bpd in 2004.

The new management installed in February 2016, including the CEO, is reviewing strategies to cut costs whilst continuing with future investments.

Previously, Moody’s downgraded Pemex by two notches to Baa3 on worsening credit metrics amid falling oil prices.

Source: Reuters

 

Oil prices rise on expectation that producers will agree to freeze output

Oil prices rose in trading in Asia on Wednesday on rising expectations that producing nations would agree on freezing their output amid global oversupply.

Expectations rose after The Kuwaiti governor for the Organization of the Petroleum Exporting Countries (OPEC), Nawal Al-Fuzaia, stated on Tuesday that there were positive indications an agreement would be reached during an OPEC meeting scheduled in Qatar on 17 April 2016.

Front month U.S. West Texas Intermediate (WTI) crude futures traded at $36.74 per barrel, up 2.3% percent from their last settlement price. International Brent futures were up 1.7% at $38.50 a barrel.

An initial freeze on output was agreed to in February, which has helped oil prices rise to almost $38 a barrel from a 12-year low close to $27 in January.

However, prices have continued to decline recently as doubts persist whether a wider deal would be reached, largely because Iran has not shown any indication of slowing its production after crippling sanctions against it were lifted in January.

Source: Reuters

Ultraviolet Petroleum (UPL) to defer $26m interest payment due April 1

U.S-based oil and gas explorer Ultra Petroleum Corp., deferred making an interest payment of approximately $26m on its 6.125% bonds due 2024. The payment was due to creditors on 1 April 2016.

The company, as per its indenture governing the 2024 notes, permits it a grace period of 30 days to make the interest payment.

Failure to either make a payment within the grace period, or obtain a waiver from the bond holders of the 2024 notes would result in a technical default.

Source: StreetInsider

Seadrill hires advisors to restructure debt

Bermuda-based offshore drilling rig provider Seadrill Ltd. hired Houlihan Lokey Inc. and Morgan Stanley to advise it on restructuring its debt worth $11bn. The process is expected to gain traction by June 2016.

According to sources, the company might opt for a debt-to-equity swap and a subsequent equity infusion of $1bn.

Seadrill, which provides rig services to upstream oil and gas companies, has seen a decline in its revenue as its clients have cut capex/drilling budgets.  The company has seen declining day rates and contract expiry on some of its vessels.

Source: Zacks Investment Research

 

Goodrich Petroleum reaches bankruptcy agreement with lenders

US-based E&P company Goodrich Petroleum Corp. reached an agreement with lenders based on a prepackaged plan to file for Chapter 11 bankruptcy protection by 15 April 2016..

The prepackaged plan, which aimed to secure support from all lenders prior to filing for Chapter 11 bankruptcy, fell short of desired participation levels. As on 31 March 2016, the company received support from its unsecured lenders totaling 61% of the 95% needed to implement its debt-for-equity exchange offer.

The new plan of re-organization aims to give its second-lien lenders an equity stake in the re-organized company through its ongoing debt-for-equity exchange offer. The company has extended its offer to 8 April 2016.

Separately, Goodrich announced earlier in March 2016, that it would delay the filing of its annual report for 2015 citing a material loss that auditors had detected which would affect the company’s ability to operate as a going concern.

Source: Bloomberg