Constellation Energy Partners LLC (NYSE MKT: CEP) today announced that the company has executed and closed a definitive agreement pursuant to which CEP has entered into a new business relationship with Sanchez Oil & Gas Corporation (“Sanchez Oil & Gas”) and its affiliate, Sanchez Energy Partners I, LP ("SEP I" and together with Sanchez Oil & Gas, "SOG").
Under the agreement, CEP has acquired oil, natural gas and natural gas liquids assets in Texas and Louisiana from SEP I for a purchase price of $30.4 million.
In conjunction with the acquisition, SEP I received $20.1 million in cash, 1,130,512 Class A units, which represents 70.0% of the total Class A units outstanding after the transaction, and 4,724,407 Class B units, which represents 16.6% of the total Class B units outstanding after the transaction.
CEP and SOG believe that the transaction, pursuant to which SEP I now owns a 17.7% limited liability company interest in CEP, is an important first step toward a wide variety of business development opportunities that may be pursued by the parties.“This transaction, which falls on the heels of our efforts to improve the balance sheet and refinance the company earlier this year, is transformative for CEP,” commented Stephen R. Brunner, President and Chief Executive Officer of CEP. “In addition to the immediate benefits we anticipate from the acquired assets, we see our new relationship with SOG as a means to achieving enhanced deal flow, which may occur through future asset contributions or joint acquisitions. At the same time, we see an opportunity to leverage the skills of SOG, a proven operator with an outstanding technical team and experience that spans across multiple basins in the U.S.” “CEP’s management team has done an excellent job of managing through a low gas price environment and successfully restructuring the company’s balance sheet to position it for future growth," added Antonio R. Sanchez, III, President of Sanchez Oil & Gas. “We look forward to working closely with them in continuing to develop and maximize the value of the acquired assets, CEP’s other properties and any future opportunities that may arise.”