American Energy – Permian Basin LLC (AEPB), an affiliate of American Energy Partners LP, has announced the initial closing of an offering by its immediate parent, American Energy Permian Holdings LLC (AEPH), of $515 million of 8.0% exchangeable junior subordinated notes due 2022, the net proceeds of which are being contributed to AEPB in exchange for preferred units. In addition, AEPB closed on a major acquisition of assets from Tall City Exploration LLC, which is backed by private equity sponsor Denham Capital Management LP, for $440 million, in cash and notes. The assets include approximately 14,000 net acres of leasehold primarily located in Reagan County, Texas and 1,400 barrels of oil equivalent (boe) per day of production.
Including the Tall City acquisition, since July 31, 2014, AEPB has closed, or plans to close by year-end 2014, the acquisition of approximately 28,000 net acres of leasehold in the Wolfcamp Shale play in the Central Midland Basin, or approximately 115,000 acres on a net effective acre basis, 1,400 boe per day of production, and 49 mmboe of proved reserves, primarily located in Reagan County, Texas, for a total purchase price of approximately $720 million. The final purchase prices of the acquisitions are subject to further customary post-closing adjustments. AEPB will fund the acquisitions with proceeds from the sale of the Notes contributed to it by AEPH and cash on hand.
Pro forma for the acquisitions expected to be completed by year-end, AEPB estimates it will have approximately 91,000 net acres in the Wolfcamp Shale play in the Central Midland Basin, or approximately 248,000 acres on a net effective acres basis, more than 17,000 boe per day of current production, 158 mmboe of proved reserves and approximately 2,700 gross wells to be drilled in the future.
American Energy Partners is based in Oklahoma City.
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