Constellation Brightens With $30.4 Million Acquisition Of Texas And Louisiana Assets

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
30MM
Description

Acquire oil, natural gas and NGL assets and entered into a business relationship.

Constellation Energy Partners LLC (NYSE MKT: CEP) has acquired oil, natural gas and natural gas liquids assets in Texas and Louisiana from Sanchez Energy Partners I LP for $30.4 million.

The acquisition was part of a deal in which Constellation entered into a business relationship with Sanchez Oil & Gas Corp. (“Sanchez Oil & Gas”) and its affiliate, Sanchez Energy Partners I LP.

The assets include 67 wells, 75% operated by Sanchez with affiliate Sanchez Oil & Gas Corp. Net production is about 1,167 barrels of oil equivalent per day (BOE/d), of which a quarter is oil and natural gas liquids production.

Based on internal reserve estimates and forward prices as of June 30, the assets provide total reserves of 1.66 MMBOE, of which 87% are proved developed. The acquisition has an effective date of Aug. 1, 2013.

In conjunction with the acquisition, Sanchez Oil & Gas received $20.1 million in cash and more than a million units of various stocks. Sanchez Oil & Gas Corp. is a private company engaged in the management of oil and natural gas properties on behalf of its affiliates headquartered in Houston. Those include Sanchez Energy Corp. (NYSE: SN).

Constellation said Sanchez Energy Partners I now owns a 17.7% limited liability company interest in the company.

“This transaction, which falls on the heels of our efforts to improve the balance sheet and refinance the company earlier this year, is transformative for CEP,” said Stephen R. Brunner, president and CEO of CEP. “In addition to the immediate benefits we anticipate from the acquired assets, we see our new relationship with SOG as a means to achieving enhanced deal flow, which may occur through future asset contributions or joint acquisitions. At the same time, we see an opportunity to leverage the skills of SOG, a proven operator with an outstanding technical team and experience that spans across multiple basins in the U.S."

Antonio R. Sanchez III, president of Sanchez Oil & Gas, said, “CEP’s management team has done an excellent job of managing through a low gas price environment and successfully restructuring the company’s balance sheet to position it for future growth.

“We look forward to working closely with them in continuing to develop and maximize the value of the acquired assets CEP’s other properties and any future opportunities that may arise,” Sanchez said.