American Energy – Utica, LLC, an affiliate of American Energy Partners, LP, has signed agreements to acquire approximately 27,000 net acres of leasehold in Monroe County, Ohio, from East Resources, Inc. and an unnamed private company. At closing, the properties are expected to have net production of approximately 40 million cubic feet of natural gas equivalent per day.
In addition, a separate AELP platform company, American Energy – Marcellus, LLC (AEM), announced that it has signed agreements to acquire approximately 48,000 net acres of leasehold in Doddridge, Harrison, Marion, Tyler and Wetzel Counties, West Virginia, also from East Resources, Inc. and an unnamed private company. At closing, the properties are expected to have net production of approximately 135 mmcfe per day.
The combined acquisition price of the transactions is $1.75 billion and both deals are expected to close in the next 60 days. The sellers are currently using two rigs to develop the acreage being acquired and AEU and AEM plan to increase operated drilling activity to 4-6 rigs by year end 2015.
The Utica acquisition marks AEU’s seventh major acquisition in the southern Utica Shale play and boosts AEU’s leasehold in the play to approximately 280,000 net acres, the largest leasehold position in this rapidly developing and prolific play. AEU has invested over $3.5 billion in the Utica to date and plans to drill approximately 2,600 gross wells and 1,560 net wells on its acreage in the years ahead.
The Marcellus acquisition marks AEM’s entry into the southern Marcellus Shale play and establishes a strong foundation from which it plans to build a more significant leasehold position in the area over time. AEM plans to drill approximately 410 gross wells and 355 net wells on its acreage in the years ahead.
During the past nine months, the AELP platform has raised committed equity and debt capital of approximately $10 billion to fund the development of five play or strategy specific companies: American Energy – Utica, LLC (AEU), American Energy – Woodford, LLC (AEW), American Energy – NonOp, LLC (AENO), American Energy – Marcellus, LLC (AEM), and American Energy – Permian Basin, LLC (AEPB).
AEU and AEM’s lead equity investor is The Energy & Minerals Group (EMG), with additional equity provided by AEU and AEM’s management team and others, including First Reserve Corporation to AEU. Citi and Goldman, Sachs & Co. acted as financial advisors to AEU and AEM. Sullivan & Cromwell LLP, Commercial Law Group, P.C. and Porter Hedges LLP acted as legal advisors to AEU and AEM. Jefferies LLC acted as financial advisor to the sellers. Baker Botts L.L.P. acted as legal advisor to the sellers.
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