Source: PLS A&D Transactions (June 23, 2014 • Volume 25, No. 08)

ENXP buys multi-pay East Texas assets for $715 million

Kayne Anderson portfolio company Treadstone Energy Partners has agreed to sell its Fort Trinidad field properties in East Texas to privately held Energy & Exploration Partners Inc. (ENXP) for $715 million. The assets cover 18,300 net acres (22,900 gross, 100% operated) in Houston and Madison Cos. within the Buda-Rose play, which targets stacked Lower Cretaceous pay in the Buda, Georgetown, Edwards and Glen Rose formations. ENXP estimates current net production at 8,430 boepd (82% oil) and proved reserves at 32.8 MMboe.

The acquisition lies on trend with and just east of ENXP’s Buda Rose position where the Fort Worth-based company recently completed its Sundance-1 vertical targeting the Buda-Rose in Madison Co. and said it is encouraged by oil and gas volumes produced thus far. Upon closing expected in July ENXP will have 72,000 net acres and ~10,000 boepd in East Texas, with most of the acreage covered by 3D seismic. ENXP plans to continue Treadstone’s development program on the acquired assets, currently consisting of three drilling rigs and two workover rigs.

“Combining the Treadstone Fort Trinidad asset with ours merges a top-tier producing asset with an outstanding seasoned technical team,” said ENXP chief Hunt Pettit, adding, “We expect to expand production significantly as we deploy a multi-rig drilling program across the entire asset to develop all prospective horizons and fully exploit our entire position.” According to Treadstone’s marketing presentation, the development program is self-funding with IRRs exceeding 100%. Treadstone has been developing its position primarily using vertical wellbores with multi-zone completions, primarily targeting the Buda and Georgetown with a few completions in the Glen Rose. It began drilling on multi-well pads in January, targeting a 2014 exit rate of 12,500 boepd and a November 2015 peak of 18,000 boepd. The assets currently hold 36 net producing wells, 136 PUD drilling locations based on 80-acre spacing and up to 250 Buda-Rose drilling locations based on 40-acre spacing. Also included in the acquisition are 30 sq mi of 3D seismic and three saltwater disposal wells. The leases are owned with an average 89.6% WI and carry an average royalty burden of 16.6%. According to Treadstone’s website Fort Trinidad is one of two current operational areas for the company, formed in 2011 by Frank McCorkle, Key Sanford and Gene Roberts. The other is Alabama Ferry field, located to the northwest primarily in Leon County.

Download Original Article from PLS A&D Transactions