2009-10-26-2009-10-01-2009-11-10

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price
$530.2MM
Description

Acquired 240,300 acres in OK, gaining 235.3 Bcfe proved, 44.7 MMcfe/d.

Lisa Stewart's Sheridan Production Partners, Houston, via subsidiary Sheridan Holding Company I LLC has closed its acquisition of all of the producing assets in Oklahoma held by Dallas-based Exco Resources Inc. (NYSE: XCO) for $530.2 million, an exit in the region for Exco. Exco used the proceeds to pay debt. The assets are in Golden Trend Area and Mocane-Laverne fields. The sale involves estimated proved reserves of 4.6 million barrels of oil and 207.7 billion cubic feet of gas, or 235.3 billion cubic feet of gas equivalent, based on SEC pricing. Current net production includes 979 barrels of oil per day and 39.2 million cubic feet per day of gas, or 45.1 million cubic feet of gas equivalent per day. The deal also involved Exco's Tulsa office. As of year-end 2008, Exco held 360,900 gross acres (240,300 net) including 27,370 gross undeveloped acres (20,100 net) in its Midcontinent region with 1,704 gross wells (984 net). Mocane-Laverne Field is in Beaver, Harper and Ellis counties with year-end proved reserves of 99.7 billion cubic feet equivalent of proved reserves and 727 gross wells producing from the Morrow, Chester and Cherokee formations. Gold Trend Area is in Grady, Garvin and McClain counties with 151.5 billion cubic feet of proved reserves at year end with 549 producing wells from the Sycamore, Hunton, Viola, Woodford, Simpson and Pennsylvania formations. The company identified 731 drilling locations for the region. Exco chief executive Douglas H. Miller says, "This sale substantially completes our 2009 plan to divest certain nonstrategic assets. We have now reached agreement on over $1.1 billion of such asset sales. Including our previously announced joint venture and after all closings of these asset sale transactions, we will have reduced debt by $2 billion. These transactions have strengthened our balance sheet and allowed us to focus more of our efforts and capital on our Haynesville and Marcellus shale plays." The effective date is of Oct. 1. Sheridan Production was formed in 2007 with backing from Warburg Pincus. It focuses on mature assets in the U.S. and completed a sale last week involving South Texas assets for $187 million. KeyBanc Capital Markets analyst Jack Aydin estimates Exco received approximately $2.14 per proved Mcfe and $12,108 per flowing Mcfe per day. "With this sale, we estimate Exco will now have more than $840 million worth of liquidity from cash on its balance sheet and its unused borrowing base. In addition, we expect Exco to generate $100 million to $200 million of free cash flow annually going forward." The liquidity estimate assumes the borrowing base will be reduced from $1.6 billion to $1.3 billion due to the announced asset sale.