Blank-check company Osprey Energy Acquisition Corp. (NASDAQ: OSPR) said June 4 it is forming the first public minerals company with Eagle Ford assets through the acquisition of Blackstone Energy Partners' entire portfolio in the South Texas shale play.
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As part of a definitive agreement with Blackstone, Osprey will acquire the assets of Blackstone's Royal Resources, which represents the entirety of the firm's mineral interest in the Eagle Ford Shale. In exchange, Blackstone will receive $400 million cash and 40 million of common units in the combined company, which will be named Falcon Minerals Corp.
Falcon Minerals is expected to have a total enterprise value of about $894 million. The company will be led by Osprey's management team in partnership with Blackstone and structured as a C-corp.
Osprey is a special-purpose acquisition company (SPAC) led by CEO Jonathan Z. Cohen, the co-founder of Atlas Pipeline Partners LP and Atlas Energy Inc.
Cohen said the company went public in July 2017 with the intent to acquire a "world-class and unique" energy business that would benefit from a new phase as a public company.
"We believe that is exactly what we are creating with Falcon Minerals," he said in a statement.
Falcon Minerals' assets will include Eagle Ford and Austin Chalk asset positions covering 251,000 gross unit mineral acres with net production for 2018 expected to be about 6,352 boe/d. The largest operators on the acreage are ConocoPhillips Co. (NYSE: COP), EOG Resources Corp. (NYSE: EOG), BHP Billiton Ltd. (NYSE: BHP) and Devon Energy Corp. (NYSE: DVN), according to the company press release.
Currently, there are more than 1,789 producing wells on the properties with expected 2018 liquids production of greater than 73%, and more than 80% of revenue derived from oil.
Falcon Minerals will also hold more than 58,000 gross unit mineral acres in the Marcellus Shale.
"There is a tremendous opportunity to build on this excellent business by utilizing our organic growth and acquisition skills in a highly fragmented oil and gas minerals industry, and we are thrilled to partner with Blackstone and benefit from their vast experience in the sector,” Cohen said.
Blackstone will retain a significant ownership stake in Falcon Minerals representing roughly 47% of its outstanding common stock, which will be listed on the New York Stock Exchange upon completion of the transaction.
To finance the transaction, Osprey said it will sell roughly 11.5 million share of its common stock in a private placement to "leading financial institutions" and its management for roughly $115 million.
Additionally, Osprey will enter into a $500 million revolving credit facility at closing with an initial borrowing base of $115 million.
Credit Suisse Securities (USA) LLC was capital markets advisers to Osprey and sole placement agent on the PIPE. Wachtell, Lipton, Rosen & Katz was the company's legal counsel and Paul Hastings LLP and Ledgewood PC acted as its oil and gas counsel.
Citi was Blackstone's financial capital markets adviser as well as its lead arranger and administrative agent on the fully underwritten RBL facility. Kirkland & Ellis LLP was its legal counsel.
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