LRR Energy To Gain Permian, Gulf Coast Assets In Drop-Down Deal With Lime Rock Resources

To acquire properties in NM Permian Basin and TX Gulf Coast primarily in Eddy County, NM and DeWitt County, TX, featuring 31 gross producing wells, gaining 765 BOE/d, 1.7 MMBOE proved.

LRR Energy LP, Houston, (NYSE: LRE) plans to acquire certain oil and gas properties in the Permian Basin region in New Mexico and onshore Gulf Coast region in Texas from its sponsor, privately held, Houston-based Lime Rock Resources, for a purchase price of $67 million.

The properties are primarily in Eddy County, New Mexico, and DeWitt County, Texas. The assets feature 31 gross producing wells (20 net).

Net production is approximately 765 barrels of oil equivalent per day. Net proved reserves are 1.7 million barrels equivalent (83% oil and gas liquids, 92% proved developed producing), of which 82% of proved reserves are operated.

LRR Energy LP is a master limited partnership that was formed in April 2011 by affiliates of Lime Rock Resources to acquire and operate assets in the Permian Basin region in West Texas and New Mexico, the Midcontinent region in Oklahoma and East Texas and the Gulf Coast region in Texas. LLR Energy’s general partner, LRE GP LLC, is controlled by Lime Rock Management LP, Lime Rock Resources and Houston-based private-equity firm Lime Rock Partners.

LRR Energy chairman and co-chief executive Eric Mullins says, “We are excited to announce our first transaction, which consists predominately of oily, mature properties that are an ideal fit for our MLP strategy.”

Charlie Adcock, co-CEO, adds, “These assets are great additions to our existing footprint in the Permian Basin and Gulf Coast regions.”

LRE expects to finance the transaction with borrowings under its existing bank credit facility.

Tudor, Pickering, Holt & Co. Securities Inc. is financial advisor to LRR Energy and Bracewell & Giuliani LLP is its legal advisor.

The deal is expected to close by June 1.