EV Energy Partners Strengthens Barnett Position With Acquisition

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
68MM
Description

To acquire natural gas properties comprised of 82 wells producing in the Barnett shale of Tarrant County.

EV Energy Partners LP (Nasdaq: EVEP) signed an agreement to acquire natural gas properties in the Barnett shale from Carrizo Oil and Gas Inc. (Nasdaq: CRZO) for $67.6 million.

EVEP, along with certain institutional partnerships managed by EnerVest Ltd., have agreed to acquire a 31% interest in these assets. The total for the transaction is $218 million for all EnerVest-affiliated entities combined.

The acquisition has been approved by the board of directors and is expected to close by Oct. 31. EVEP plans to finance the acquisition with proceeds from its previously-announced Utica shale acreage sale and borrowings under its existing credit facility.

The acquisition is comprised of 82 wells producing primarily from the Barnett shale formation in Tarrant County, Texas. The assets include over 17,000 gross acres (9,500 net acres) which are 100% held by production.

The properties, and EVEP's share of reserves and production, include:

  • Estimated proved reserves as of July 1, of 62.3 billion cubic feet (Bcf) and estimated probable reserves of 30.7 Bcf, net to EVEP based on recent strip prices;
  • 100% natural gas and 58.4% proved developed;
  • 71 identified low-risk proved and probable drilling locations with an estimated average drilling and completion cost of $0.85 to $0.90 per thousand cubic feet (Mcf);
  • Net daily production to EVEP's interest of 13.1 million cubic feet per day (MMcf/d);
  • Natural gas pricing of NYMEX less $0.90 to $1 per Mcf;
  • Current lease operating costs, including ad valorem taxes, of $0.65 to $0.75 per Mcf of production;
  • Production taxes of 1.7% to 2.1% of revenue; and
  • Incremental annual general and administrative expense of $125,000.

"These 'bolt-on' assets are very complementary to our strong operating position within the Barnett shale. Our team has a demonstrated exploitation track record in the Barnett and will leverage their expertise in these new high-quality gas properties. The Barnett reservoir within these new leases has estimated gas in place of 150-200 Bcf per 640 acre section and the existing wells drilled have estimated ultimate recoveries averaging over 5 Bcf per well. We believe these properties will provide very attractive future development opportunities, even at current gas prices," Mark Houser, president and CEO, said in the release.In conjunction with the acquisition, and consistent with its strategy of hedging production of acquired assets, EVEP intends to enter into arrangements to hedge a portion of the acquired production volumes at or prior to closing.

EV Energy Partners LP engages in the acquisition, development, and production of oil and natural gas properties in the U.S. The company is based in Houston.