Midstates Petroleum Company Inc. (MPO: Quote) reported signing a Purchase and Sale Agreement with Panther Energy, LLC, and its partners Red Willow Mid-Continent, LLC and LINN Energy Holdings, LLC (LINE: Quote) to acquire producing properties as well as developed and undeveloped acreage in the Anadarko Basin in Texas and Oklahoma for $620 million cash. Both Panther Energy, LLC and Red Willow Mid-Continent, LLC are units of the Southern Ute Indian Tribe Growth Fund. Primary horizontal drilling targets include the Cleveland, Marmaton, Cottage Grove, and Tonkawa formations.
This transaction adds nearly 36.4 million barrels of oil equivalent or "Mmboe" proved reserves that are 45% oil and 21% natural gas liquids or "NGLs", of which 34% are proved developed producing; increases net current daily production by about 8,000 Boe per day; improves drilling inventory with over 700 low-risk, repeatable horizontal drilling opportunities; as well as adds around 280 gross producing wells that are over 80% operated with an average 69% working interest and 55% net revenue interest.
Moreover, the transaction is immediately accretive in 2013 to cash flow per share, earnings, EBITDA, proved reserves and production per share. The transaction would become effective April 1, 2013 and may close on or about May 31, 2013.
During 2013, Midstates expects to drill some 40-45 wells on the newly acquired acreage, all of which would be horizontal wells. Drilling and completion costs have averaged some $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, would continue to be oil and liquids-rich and total 111.8 Mmboe comprising 48% oil, 20% NGLs, and 32% natural gas. The reserve life of the assets being acquired is about 12.5 years.
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by RTT Staff Writer
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