Midstates Petroleum to acquire oil-weighted properties in the western Anadarko basin
HOUSTON -- Midstates Petroleum announced today that it has entered into a purchase and sale agreement to acquire producing properties, as well as developed and undeveloped acreage, in the Anadarko basin in Texas and Oklahoma for $620 million in cash. The Midstates agreement will be with Panther Energy, and its partners Red Willow Mid-Continent and LINN Energy Holdings. Both Panther Energy and Red Willow Mid-Continent are subsidiaries of the Southern Ute Indian Tribe Growth Fund.
Primary horizontal drilling targets include the Cleveland, Marmaton, Cottage Grove and Tonkawa formations with potential for drilling the deeper lower Pennsylvanian and Mississippian sections. The transaction is effective April 1 and closing is expected on or about May 31, subject to customary closing conditions.
The acquisition will add approximately 36.4 MMboe proved reserves that are 45 percent oil and 21 percent NGLs, of which 34 percent are proved developed producing. It will increase net current daily production by approximately 8,000 boepd. Midstates will see its acreage position expand with approximately 140,000 net acres with multiple objectives. Roughly 102,000 acres are in Texas and 38,000 are in Oklahoma, with 60 percent of total acreage held by production. Approximately 280 gross producing wells will be added that are over 80 percent operated with an average 69 percent working interest and 55 percent net revenue interest.
Panther currently employs three rigs in its drilling program. Midstates plans to double that activity level by late summer 2013 and run a six-rig program, with three to four rigs drilling for the Cleveland formation and two to three drilling for the Marmaton, Cottage Grove and Tonkawa formations.
During 2013, Midstates expects to drill approximately 40-45 wells on the newly acquired acreage, all of which will be horizontal wells. Drilling and completion costs have averaged approximately $3 million per horizontal well, which have been drilled to an average vertical depth of 6,000 to 8,000 feet with 4,000 to 4,300 foot laterals and 15 to 17 stages of fracture stimulation.
Midstates’ board of directors has unanimously approved the transaction. The company will enter into a transition services agreement with Panther for a six-month period following transaction closing. Morgan Stanley & Co. and SunTrust Robinson Humphrey acted as financial advisors to Midstates in connection with the transaction. Vinson & Elkins also advised the company in its agreement.