Vanguard Natural Resources, LLC (VNR) on Monday said it has agreed to acquire natural gas and liquids assets in the Woodford Shale and Fayetteville Shale of the Arkoma Basin from Colorado-based oil and gas company Antero Resources for $445 million.
In a statement, Antero said the sale would help it to reduce net debt and allows it to redeploy capital to its high growth Appalachian shale projects. The effective date of the acquisition is April 1, and the companies anticipate closing the deal on or before June 29.
The acquisition includes about 66,000 net acres in the Woodford Shale play and 5,300 net acres in the Fayetteville Shale play, located in the Arkoma Basin in Oklahoma and Arkansas, respectively. These assets contain an estimated 251 Bcfe of proved developed reserves as of March 31, 2012 and are currently producing 76 MMcfed from 833 gross wells. Antero operates 134 of the producing wells, all in the Woodford Shale play.
Vanguard, which is focused on the acquisition, production and development of oil and natural gas properties, said it expects the acquisition to be immediately accretive to distributable cash flow.
Vanguard noted that these assets include about 180 proved drilling locations that are expected to generate superior returns even in a low gas price environment. The company added that it has identified an additional 1,100 future proved drilling locations on acreage.
Vanguard President and Chief Executive Officer Scott Smith said, "This acquisition is primarily natural gas with some associated liquids and has an existing hedge book that will allow us to achieve above market pricing for the next several years. With this acquisition, we have established a new operating area which we believe has potential for future growth through other acquisitions as well as development drilling as natural gas prices improve."
The company intends to fund the acquisition with borrowings under its existing reserve-based credit facility.
Vanguard added that it will provide updated 2012 production and financial results guidance while announcing second-quarter results on August 2.
In its statement, Antero said its estimated 988 Bcfe of proved developed reserves as of March 31 would have been reduced to 737 Bcfe and net debt of $1.1 billion would have been reduced to $650 million - both giving pro forma effect to the disposition.
Antero Chairman and CEO Paul Rady commented, "The Arkoma asset sale allows Antero to redeploy capital to its high growth Appalachian shale projects including the Marcellus Shale, Upper Devonian Shale and Utica Shale plays where we are focused on the development of liquids-rich natural gas resources."
Following this sale, the company's only remaining non-Appalachian asset is Piceance Basin project, which also produces liquids-rich gas from Mesaverde Formation tight sands.
In the transaction, Citigroup and Robert W. Baird & Co. served as financial advisors and Vinson & Elkins served as legal advisor to Antero.
In March, Antero closed its previously announced sale of its midstream assets, located in Harrison and Doddridge Counties, West Virginia to Crestwood Midstream Partners LP (CMLP) and Crestwood Partners LLC for $376.8 million in cash plus an earn-out provision.
Vanguard Natural shares closed Friday's regular trading session at $23.29, down $0.81 or 3.36 percent.
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