Energy & Exploration Partners Inc. (ENXP) intends to acquire 18,300 net acres in Houston and Madison counties, Texas from TreadStone Energy Partners LLC, a Kayne Anderson Energy Funds portfolio company.

The $715 million acquisition, announced June 16, includes net production of 8,430 barrels of oil equivalent per day (boe/d), of which 82% is oil, 30 square miles of 3-D seismic data and a three-well salt water disposal system.

In 2012, TreadStone’s assets included more than 20,000 acres in two prolific oil- and rich-gas-producing field areas in Leon, Houston and Madison counties. The assets will complement ENXP's current East Texas portfolio.

The TreadStone acreage lies on trend and just east of the ENXP position and has been predominantly developed vertically in the Lower Cretaceous Buda-Rose via multizone completions. ENXP is acquiring 36 net producing wellbores, 136 proved undeveloped drilling locations based on 80-acre spacing and up to 250 Buda-Rose drilling locations based on 40-acre spacing.

ENXP, based in Fort Worth, Texas, has recently completed the Sundance #1, a vertical Buda-Rose completion in Madison and said it was encouraged by the volume of oil and gas currently flowing up tubing.

Overview: TreadStone acquisition

WI and royalties

100% operated with an average working interest of 89.6% and an average royalty burden of 16.6%.

Acquired assets proved reserves

32.8 MMboe based on third-party engineering.

Approximate acreage

72,000 net acres in East Texas.

ENXP Drilling program

Balanced on legacy acreage while continuing to aggressively exploit stacked-pay zones of the acquired assets.

Source: ENXP

“Combining the TreadStone Fort Trinidad asset with ours merges a top tier producing asset with an outstanding seasoned technical team,” said Hunt Pettit, president and CEO of ENXP. “With the combined assets, ENXP will have over 10,000 boe of net daily production and 72,000 net acres, most of which is covered by 3-D seismic data in the prolific East Texas Basin.”

The stacked pays in the area are 5,000 feet thick.

“We expect to expand production significantly as we deploy a multirig drilling program across the entire assets to develop all prospective horizons and fully exploit our entire position," Pettit said.

ENXP is an independent energy company with operations in the Eaglebine in the East Texas Basin and exploration and development activities focused on the Woodbine Sandstone, Eagle Ford Shale and other stacked formations. The company is also active in the Permian Basin with development activities focusing on the Spraberry, Wolfcamp and Cline intervals.

TreadStone is a private exploration and production company formed in 2011 by Frank McCorkle, Key Sanford and Gene Roberts with a capital commitment from Kayne Anderson, a leading provider of energy private-equity to high-growth oil and gas companies. The fund has raised $4.3 billion in capital across six funds and invested in more than 89 portfolio companies since 1998. Kayne Anderson is the energy private-equity arm of Kayne Anderson Capital Advisors LP, a leading alternative investment manager with over $28 billion under management.

The acquisition is expected to close before the end of July with an effective date of April 1.

Citigroup Global Markets Inc. acted as exclusive mergers and acquistions advisor on the TreadStone acquisition.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Global Hunter Securities LLC will act as financial advisors to ENXP on the TreadStone acquisition.