Land Run Minerals V LLC (LRM V) recently made its debut with an initial acquisition in the Midcontinent.
The Oklahoma City-based firm, a royalties acquisition and management strategy launched from the 89 Energy platform, acquired a “unique, large-scale, mature royalties asset” located in the core fairway of the STACK play, according to an Oct. 31 company release.
“This initial acquisition leveraged our extensive experience and understanding of production and development activity in the Mid-Continent,” John-Mark Beaver, board member of LRM V and president and CEO of 89 Energy, said in the release.
The acquisition was also announced in conjunction with new equity commitments from Kayne Energy Private Equity.
In May 2021, Kayne Anderson Energy Funds announced the all-equity consolidation of Anadarko Basin portfolio companies Casillas Petroleum Resource Partners, Native Exploration Holdings and Acacia Exploration Partners to form 89 Energy III LLC.
“We are excited to add this mineral and royalty package to the Kayne Energy PE portfolio,” commented Ryan Sauer, managing director at Kayne Energy PE, in the Oct. 31 release. “This transaction represents a continuation of our successful relationship with the 89 Energy team and reflects our confidence in the team’s ability to identify and create value for our investors.”
LRM V’s initial acquisition comprises 55,000 net royalty acres (normalized to 1/8th) and 1,715 wells with an average net revenue interest of 1.6%.
Acquired entities include Rumble Minerals LLC, Fortis Sooner Trend Minerals LLC, Sooner Trend Minerals LLC, FMII STM LLC and Phenom Minerals LLC, according to the company website.
The assets included in the acquisition, mostly located in Oklahoma’s Kingfisher, Canadian and Blaine counties, have net production of 4,500 boe/d.
“In addition to the material production base, we acquired royalties in low breakeven development locations operated by large, public companies who are committed to active, long-term STACK development programs,” Beaver said.
“Midcontinent A&D markets are heavily discounting these factors, which is a dislocation we intend to exploit, as available,” he added.
According to the release, five rigs are active on the acquired asset. Primary operators include Coterra Energy Inc., Devon Energy Corp., Marathon Oil Corp. and Ovintiv Inc.
Sauer noted that the acquisition will serve as a cornerstone for future deals given the “considerable amount of cash flow generated from the properties and inventory of high-quality development prospects.”
The firm did not disclose any financial information related to the transaction or its equity commitment.
LRM V funded the acquisition with equity and debt financings. The equity financing was provided by the new commitments from Kayne Energy Private Equity. The debt financing was provided by a new credit facility led by Wells Fargo Securities LLC and TCBI Securities Inc.
Wells Fargo Securities and TCBI Securities acted as joint lead arrangers and book-runners on syndication efforts. Wells Fargo Bank NA will serve as administrative agent.
Baker Botts LLP and Porter Hedges LLP served as legal advisers to LRM V. McDermott Will & Emery served as legal adviser to Kayne Energy.
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