- Addition of approximately 7,400 Boe/day net production as of April 2013 (approximately 87% oil and 11% NGLs).
- Estimated reserve life index of approximately 13 years based on estimated proved reserves of approximately 35.0 MMBoe as of April 1, 2013.
- Differential for oil is $8.00 per barrel below WTI and lifting costs are approximately $18.00 per Boe.
- Control of midstream assets will enable integrated management of CO 2 compression, delivery and recycling as well as oil export via a wholly owned pipeline. These assets are strategically important, enhance the value of the acquired oil properties, and minimize reliance on third parties for CO 2 delivery and oil transportation.
- Whiting will continue to operate the assets post-closing through October 31, 2013, affording the Partnership the opportunity to transition and integrate its operation of the new assets.
- Immediately accretive to distributable cash flow (“DCF”) per unit. The Partnership expects second half 2013 total DCF to range between approximately $135 million and $145 million.
- The expected accretion to DCF per unit from this transaction will support the Partnership’s target annual distribution growth rate of 5% and strengthen DCF coverage ratio for the second half of 2013 and in future years.
- At closing, Whiting will novate to the Partnership oil derivative contracts, with a counterparty that is a participant in the Partnership’s current credit facility, consisting of swaps to NYMEX WTI crude oil at the following notional volumes and prices:
|Period||Swap Volume (Bbl/d)||Swap Price|
|4/1/13 – 12/31/13||6,100||$98.50|
|1/1/14 – 12/31/14||5,500||$94.75|
|1/1/15 – 12/31/15||5,000||$94.75|
|1/1/16 – 3/31/16||4,400||$93.50|
- The Partnership has a financing commitment to increase the borrowing base of its credit facility to $1.5 billion, with an elected commitment amount of $1.4 billion, at closing. The Partnership expects to fund the asset purchase price with borrowings under this amended credit facility.
- At closing, the Partnership expects to have a pro forma total leverage ratio, equal to total debt divided by the last twelve months pro forma Adjusted EBITDA, of approximately 4.0-to-1.
- To maximize financial flexibility, the Partnership’s amended credit facility will have a relaxed total leverage ratio covenant limitation for a period of five quarters following the transaction to allow for the gradual reduction of indebtedness from operating cash flow and opportunistic refinancing transactions. Specifically, the leverage ratio covenant limitation, defined as total debt divided by last twelve months pro forma Adjusted EBITDA, will be revised as follows
|Existing Total Leverage Covenant:||4.00x||4.00x||4.00x||4.00x||4.00x||4.00x|
|Amended Total Leverage Covenant:||4.75x||4.75x||4.75x||4.50x||4.25x||4.00x|