Vanguard Natural Resources, LLC ( Vanguard or the Company) announced that on June 29, 2012 it consummated the previously announced acquisition of natural gas and liquids assets from Antero Resources for an adjusted purchase price of $434.4 million, subject to customary final post-closing adjustments. The effective date of the acquisition is April 1, 2012.
Significant benefits expected from the acquisition:
- Immediately accretive to distributable cash flow;
- Proved reserves of approximately 420 Bcfe (58% proved developed and 82% natural gas);
- Reserve to production ratio of approximately 15 years;
- Current net production of approximately 76 MMcfe/d (91% natural gas) from 833 gross wells (134 producing wells to be operated by Vanguard in the Woodford Shale);
- Approximately 66,000 net acres in the Woodford Shale play and 5,300 net acres in the Fayetteville Shale play;
- Approximately 180 proved drilling locations with an average 22.5% working interest that are expected to generate superior returns even in a low gas price environment. We have also identified an additional 1,100 future proved drilling locations on acreage that is held by production that can be developed should natural gas prices return to the $4-$5 range; and
- Existing natural gas hedge book valued at approximately $100 million which` we intend to restructure to cover 100% of expected proved production for the next five years at prices significantly higher than current market.
The Company funded this acquisition with borrowings under its existing reserve-based credit facility. As anticipated, Vanguard’s borrowing base was increased from $670 million to $975 million in connection with an interim borrowing base redetermination to include the properties from this acquisition. As of June 29, 2012 and pro forma for the borrowing base increase and financing for this acquisition, the Company has borrowings under its reserve-based credit facility of $734 million which leaves $241 million of undrawn capacity.
Updated 2012 production and financial results guidance will be included in the second quarter results press release which is expected to be issued on August 2, 2012.