The acquisition is the first of the BCE-Mach LLC partnership formed between Mach Resources, led by veteran oil and gas executive Tom Ward, and Bayou City Energy Management LLC in early March.
The transaction, which represents one of the three Midcontinent sales agreements Chesapeake disclosed earlier this year, includes operated producing properties concentrated in Woods and Alfalfa counties, Okla.
“The Mississippi Lime in Woods and Alfalfa counties is a well-delineated play with an extensive inventory of future drilling locations,” Mach CEO Tom Ward said in a statement. “On a full cycle economics basis, this play competes with any in the Lower 48, and we are excited to join with a like-minded partner in Bayou City Energy focusing on projects with strong returns driven by stable cash flow. We will be an active developer of these properties from day one led by a team of well-seasoned industry professionals with extensive experience in the area.”
In total, Chesapeake said Feb. 6 it had signed three separate sales agreements for properties covering 238,000 net acres in its Midcontinent operating area for roughly $500 million. The divestitures represented the company's exit from the Mississippi Lime play.
Ward co-founded Chesapeake in 1989 with Aubrey K. McClendon where he also served as the company’s president and COO. He eventually left the company to help create SandRidge Energy Inc. (NYSE: SD) in 2006 and later Tapstone Energy in 2013.
TD Securities (USA) LLC was lead left arranger and sole bookrunner and also Capital One and Deutsche Bank Securities Inc. as joint lead arrangers assisted in debt financing for the acquisition, which closed March 29. In addition, Kirkland & Ellis, Latham & Watkins and McAfee & Taft provided legal counsel.
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