New Source Rounds Out Business With MCE Acquisition

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price

Acquired the oilfield services company specialized in increasing efficiencies and safety in drilling and completions.

New Source Energy Partners LP (NYSE: NSLP) acquired MCE LP, and its general partner, MCE GP LLC, for $43.6 million, the company said in a press release on Nov. 14.

MCE is an oilfield services company that specializes in increasing efficiencies and safety in drilling and completion processes. The transaction closed on Nov. 12 with an effective date of Nov. 1.

“The acquisition of MCE marks an exciting development for New Source as it begins our conversion from a pure play E&P MLP into a fully-integrated partnership: an E&P MLP focused on full-cycle economics,” Kristian Kos, New Source president and CEO, said in the release. “This expands our growth opportunities, as it is comprised of a successful, driven team of employees whose senior management is very knowledgeable regarding the operating environments throughout the U.S. We believe that the achievement of our long-term goals is greatly enhanced by this addition.”

MCE was acquired from its previous owners, which includes Kristian Kos, for some $43.6 million in total initial consideration, to be paid in $3.8 million in cash and some 1.8 million New Source common units, valued using a volume weighted average trading price for the period between Aug. 21 and Nov. 11 of $21.55 per common unit. In addition to the initial consideration, the previous owners of MCE are entitled to receive an earn out payment on May 1, 2015. Any earn out payment will be calculated based on a specified multiple of the annualized earnings before interest, taxes, depreciation and amortization (EBITDA) generated by MCE for the nine months ended March 31, 2015, less certain adjustments, and will be satisfied using the partnership’s common units, valued using a trailing 20-day volume weighted average trading price as of three trading days prior to the issuance of such common units. The previous owners of MCE also retained 100 class B units in MCE, which entitle them to incentive distributions of cash distributed by MCE on its partnership interests above specified thresholds, up to a maximum level of 50%.

Given the relationship between Kristian B. Kos and the partnership, the acquisition was unanimously approved by the board of directors of the partnership’s general partner on the approval and recommendation of its conflicts committee, which is comprised entirely of independent directors.

New Source Energy Partners LP is an independent energy company engaged in the acquisition and development of oil and natural gas properties in the U.S. The company is based in Oklahoma City.