BCE-Mach, a partnership led by industry icon Tom Ward, is closing out the year with a pair of acquisitions that expands its footprint in the Midcontinent, which already stretches across a formidable 678,000 net acres as of Sept. 30.
The transactions mark BCE-Mach’s tenth and eleventh acquisitions since Ward’s Mach Resources LLC teamed up with Houston-based private equity firm Bayou City Energy Management LLC to pursue a strategy of consolidation within the Midcontinent through the prudent acquisition of oil and gas assets.
“Our strategy since forming BCE-Mach in 2018 hasn’t changed,” Ward, who serves as CEO of BCE-Mach, commented in a company release on Dec. 9.
“Despite changing commodity prices and investor interest in our industry,” he continued, “we have consistently been able to deploy capital and acquire assets at approximately 2.5 times cash flow.”
The two recent acquisitions were executed through purchase and sale agreements totaling $66.5 million, the first of which represents BCE-Mach’s fourth acquisition in the STACK play and includes additional working interest across 61 wells it operates in Kingfisher County, Oklahoma.
The latter deal will also mark another fourth acquisition for BCE-Mach, but in the Mississippi Lime, and consists of 66,000 net acres and 193 operated wells primarily located in Kansas’ Barber County, expanding BCE-Mach’s operating footprint in the state. The deal also includes the addition of 16 disposal wells and corresponding gathering systems.
Set to close next quarter, the two acquisitions are expected to add $26.4 million of 2022 cash flow at recent prices, according to the release on Dec. 9.
In the third quarter, BCE-Mach generated $111 million of free cash flow, which is on track to grow even further, noted Will McMullen, founder and managing partner of Bayou City Energy.
“Our strategy is working,” McMullen added in the release. “Investors want free cash flow, and we are on track to deliver about half a billion dollars of free cash flow on an annualized basis and growing.”
As of Sept. 30, BCE-Mach’s assets consisted of 3,096 gross operated wells with roughly 63% average working interest and 52% average net revenue interest. The company also had proved reserves of about 211 million boe with a product mix of approximately 55% natural gas and 45% liquids. Per the release, about 88% of BCE-Mach’s reserves are PDP, which boast a five-year projected average annual decline rate of roughly 12%.
In the third quarter, BCE-Mach reported average net daily production of approximately 52,000 boe/d (45% liquids) with an adjusted EBITDA of $128 million.
BCE-Mach’s assets also include an extensive midstream portfolio including both ownership and operatorship of 330 MMcf/d of processing capacity across three processing plants, 820 miles of high and low pressure gas gathering lines and 825 miles of water disposal pipelines with 70 disposal wells.
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