Silver Run, Kingfisher, Alta Mesa finalize three-way, $1.6B merger

Silver Run Acquisition Corp. II, Kingfisher Midstream and Alta Mesa Holdings said Friday their proposed merger was final.

The deal unites Silver Run’s financing, Alta Mesa’s 130,000-acre Oklahoma STACK play position, and Kingfisher Midstream into a new company called Alta Mesa Resources, Kallanish Energy reports.

The deal includes cash and stock from Silver Run and funding from private equity firms that will total roughly $1.6 billion.

Private equity firm Riverstone Holdings in 2017 formed Silver Run as a special purpose acquisition company, or SPAC, an investment vehicle that raises money on the reputation of its managers and then goes looking for a business to buy.

Former Anadarko Petroleum CEO and current head of Silver Run Jim Hackett will serve as executive chairman of Alta Mesa Resources and chief operating officer of Kingfisher Midstream’s operations.

The deal’s financing is largely tied to Silver Run, which will contribute most of its $1 billion initial public offering proceeds to the deal. Riverstone may contribute up to $600 million.

ARM Energy Holdings said last Friday it agreed to sell Kingfisher to Silver Run for up to $1.55 billion. The deal includes $800 million cash, $500 million in Silver Run stock and up to $200 million in additional stock based on the company’s performance.

In addition to expanding its leasehold since 2017, Alta Mesa’s average production has increased 20% in the past five months, going to 24,000 barrels of oil-equivalent per day (BOE/d) from 20,000 BOE/d in August.

Since August, Kingfisher Midstream's takeaway capacity skyrocketed by 150%, to 150 million cubic feet per day (MMcf/d) of gas, from 60 MMcf/d in 2017. Kingfisher Midstream’s gathering system now runs an additional 92 miles, boosting its infrastructure to 413 miles from 321 miles.

A 200 MMcf/d plant expansion is also underway, under budget and anticipated to begin operations in first-quarter 2018, Alta Mesa said in a January presentation.

Following the closing, Riverstone Holdings and Alta Mesa management collectively own 33% of Alta Mesa Resources’ market capitalization. The equity holders of Kingfisher collectively own about 14% of its market capitalization.

The company’s common stock and warrants will be traded on the NASDAQ capital market under the symbols “AMR” and “AMRRW”, respectively, beginning today.

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