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McClendon’s American Energy spends $4.25 bn on shale

BRADLEY OLSON

OKLAHOMA CITY, Oklahoma (Bloomberg) -- American Energy Partners LP, the company formed by former Chesapeake Energy Corp. CEO Aubrey McClendon, agreed to buy shale acreage in the Marcellus, Utica and Permian basin in three transactions for a total of $4.25 billion.

The combined purchase is the biggest yet for American Energy, which McClendon created last year with a goal of amassing rights to drill into shale rock, a strategy that made Chesapeake into the second-largest U.S. natural gas producer. American Energy has raised equity and debt of about $10 billion from private-equity backers including Energy & Minerals Group and First Reserve Corp. to fund its acquisitions.

“McClendon is back,” said Fadel Gheit, an analyst with Oppenheimer & Co. in New York. “He’s making bets on the same type of assets he did at Chesapeake. The guy is consistent.”

American Energy has previously concentrated on the Utica shale in Ohio, investing $3.5 billion to build a position of about 280,000 acres. McClendon was among the most ardent believers in the Utica at Chesapeake, declaring in 2011 that the formation would rival the Eagle Ford in South Texas. The properties purchased in the three shale formations today are producing the equivalent of about 45,000 bopd.

American Energy - Permian Basin LLC will acquire about 63,000 net acres in the Permian basin of Texas from Enduring Resources LLC for $2.5 billion, the Oklahoma City-based company said in a statement today, June 9. Denver-based Enduring is backed by EnCap Investments LP.

In a separate release, American Energy said its Utica affiliate will purchase about 27,000 net acres in Ohio from East Resources Inc. and an unidentified closely held company. A third American Energy affiliate will buy 48,000 net acres in West Virginia from East Resources and an unnamed company. The two transactions total $1.75 billion.

McClendon formed American Energy last year after being forced from his role as chairman and CEO of the company he co-founded because of shareholder unrest.

Citigroup Inc. and Goldman Sachs Group Inc. and Tudor Pickering Holt & Co. acted as financial advisers to American Energy and Sullivan & Cromwell LLP, Commercial Law Group P.C. and Porter Hedges LLP were its legal advisers for the transactions. Jefferies Group LLC advised the sellers and Baker Botts LLP provided legal advice for the Utica and Marcellus deals while Latham & Watkins LLP advised Enduring.

06/09/2014

 

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