This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

American Energy Pays $4.3B for Shale Properties

Stocks in this article: CHK

HOUSTON (The Deal) -- As has been rumored, American Energy Partners, headed by deposed Chesapeake Energy (CHK) CEO Aubrey McClendon said Monday that its units bought properties in the Permian Basin, the Utica Shale and the Marcellus Shale from private equity-controlled companies for $4.25 billion.

American Energy-Permian Basin LLC bought 63,000 net acres of leasehold in the southern Permian primarily in Reagan and Irion Counties, Texas, from affiliates of Trilantic Capital Partners-backed Enduring Resources LLC of Denver for $2.5 billion. Separately, American Energy-Utica LLC picked up 27,000 net acres of leasehold in Monroe County, Ohio, from Kohlberg Kravis Roberts & Co.-backed East Resources Inc. and an unnamed private company and American Energy-Marcellus LLC purchased 48,000 net acres of leasehold in Doddridge, Harrison, Marion, Tyler and Wetzel Counties, W. Va., also from East Resources and an unnamed private company, for $1.75 billion.

Last month, Reuters reported that American Energy would buy Enduring for $2 billion. Shortly thereafter, the Deal reported from a source that American Energy was actually planning to announce $4.5 billion worth of property acquisitions, including some in the Marcellus Shale.

On Friday reported that American Energy was working through a deal with HG Energy LLC, which was formed by former East Resources employees, to acquire the privately held company's package of 75,000 acres in the area for $2 billion, or $26,666 per acre.

The Permian properties have net production of 16,000 barrels of oil equivalent per day. The deal marks American Energy's entry into the play, where it intends to boost its position through additional acquisitions. Enduring is using four rigs to develop the Permian acreage and American Energy plans to boost operated drilling activity to six to eight rigs by the end of next year and drill up to 2,500 gross wells and 1,750 net wells on the acreage over the next 10 years.

The Utica properties are expected to have net production of 40 million cubic feet of natural gas equivalent per day when the deal closes. The sellers are using two rigs to develop the acreage, which American Energy's unit plans to boost to four to six rigs by the end of next year. It is American Energy's seventh major acquisition in the play boosting its leasehold to 280,000 net acres, the largest in the area. The unit has invested over $3.5 billion in the Utica to date and plans to drill 2,600 gross wells and 1,600 net wells on its acreage.

The Marcellus properties are expected to have net production of 135 million cubic feet of natural gas equivalent per day. The deal marks American Energy's entry into the southern part of the play and it plans to drill 410 gross wells and 355 net wells on the acreage.

The Utica and Marcellus deals are expected to be completed in 60 days. The company didn't say when it expects the Permian deal to close. Goldman Sachs Bank USA is providing the financing on all three.

Oklahoma City-based American Energy has raised committed equity and debt capital of $10 billion to fund the development of five play or strategy specific companies, which, besides the Permian, Utica and Marcellus units, include American Energy-Woodford LLC and American Energy-NonOp LLC.

McClendon formed American Energy in April of last year after being forced to leave Chesapeake under a cloud of self-dealing accusations. His lead equity investor is the Energy & Minerals Group, with additional equity provided by First Reserve Corp. (for American Energy-Utica), its management team and others.

Goldman, Sachs & Co.'s Suhail Sikhtian, Shane Young and Bruce Schwartz and Citi's Chris Miller, Chris Abbate and Mohammed Baabde advised American Energy on all three deals, with Tudor, Pickering, Holt & Co.'s Maynard Holt and Jeff Knupp also working on the Enduring acquisition. Sullivan & Cromwell LLP's George Sampas and John Estes, Commercial Law Group PC's Ray Lees and Porter Hedges LLP were American Energy's legal advisors on the transactions. Ralph Eads and Joe Gladbach from Jefferies LLC advised the sellers on all three deal while Michael Dillard and Michael Darden of Latham & Watkins LLP counseled Enduring and Baker Botts LLP represented East Resources and the unnamed private company on the Utica and Marcellus purchases.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,574.57 +217.70 1.25%
S&P 500 2,034.30 +21.41 1.06%
NASDAQ 4,697.1520 +52.84 1.14%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs