2010-11-04-2010-10-26

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
$967.0MM
Description

To buy 212 active wells on 20,207 gross acres in core Barnett area, gaining 87 MMcfe/d, 1.1 Tcfe total reserves.

Houston-based EnerVest Ltd. and affiliated partnerships including MLP EV Energy Partners LP (Nasdaq: EVEP) plan to buy properties in the North Texas Barnett shale from privately held, Dallas-based Talon Oil & Gas LLC, for $967 million. The acquisition marks EnerVest's entry into the region.

The assets include 212 active wells on 20,207 gross acres in the core Barnett area. Production is 87 million cubic feet of gas equivalent per day (71% gas). Total reserves are 1.1 trillion cubic feet equivalent. The deal also includes 3-D seismic across all of the acreage and hedges from the seller.

Talon, an EnCap Investments LP-backed company formed in 2007 and led by Grant Henderson, acquired the Barnett shale assets held by Dallas-based Denbury Resources Inc. (NYSE: DNR) in two transactions in 2009 for a total of $480 million.

Talon retained RBC Richardson Barr in August to sell a Barnett package consisting of approximately 20,000 net acres, with an associated gathering system. Total net proved reserves in the package consisted of 726.6 billion cubic feet equivalent (70% gas; 41% proved developed producing. Production from 208 wells was 84.6 million cubic feet equivalent per day. Upside included an inventory of 819 low-risk recompletion, refract, development drilling and downspacing opportunities.

EnerVest president and chief executive John Walker says, "We are excited to add the Barnett shale as our fourth core operating area, joining the Austin chalk, the San Juan Basin and Ohio…We plan to maintain an active drilling program."

Pro forma, EnerVest will have production of 384 million cubic feet of gas equivalent per day from 18,530 wells with 2.7 trillion cubic feet equivalent of reserves.

Griffis & Small LLC is financial advisor to EnerVest. The deal is expected to close by Dec. 30.

Jefferies & Co. Inc. calculate implied metrics at $11,000 per flowing Mcfe and $0.90 per Mcfe proved (60% PUDs).