Independent oil and gas producer WildHorse Resource Development (WRD) announced Monday it’s selling its North Louisiana assets to an unnamed buyer for roughly $217 million.
In addition, the Houston-based company said it’s acquiring producing and non-producing properties in Lee County, northwest of Houston in the Eagle Ford Shale, for roughly $19.3 million from an undisclosed seller.
As part of the Louisiana sale, WRD could receive contingent payments of up to $35 million based on the number of wells spud by the buyer on the assets over the next four years, Kallanish Energy reports.
WildHorse’s North Louisiana assets are primarily located in Webster, Claiborne, Lincoln, Jackson, and Ouachita parishes, and include roughly 90,000 net acres of leasehold and approximately 473 operated wells.
Estimated total proved reserves from the divested properties at Dec. 31, 2017 were 412.1 billion cubic feet-equivalent (Bcfe) (41% proved developed and 98% natural gas).
Estimated fourth-quarter 2017 production from the divested properties was approximately 46.9 million cubic feet-equivalent per day (MMcfe/d) (96% natural gas).
“With the sale of our North Louisiana assets, WRD will become a pure-play Eagle Ford producer with oil representing approximately 70% of our production in 2018,” said Jay Graham, chairman and CEO of WildHorse.
Cash proceeds from the sale will be used to repay indebtedness outstanding under the independent producer’s revolving credit facility. Based on initial discussions with its bank group, WRD anticipates the borrowing base on its revolving credit facility will remain unchanged at $875 million in connection with the closing of the transaction and will be reviewed along with its regularly scheduled year-end redetermination on March 30.
This transaction is expected to on March 30, and has an effective date of Jan. 1, 2018.
Guggenheim Securities served as financial advisor and Locke Lord acted as legal counsel to WRD on the North Louisiana divestiture.
The acquired Lee County, Texas, assets include roughly 17,453 net acres immediately contiguous to WRD’s existing Eagle Ford properties and one operated (four non-operated) producing horizontal wells with combined net production of approximately 59 barrels of oil-equivalent per day (BOE/d).
The acquired acreage includes rights exclusively to the Eagle Ford and is approximately 98% held by production. WRD estimates approximately 110 net locations on the acquired acreage with an average NRI of 82%. After the close of the acquisition, WRD expects to hold over 404,000 net acres in the Eagle Ford.