2011-04-27-2011-04-12-2011-05-04
Bought company with 115,500 net acres in OK, TX & AR, gaining 47 MMcfe/d, 268 Bcfe proved.
Eagle Rock Energy Partners LP, Houston, (Nasdaq: EROC) has completed the acquisition of all equity interests in Tulsa, Oklahoma-based CC Energy II LLC (aka Crow Creek Energy), a portfolio company of Natural Gas Partners VIII LP, for $529.5 million. Crow Creek has reserves in multiple basins across Oklahoma, Texas and Arkansas.
Total consideration included approximately $301.9 million of Eagle Rock equity issued to the sellers, $15 million of cash and $212.6 million of assumed debt.
As part of the total consideration, the partnership has issued approximately 28.8 million common units to the existing equity holders of Crow Creek in a private placement. The substantial majority of these units were issued to NGP VIII, the private-equity sponsor of Crow Creek Energy. Natural Gas Partners, through NGP VIII and other private-equity funds and portfolio companies it manages, is Eagle Rock's largest holder. At closing, Natural Gas Partners' ownership interest in the partnership, on a fully diluted basis, increased from approximately 24% to approximately 40%.
The newly-issued Eagle Rock units were issued at a price of $10.50 per unit, the ceiling price of the agreed upon collar in the contribution agreement. As previously announced, the units issued as consideration for the Crow Creek acquisition will not receive a distribution with respect to the first quarter of 2011.
The cash portion of the acquisition consideration and the repayment of Crow Creek's outstanding debt, estimated to be approximately $227.6 million, was funded through the partnership's revolving credit facility. Effective upon closing, the partnership's borrowing base increased from $160 million to $405 million.
With the consummation of this acquisition, Eagle Rock has total pro-forma proved reserves of 396 billion cubic feet equivalent, an increase of more than 200% from its year-end 2010 proved reserves; and total probable reserves of more than 400 Bcfe. Eagle Rock's reserve base is now approximately 73% proved developed and 27% proved undeveloped, reflecting its substantial development opportunities. Pro forma, proved reserves are comprised of approximately 64% natural gas, 19% crude oil and 17% natural gas liquids. The Crow Creek estimated proved reserves included in the partnership's pro forma estimates were calculated using February 15, 2011, strip prices.