Midstates to Acquire Oil Properties in Oklahoma & Texas

Source: www.gulfoilandgas.com 4/4/2013, Location: North America

Midstates Petroleum Company, Inc. ("Midstates" or the "Company") announced that it 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 (together, “Panther”), to acquire producing properties as well as developed and undeveloped acreage in the Anadarko Basin in Texas and Oklahoma for $620 million in cash.

Both Panther Energy, LLC and Red Willow Mid-Continent, LLC 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, 2013 and closing is expected on or about May 31, 2013, subject to customary closing conditions.

Key highlights of the transaction include:

- Adds approximately 36.4 million barrels of oil equivalent (“Mmboe”) proved reserves that are 45% oil and 21% natural gas liquids (“NGLs”), of which 34% are proved developed producing
- Increases net current daily production by approximately 8,000 Boe per day (67% liquids)
- Enhances drilling inventory with over 700 low-risk, repeatable horizontal drilling opportunities
- Expands acreage position with approximately 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 approximately 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
- Immediately accretive in 2013 to cash flow per share, as well as earnings, EBITDA, proved reserves and production per share

John Crum, Midstates Chairman, Chief Executive Officer and President commented, “The acquisition we announced today greatly enhances our scope, scale and identified resource potential. On a variety of key metrics and in particular cash flow, the transaction is immediately accretive in 2013, and with a full year impact from the Panther assets is strongly accretive in 2014 and beyond. It increases our year-end 2012 proved reserves by almost 50%, grows our fourth quarter production by over 50%, and nearly doubles our active gross well count. We are very excited about the immediate positive impact it will have on our Company in addition to the significant growth opportunities it will provide us. This acquisition strengthens and diversifies Midstates’ investment portfolio and lowers the overall risk profile of the Company.”

Crum continued, “Adding this new third focus area provides Midstates the opportunity to build upon our operational strengths and leverage our presence in the Mid-Continent region that we established last year in Tulsa after completing our Mississippian Lime acquisition. The Anadarko Basin is well understood by our team and the industry and will enhance Midstates’ overall investment profile. Returns on the wells in this region are very attractive and the operating costs are comparable to our existing cost structure.”

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 approximately 40-45 wells on the newly acquired acreage, all of which will be horizontal wells. Drilling and completion costs have averaged approximately $3.0 million per horizontal well which have been drilled to an average vertical depth of 6,000 to 8,000 feet with 4,000 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.

In connection with the acquisition, Midstates has secured $620 million in bridge loan commitments from Morgan Stanley Senior Funding, Inc. and SunTrust Robinson Humphrey, Inc. Midstates intends to permanently finance the acquisition by raising $725 to $750 million of which $100 to $125 million would be equity, pending market conditions, and the balance would be debt. Additionally, Midstates has also received commitments from SunTrust Robinson Humphrey, Inc. and Morgan Stanley Senior Funding, Inc. to increase the borrowing base under the Company’s revolving credit facility to $425 million at closing of the transaction. The Company believes these financing arrangements are sufficient to both finance the acquisition and provide liquidity to comfortably fund its drilling and development program through the end of 2014.

Midstates’ Board of Directors has unanimously approved the transaction. The Company will enter into a transition services agreement with Panther for a six-month period following transaction closing.

Morgan Stanley & Co. LLC and SunTrust Robinson Humphrey, Inc. acted as financial advisors to the Company in connection with the transaction.

For more information about related Opportunities and Key Players visit Unconventional Oil & Gas

United States >>  6/10/2022 - Schlumberger and Subsea 7 announced that the Subsea Integration Alliance has been renewed for another seven years. ...

Related Categories: Coalbed Methane  General  Heavy Oil  Methane Clathrate  Oil Sands  Oil Shale  Shale Gas  Tight Gas  Tight Oil 

Related Articles: Coalbed Methane  General  Heavy Oil  Methane Clathrate  Oil Sands  Oil Shale  Shale Gas  Tight Gas  Tight Oil 

Gulf Oil and Gas
Copyright © 2021 Universal Solutions All rights reserved. - Terms of Service - Privacy Policy.