Midstates Petroleum Company, Inc. (NYSE: MPO) ("Midstates" or the "Company") announced today that it has entered into an Asset Purchase Agreement with Eagle Energy Production, LLC (“Eagle”), a private exploration and production company sponsored by Riverstone Holdings, LLC (“Riverstone”), to acquire all of their producing properties as well as their developed and undeveloped acreage primarily in the Mississippian Lime oil play in Oklahoma and Kansas for $325 million in cash and 325,000 shares of Series A Preferred Stock (“Preferred Stock”) of Midstates with an initial liquidation preference value of $1,000 per share. The transaction will be effective June 1, 2012 and closing is expected on or about October 1, 2012, subject to customary closing conditions.
Key highlights of the transaction include:
- Adds 37.0 million barrels of oil equivalent (“Mmboe”) proved reserves that are 35% oil and 23% natural gas liquids (“NGLs”), of which 35% are proved developed producing
- Reserves being acquired have a reserve life (ratio of proved reserves to annual production) of 14.7 years
- Acquisition includes 114 gross producing wells that are 85% operated with an average 67% working interest and 53% net revenue interest
- Net current daily production from the properties is approximately 7,000 Boe per day
- Adds 103,000 net acres of which 84,000 are in the Mississippian Lime play with 78,000 in Oklahoma and 6,000 in Kansas; the remaining 19,000 are in the Hunton play in Oklahoma.
- Eagle’s Mississippian Lime properties have all been developed with horizontal wells
- Drilling and completion costs have averaged $3.7 million per horizontal well
- The producing fields are in low cost operating areas with good access to needed infrastructure
- Expands Midstates drilling inventory by over 600 gross drilling locations, all of which are horizontal
- Currently utilizing three rigs in its drilling program and expects to increase to four by year-end 2012
- Midstates will assume Eagle’s hedges on its production
- Immediately accretive to proved reserves and production per share and expected to be accretive to cash flow per share in 2014
John Crum, Midstates Chief Executive Officer and President commented, “The transaction we are announcing today is both a strategic and transformative acquisition for Midstates. The technical team we have assembled at Midstates has the experience and technical knowledge to operate in a wide variety of basins in the U.S., and our new business group continually looks at new opportunities to utilize that expertise.” Crum continued, “The properties we are acquiring in the Mississippian Lime play are particularly appealing because they are in a market-recognized, emerging horizontal oil play with good predictability and solid economics. I am particularly pleased that during the transition period, Steve Antry and his Eagle team have agreed to continue their fine work developing these assets. This transaction will quickly increase our scale and critical mass. We are all very excited to be adding this new core operating area to our portfolio.”