Midstates To Acquire Producing Properties In Anadarko Basin

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
620MM
Description

Entered into a purchase and sale agreement to acquire producing properties and developed and undeveloped acreage in the Anadarko Basin.

Midstates Petroleum Co. Inc. (NYSE: MPO) has entered into a purchase and sale agreement with Panther Energy LLC and its partners, Red Willow Mid-Continent LLC and LINN Energy Holdings LLC (Nasdaq: LINE), to acquire producing properties as well as developed and undeveloped acreage in the Anadarko Basin in Texas and Oklahoma for US $620 million in cash.

Both Panther Energy and Red Willow are subsidiaries of the Southern Ute Indian Tribe Growth Fund. Primary horizontal drilling targets include the Cleveland, Marmaton, Cottage Grove, and Tonkawa formations. The transaction will be effective April 1 and closing is expected on or about May 31, subject to customary closing conditions.

Key highlights of the transaction include:

  • Adds 36.4 million barrels of oil equivalent (MMBOE) proved reserves that are 45% oil and 21% NGLs, of which 34% are proved developed producing;
  • Increases net current daily production by 8,000 BOE per day (67% liquids);
  • Enhances drilling inventory with over 700 low-risk, repeatable horizontal drilling opportunities;
  • Expands acreage position with 140,000 net acres with multiple objectives; about 102,000 are in Texas and 38,000 are in Oklahoma; 60% of total acreage is held by production;
  • Adds 280 gross producing wells that are over 80% operated with an average 69% working interest and 55% net revenue interest;
  • Provides more than 100 MMBOE in internally estimated resource potential; and is
  • Immediately accretive in 2013 to cash flow per share, as well as earnings, EBITDA, proved reserves and production per share.

Primary drilling targets on the properties acquired include the Cleveland, Marmaton, Cottage Grove, and Tonkawa formations with potential upside from drilling the deeper lower Pennsylvanian and Mississippian sections. Panther currently employs three rigs in its drilling program. Midstates plans to double that activity level by late summer 2013 and run a six-rig program with three to four rigs drilling for the Cleveland formation and two to three drilling for the Marmaton, Cottage Grove and Tonkawa formations.

During 2013, Midstates expects to drill 40-45 wells on the newly acquired acreage, all of which will be horizontal wells. Drilling and completion costs have averaged US $3 million per horizontal well which have been drilled to an average vertical depth of 6,000 feet to 8,000 feet with 4,000-foot to 4,300-foot laterals and 15 to 17 stages of fracture stimulation.

The company’s pro forma reserves including the acquisition will continue to be oil and liquids-rich and total 111.8 MMBOE consisting of 48% oil, 20% NGLs, and 32% natural gas. The reserve life of the assets being acquired is about 12.5 years.

Midstates Petroleum Co. LLC is an independent oil and gas company engaged in oil and gas exploration and development. The company is based in Houston.