FourPoint Energy LLC will acquire oil and gas assets from units of Chesapeake Energy for $840 million.
The private, Greenwood Village, Colo.-based exploration and production firm is acquiring assets that include an interest in around 1,500 producing wells, mainly in the Cleveland, Tonkawa and Marmaton formations. The assets being acquired cover nearly 250,000 net acres focused in Roger Mills and Ellis counties in western Oklahoma, near the state’s border with the Texas Panhandle.
The wells have daily net production of approximately 21,500 barrels of oil equivalent per day for the twelve months ending April 2015, including 7,000 barrels per day (bpd) of oil, 5,000 bpd of natural gas liquids, and 57 million cubic feet per day of natural gas.
FourPoint expects to assume operations of the assets by Aug. 31, the date when the deal is expected to close.
The acquisition will be instrumental in the company’s ongoing efforts to build a world class portfolio of oil and gas assets in the Western Anadarko Basin, boosting the company’s inventory of operated, oily assets and giving FourPoint a large production base to strengthen its cash flow in the uncertain commodity price environment, FourPoint President and CEO George Solich said in a July 1 press statement. FourPoint’s Western Anadarko footprint will exceed 400,000 net acres with net production expected at 260 million cubic feet equivalent per day from around 4,600 gross wells; half of the production will come from oil and natural gas liquids.
Chesapeake halted drilling and development activity on the assets in this year’s first quarter in anticipation of the sale. Since 2012, Chesapeake has drilled and completed more than 190 horizontal wells on the assets, said Kamil Tazi, executive vice president and COO, in a press statement.
“FourPoint is eager to leverage the knowledge that Chesapeake has developed through their drilling program with our extensive technical expertise in the area to position the company to grow production and cash flow.”
FourPoint will fund the transaction with $619 million in FourPoint Holdings equity issued to funds managed by GSO Capital Partners and cash draw from existing FourPoint Energy credit facilities.
FourPoint was founded in 2013 by the leadership team of Cordillera Energy Partners III LLC following the sale to Apache Corporation in 2012. Apache acquired the company for $2.5 billion in cash and 6.3 million shares of Apache common stock. Cordillera had operations and acreage across the Granite Wash, Tonkawa, Cleveland and Marmaton plays in western Oklahoma and the Texas Panhandle.
According to the company’s website, FourPoint is initially focusing on the Anadarko and Permian basins.
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