Memorial Resource Development Corp. (Nasdaq: MRD) swapped its East Texas and noncore Louisiana oil and gas properties Feb. 23 for all of Memorial Energy Partners LP’s (NYSE: MEMP) nonoperating interests in the Terryville Field in North Louisiana.

The deal also pays $78 million cash to MRD.

MEMP's non-operating interests in the Terryville Field, also called the Terryville Complex, include interests in 103 gross (5.1 net) wells. That includes 21 gross horizontal wells operated by MRD.

MEMP, an MLP, is led by John A. Weinzierl, who is also CEO of Memorial Resource Development. MRD controls MEMP through a general partner and has historically used it for dropdown transactions.

The Terryville deal transforms MRD into a pure play E&P and high grades its capital program, the company said. The deal increases MRD’s working interest for its drilling program to 91% and increases its hedged production to about 78%.

“The divestiture of our East Texas and non-core Louisiana assets further concentrates MRD in the Terryville Field, where we expect approximately 100% of our 2015 capital budget to be focused,” Weinzierl said. “We expect to operate a total of eight rigs in the Terryville Field, which is not only supported by our robust hedge positions but also by current drilling economics in this world class resource base.”

Following to the asset exchange, about 99% of MRD's proved reserves are located in the Terryville Field.

Total proved reserves are estimated to be about 20 billion cubic feet equivalent (Bcfe), 62% proved developed and 70% natural gas. December net production was estimated at 5 MMcfe/d.

MRD's divested properties are primarily located in the Joaquin Field in Panola and Shelby counties, Texas, and also include noncore properties located in West Louisiana.

MEMP said the deal is expected to be immediately accretive to distributable cash flow and net asset value and give the company increased operational control over its existing East Texas assets.

“This transaction provides strategic benefit to MEMP,” said William J. “Bill” Scarff, president of the general partner of MEMP. “MEMP acquires additional working interests in producing properties it already owns in the Joaquin Field. Further, the transaction extends MEMP's extensive drilling inventory in the area and provides additional projects that are expected to achieve acceptable rates of return, even in this low commodity price environment.”

MEMP funded the cash portion of the transaction with borrowings under its revolving credit facility, which has a $1.44 billion borrowing base.

MRD will use cash proceeds from the sale to repay indebtedness outstanding under its revolving credit facility and for general corporate purposes.

Terms of the transaction were approved by MRD's board of directors and its conflicts committee, which is composed entirely of independent directors. The transaction has an effective date of Jan. 1.