PITTSBURGH, Sept. 24, 2014 /PRNewswire/ -- Atlas Resource Partners, L.P. (NYSE: ARP) ("ARP" or "the Company") announced today that it has entered into a definitive agreement to acquire oil assets in the Eagle Ford Shale in south Texas for $225 million. The assets consist of 22 producing wells and 19 undeveloped locations containing estimated net reserves of approximately 12 million barrels of oil equivalent ("Mmboe"). ARP's Board of Directors has approved the transaction, which is expected to close in the fourth quarter 2014 with an effective date of July 1, 2014. The Company will pay $200 million of the purchase price upon closing, subject to customary purchase price adjustments, with the remainder of the purchase price paid in installments in 2015.
In connection with the acquisition, Atlas Energy, L.P.'s (NYSE: ATLS) E&P development subsidiary will purchase eight wells that have been drilled but not completed and 53 undeveloped drilling locations for approximately $115 million, which is to be paid in the twelve months following closing.
Edward E. Cohen, Chief Executive Officer of ARP, stated, "This transaction demonstrates the ability of the Atlas companies to acquire high-margin production in a premier U.S. oil and gas basin without diluting common unit holders' interests. We expect this transaction to immediately enhance ARP's cash flow, distribution coverage and credit metrics, providing additional visibility and growth."
ARP will acquire oil-rich production in Atascosa County, TX, located in the oil window of the Eagle Ford Shale. The production is comprised of approximately 87% oil, 7% natural gas liquids and 6% natural gas from 22 producing wells, from which the Company expects net daily production to average approximately 1,900 barrels of oil equivalents per day ("boe/d") in 2015. ARP's oil and liquids production is expected to increase as a result of the acquisition to approximately 25% of ARP's total daily oil and gas production. In addition to the oil-producing assets, ARP will acquire 19 undeveloped drilling locations in the Eagle Ford position. The Company expects that these drilling locations will provide valuable inventory for ARP's investment partnership business. The Eagle Ford assets also have contracted agreements for gathering and processing capacity as well as salt water disposal.
Additional operating details of the assets to be acquired by ARP:
- Net reserves of approximately 12 Mmboe; approximately 86% oil; 100% operated, 100% working interest (74% net revenue interest)
- Expected net daily production in 2015 of approximately 1,900 boe/d from 22 producing wells in Atascosa Co., TX
- ARP expects the entire acreage position to be held by production in the several quarters following the closing of the transaction
- Lease operating costs and production taxes of approximately $9.75 per barrel ("bbl")
- Oil transportation costs of approximately $7.00/bbl; gas gathering and processing costs of approximately $1.70 per million cubic feet
ARP intends to finance a portion of the transaction through borrowings under the Company's revolving credit facility. ARP will pay $200 million upon closing the transaction, subject to purchase price adjustments, and the remaining $25 million will be paid in three quarterly installments beginning March 31, 2015. The Company is also currently working with its lending group to expand the borrowing base on its revolving credit facility as a result of the transaction.
Morgan Stanley and Co. LLC acted as financial advisor on the transaction, and Jones Day and Ledgewood (Philadelphia) acted as legal advisors.
Atlas Resource Partners, L.P. (NYSE: ARP) is an exploration & production master limited partnership which owns an interest in over 14,000 producing natural gas and oil wells, located primarily in Appalachia, the Barnett Shale (TX), the Mississippi Lime (OK), the Raton Basin (NM), Black Warrior Basin (AL) and the oil-rich Rangely Field (CO). ARP is also the largest sponsor of natural gas and oil investment partnerships in the U.S. For more information, please visit our website at www.atlasresourcepartners.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
Atlas Energy, L.P. (NYSE: ATLS) is a master limited partnership which owns all of the general partner Class A units and incentive distribution rights and an approximate 28% limited partner interest in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P. Additionally, Atlas Energy owns and operates the general partner of its midstream oil & gas subsidiary, Atlas Pipeline Partners, L.P., through all of the general partner interest, all the incentive distribution rights and an approximate 6% limited partner interest. For more information, please visit our website at www.atlasenergy.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. ARP cautions readers that any forward-looking information is not a guarantee of future performance. Such forward-looking statements include, but are not limited to, statements about future financial and operating results, resource potential, the pending acquisition, ARP's plans, objectives, expectations and intentions and other statements that are not historical facts. Risks, assumptions and uncertainties that could cause actual results to materially differ from the forward-looking statements include, but are not limited to, those associated with general economic and business conditions; ARP's ability to close its pending acquisition on the terms described or at all; ARP's ability to obtain the required financing for its pending acquisition on desirable terms or at all; ARP's ability to realize the anticipated benefits of its acquisitions, including the proposed transaction; changes in commodity prices; changes in the costs and results of drilling operations; uncertainties about estimates of reserves and resource potential; inability to obtain capital needed for operations; ARP's level of indebtedness; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; and other risks, assumptions and uncertainties detailed from time to time in ARP's reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and ARP assumes no obligation to update such statements, except as may be required by applicable law.
SOURCE Atlas Resource Partners, L.P.