Treadstone Energy sells for 715 million to Energy Exploration
June 16, 2014, 10:52 a.m. EDT
Energy & Exploration Partners, Inc. Announces Buda-Rose Acquisition From TreadStone Energy Partners, LLC
FORT WORTH, Texas, June 16, 2014 /PRNewswire/ -- 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).
Contact: Energy & Exploration Partners, Inc.
Brian C. Nelson
Executive Vice President and Chief Financial Officer
(817) 484-4733
Views: 1132
Replies to This Discussion
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Permalink Reply by dbob on
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If the net acreage is right and the dollar amount is right, thats nearly $39,000 per acre. Any chance we can get Mark P to comment on this one? If that is accurate, a whole lot of land just got a hell of a lot more valuable.
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Permalink Reply by Rock Man on
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One of the metric benchmarks for production related purchases is $100,000 per flowing barrel.
This deal works out to about $85,000 per flowing BOE - or a tad low as to this metric.
If you just look at the 82% oil rate (6912 BOPD), the number is $103,440 per flowing barrel - or pretty much dead on.
Tough sometimes to figure which parameter to focus on when looking at deals like this - sometimes you have to look at all the calculations and see the deal as a "mix" of financial evaluation metrics.
For example, "x" % of the price is for production, "x" % is for undrilled PUD's and "x" is for undeveloped / unproven acreage
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Permalink Reply by Skip Peel - Mineral Consultant on
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The royalty burden is also quite advantageous for an operator. I don't recall seeing any contemporary deals with NRIs as high as 83.4%
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Permalink Reply by Alvin T. Kmiec on -
I just got a permit from CGG to do all the seismic work on our ranch. Form the map the guy showed me they will be coming from the J7 stock farms area and work north and west into Leon Co. The first stage will start in Leon Co. then into Houston Co. with the second stage. I wonder who ever is buy them out is having this done. Has anyone else been contacted by them?
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Permalink Reply by Steve H on
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Well that didn't last long !
Energy and Exploration Partners Inc. (ENXP) said Dec. 7 it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code.
The filing converts the involuntary petition for ENXP Operating LP filed by certain vendors into a voluntary petition, the release said.
Prior to the filing, the company initiated a reduction in staffing to match its personnel levels with its expected activity levels in the current commodity price environment.
Several senior executives also resigned to pursue other interests, including:
Executive Vice President Business Operations and Development Robert Karpman;
Executive Vice President of Acquisitions and Divestitures David Patty;
COO John Richards;
Chief Accounting Officer Jim Howe; and
CFO Brian Nelson.
John Castellano, of AlixPartners LLP, will join the company as interim CFO. The other roles will be covered by existing personnel during the restructuring process, the release said.
ENXP also secured commitments for up to $135 million of new debtor-in-possession financing from a group of its existing senior lenders, subject to court approval. Proceeds will fund its operations during the restructuring process.
ENXP said it has been and continues to work closely with its suppliers and business partners to ensure its business continues uninterrupted. The company "fully expects" to continue producing oil and gas and maintain adequate staff.
The Fort Worth, Texas, company owns acreage in the East Texas Basin and the Denver-Julesburg Basin.
Bracewell & Giuliani LLP is ENXP's legal adviser. The company has engaged AlixPartners LLP as its restructuring adviser. Evercore is its investment banker. -
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