Source: Hart Energy
WildHorse Resource Development Corp. (NYSE: WRD) is purchasing about 111,000 net acres in the Eagle Ford Shale, which will make it the second largest Eagle Ford operator, the Houston-based company said May 11.
WildHorse agreed to acquire the acreage and associated production from Anadarko Petroleum Corp. (NYSE: APC) and affiliates of Kohlberg Kravis Roberts & Co. LP (KKR) for $625 million in cash and stock. The deal will add nearly 950 net Eagle Ford locations and proved developed producing reserves of 22.9 million barrels of oil equivalent (MMboe).
The acreage, which is 95% HBP, is located next to WildHorse’s existing position in Burleson, Brazos, Lee, Milam, Robertson and Washington counties, Texas. Fourth-quarter 2016 net production was 7,583 boe/d (72% oil and 89% liquids) from 386 operated wells.
The acquisition continues to expand WildHorse’s position in the Eagle Ford, where the company has completed a series of deals in the past six months. In total, WildHorse has acquired more than 170,000 net acres since completing its IPO in December.
According to WildHorse, the acquisition will also give the company a larger acreage position in the Eagle Ford Shale than Sanchez Energy Corp. (NYSE: SN), which itself acquired Eagle Ford acreage from Anadarko Petroleum for $2.3 billion earlier this year.
The WildHorse deal suggests a price of about $1,000 per acre, analysts said. Sanchez paid roughly $3,000 to $4,000 per acre for its deal, which closed in March.
“With a total of 385,000 net acres, we have built a premier contiguous acreage base making us the second largest operator in the entire Eagle Ford trend,” Jay Graham, WildHorse’s chairman and CEO, said in a statement. “Furthermore, we have done so at prices we believe to be extremely attractive, providing highly economic returns on a full cycle basis.”
Since January 2016, Anadarko has closed or announced divestitures of more than $8.1 billion as it focuses on the Delaware and Denver-Julesburg basins.
Currently, Sanchez Energy holds 335,000 net acres in the Eagle Ford and EOG Resources Inc. (NYSE: EOG)—the largest acreage holder—has 590,000 net acres, according to WildHorse's company presentation.
During the first quarter, WildHorse brought online a total of seven gross/net Eagle Ford wells with four of the wells coming online in March. These wells include the company’s first Burleson North well brought online in early March.
In late March and early April, WildHorse drilled an additional six wells within the vicinity of its first Burleson North well and expects additional wells in the 2017 program in this area. In addition, the company brought online its first Eagle Ford refrack test in March and completed a second refrack in mid-April with “encouraging results.”
WildHorse’s net production increased 18% year-over-year to 17,600 boe/d for the first quarter compared to 14,900 boe/d for first-quarter 2016.
Graham said WildHorse is just getting started as the company's production ramps over the next few months.
In the second quarter, WildHorse plans to bring online 16 to 20 wells, increasing the company’s total of Gen 3 completions to about 40 wells.
“Some of those wells will be immediately adjacent to our acquisition acreage,” Graham said.
In total for 2017, WildHorse expects to bring online a total of about 85 to 95 Eagle Ford wells and nine wells in North Louisiana.
The $625 million transaction consideration includes about $556 million in cash to Anadarko Petroleum and 6.3 million shares of WildHorse common stock valued at about $69 million to KKR.
WildHorse said it plans to fund the deal through an agreement with The Carlyle Group, where Carlyle’s U.S. buyout fund Carlyle Partners VI agreed to purchase $435 million of WildHorse’s preferred stock. The company will pay the remaining balance with borrowings under its revolving credit facility.
WildHorse said it expects its acquisition to close by June 30, with an effective date of Jan. 1.
Kirkland & Ellis LLP advised affiliates of KKR on the sale. Barclays was WildHorse’s financial adviser and Locke Lord LLP, Vinson & Elkins LLP and Akin Gump Strauss Hauer & Feld LLP were the company's legal advisers for the acquisition and financing.
Emily Patsy can be reached at epatsy@hartenergy.com.
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