Memorial Production Partners LP (Nasdaq: MEMP) closed two acquisitions of oil and natural gas properties in East Texas and the Rockies for a total of $29 million, the company announced Sept. 11.
The acquired properties consist of 237 gross (61 net) wells in East Texas, primarily in the Carthage and Willow Springs fields, and Wyoming, in the Moxa Arch field.
Memorial will operate 22% of the total proved reserves. In all, Memorial acquired approximately 21.3 billion cubic feet equivalent (Bcfe) of proved reserves, with 82% located in the Rockies and 18% in East Texas.
The Rockies transaction has an effective date of April 1, and the East Texas transaction has an effective date of June 1.
“These acquisitions complement our existing asset base along with the previously announced acquisition in July and are expected to enhance distributable cash flow,” said John A. Weinzierl, chairman, president and CEO.
Memorial said the assets are expected to be immediately accretive to distributable cash flow and net asset value. They have a stable, long-lived production profile with a projected average annual proved developed producing (PDP) decline rate of about 8%.
The land has estimated proved reserves of approximately 21.3 Bcfe, 94% PDP and 93% gas.
The assets add to Memorial’s proved reserves of 1,047 Bcfe, 59% of which is natural gas. The company’s 2013 production is estimated at up to 48 Bcfe.
In July, the company announced the purchase of multiple asset packages from MEMP’s sponsor, Memorial Resource Development LLC, and affiliates of Natural Gas Partners for $606 million. The deal included “strategic entrance” into the Permian Basin and the Rockies and a bolt-on acquisition in core area of East Texas.
Estimated June net production was 5.3 million cubic feet equivalent per day (MMcfe/d), with 89% natural gas and 11% liquids. Memorial said the assets have high operating margins and moderate capital expenditure requirements.
Memorial 2013 Production and Financial Guidance
Annual Production (Bcfe)
Adjusted EBITDA ($MM)
Distributable Cash Flow ($MM)
Maintenance Capex ($MM)
Growth Capex ($MM)
Source: Memorial Production Partners LP
The company funded the transactions using its $1 billion multi-year revolving credit facility.
Consistent with its hedging strategy, Memorial intends to hedge 85% of projected production volumes related to the acquisition through 2019.
Headquartered in Texas, Memorial controls properties in South Texas, East Texas/North Louisiana and California, with reserves consisting of of mature, legacy oil and natural gas reservoirs.