Energy & Exploration Partners is to acquire 18,300 net acres in Houston and Madison Counties, Texas from TreadStone Energy Partners, a Kayne Anderson Energy Funds portfolio company. The transaction is valued at approximately $715 million.
Energy & Exploration Partners, Inc. (“ENXP”) announced today that it has reached an agreement to acquire 18,300 net acres in Houston and Madison Counties, Texas from TreadStone Energy Partners, LLC (“TreadStone”), a Kayne Anderson Energy Funds portfolio company, for approximately $715 million, subject to customary purchase price adjustments. As of June 7, 2014 the acquisition includes net production of 8,430 barrels of oil equivalent per day (82% oil), 30 square miles of 3-D seismic data and a three-well salt water disposal system. The effective date of the TreadStone acquisition is April 1, 2014 and is expected to close before the end of July.
The TreadStone acquisition complements ENXP’s current East Texas portfolio. ENXP has recently completed the Sundance #1, a vertical Buda-Rose completion in Madison County, Texas and is encouraged by the volume of oil and gas currently flowing up tubing. The TreadStone acreage lies on trend and just east of the ENXP position and has been predominately developed vertically in the Lower Cretaceous Buda-Rose via multizone completions. ENXP is acquiring 36 net producing wellbores, 136 proved undeveloped drilling locations based on 80-acre spacing and up to 250 Buda-Rose drilling locations based on 40-acre spacing. The TreadStone acquisition is 100% operated with an average working interest of 89.6% and an average royalty burden of 16.6%. The acquired assets currently have 32.8 Mmboe of proved reserves based on third-party engineering.
Pro forma for the acquisition, ENXP will have approximately 72,000 net acres in East Texas. The Company plans to balance its drilling program on its legacy acreage while continuing to aggressively exploit the stacked-pay zones of the acquired assets. Hunt Pettit, President and Chief Executive Officer of ENXP, commented, “Combining the TreadStone Fort Trinidad asset with ours merges a top tier producing asset with an outstanding seasoned technical team. With the combined assets, ENXP will have over 10,000 boe of net daily production and 72,000 net acres most of which is covered by 3D seismic data in the prolific East Texas Basin with its 5,000-foot thick hydrocarbon column of stacked pay. We expect to expand production significantly as we deploy a multi-rig drilling program across the entire asset to develop all prospective horizons and fully exploit our entire position.”
Citigroup Global Markets Inc. acted as exclusive M&A advisor on the TreadStone acquisition.
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Global Hunter Securities will act as financial advisors to ENXP on the TreadStone acquisition.
ENXP is an independent exploration and production company based in Fort Worth, TX, focused on the acquisition, exploration and development of unconventional oil and gas resources.
TreadStone is a private E&P company formed in 2011 by Frank McCorkle, Key Sanford and Gene Roberts with a capital commitment from Kayne Anderson Energy Funds. Kayne Anderson Energy Funds is a leading provider of energy private equity to high growth oil and gas companies having raised $4.3 billion in capital across six funds and invested in more than 89 portfolio companies since 1998. Kayne Anderson Energy Funds is the energy private equity arm of Kayne Anderson Capital Advisors, L.P., a leading alternative investment manager with over $28 billion in AUM (as of 5/31/14).