PostRock Increases Stake In Constellation Energy Partners

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
6MM
Description

Acquired additional interest in Constellation Energy Partners LLC bringing total holdings to 24.6%, with company featuring properties in Black Warrior Basin in AL, Cherokee Basin in KS & OK, Woodford in Arkoma Basin in OK & Central Kansas Uplift in KS & NE.

PostRock Energy Corp., Oklahoma City, (Nasdaq: PSTR) has acquired 2.79 million Class B member shares of Constellation Energy Partners LLC (NYSE: CEP) from Constellation Energy Group Inc., Baltimore, (NYSE: CEG) for $6 million.

PostRock now owns all of Constellation Energy Partners’s Class A interests and 24.9% of its Class B interests. In combination, the interests are believed to represent a 26.4% voting interest in Constellation Energy Partners.

Constellation Energy Partners has oil and gas properties in the Black Warrior Basin in Alabama, the Cherokee Basin in Kansas and Oklahoma, the Woodford Shale in the Arkoma Basin in Oklahoma, and the Central Kansas Uplift in Kansas and Nebraska. Proved reserves as of year-end 2010 were approximately 169 billion cubic feet of gas equivalent.

PostRock and Constellation Energy Partners both have the majority of their assets in the Cherokee Basin of Kansas and Oklahoma. Since last spring, PostRock has sought to work with Constellation Energy Partners to explore opportunities to reduce costs and enhance value for the companies' respective investors.

PostRock chief executive Terry W. Carter says, “Particularly in light of the current depressed gas market, we believe that PostRock and CEP should be aggressively pursuing joint operations and/or other ways to enhance shareholder value. Unfortunately, our mutual alternatives have been limited by the decisions of CEP's Board, which set unacceptable conditions relating to the confidentiality of any such discussions. Having now acquired more than a 15% interest in CEP, our alternatives are somewhat limited by Delaware statutes. Regardless, we will continue to try to work with CEP and to urge adoption of a more pragmatic approach to exploring our mutual opportunities."