Mid-Con Energy Partners LP (NASDAQ: MCEP) said Nov. 14 that it will divest the entirety of its oil and natural gas assets in Southern Oklahoma, including nearly 90 producing gross oil and natural gas wells.
The Tulsa, Okla.-based company said it entered an agreement with an unaffiliated buyer to sell its leasehold, including 6,591 net acres, for proceeds before any closing adjustments of $25 million, which is planned to reduce Mid-Con Energy's revolving credit facility. The company is facing limited liquidity and struggling with high leverage that put it in technical default in the third quarter.
As of Dec. 31, Mid-Con Energy’s Southern Oklahoma holdings included 89 gross wells, 55 gross injection wells and five gross water supply wells. Another 36 gross wells were inactive.
The estimated net total proved reserves at the end of 2016 were 2.7 million barrels of oil equivalent (boe/d) and third-quarter average production was about 540 boe/d.
Mid-Con Energy hired advisory firm EnergyNet to market the assets in September. Marketing materials listed 12-month average net operating income of about $583,000 per month. The firm also said the assets consisted of six waterflood units in Love and Carter counties, Okla. About 3,197 net HBP acres hold rights in the Mississippian, Woodford, Hunton and Viola.
Jeff Olmstead, Mid-Con Energy’s president and CEO, said a number of pending transactions are expected to provide flexibility and liquidity to take advantage of market opportunities.
“From an operational perspective, our grassroots waterflood projects in the Northeastern Oklahoma and Permian core areas continued to yield positive results, which allowed us to accelerate our development in those units and position us for future growth,” he said.
As of Sept. 30, Mid-Con Energy held $122 million of outstanding debt and total liquidity of $2.6 million in cash and cash equivalents. The company breached its total leverage financial covenant in its credit agreement in the third quarter. As a result, on Nov. 10, Mid-Con Energy entered into a limited waiver in which the lender group agreed to waive the default.
However, the company reported that it has received lender commitments for a bank amendment that could extend the maturity of our credit facility, among other changes.
Mid-Con Energy's core areas of operation include northeastern Oklahoma and Texas within the eastern shelf of the Permian Basin. In August, the company closed a $19.5 million bolt-on in Nolan County, Texas, in the Permian.
Darren Barbee can be reached at email@example.com.