American Energy Partners, LP was founded by Aubrey K. McClendon in April 2013. The Oklahoma City-based company aims to capitalize on opportunities available in unconventional resource plays onshore in the United States. McClendon co-founded Chesapeake Energy (ticker: CHK) in 1983 and served as its CEO until April 2013.
On October 9, 2013, American Energy – Utica, LLC (AEU), an affiliate of American Energy Partners, LP announced the acquisition of approximately 110,000 net acres in the Utica Shale.
According to the release, AEU raised approximately $1.7 billion in private equity commitments and term loan proceeds to finance this acquisition, drilling operations, and acquire and develop additional acreage in the Utica Shale. AEU will start drilling operations with one rig in the fourth quarter of 2013 and plans to increase drilling activity to at least 12 rigs over the next 2 to 3 years.
CNBC reported back on September 30, 2013, the company’s largest single investor is the Energy and Minerals Group, a $6.7 billion private equity fund (founded in 2006) which owns approximately 70% of the equity in AEU. Additional debt financing was provided by First Reserve Corp, GSO Capital Partners (of the Blackstone Group), Magnetar Capital, BlackRock Inc., and others.
We remind readers that while CEO of Chesapeake McClendon assembled more than 1.2 million acres in the Utica which he believed to be worth more than $20 billion. Rumors from the networks and analysts were flying since April 2013 that Aubrey was putting together a Utica Shale package. Today’s announcement is no surprise but certainly confirms American Energy Partners made its entrance into the Utica with approximately 110,000 net acres.
Midstream and processing has been a hurdle in this part of the county. The company has taken pro-active steps ahead of production gains to solidify midstream gathering, processing and fractionation operations through an agreement with MarkWest Utica EMG, a joint venture between Markwest Energy Partners (MWE) and EMG on approximately 80% of the acreage. The remaining 20% of the acreage is dedicated to UEO Buckeye (UEO) for processing. UEO is a joint venture of M3 Midstream, LLC, Access Midstream Partners, LP (ACMP) and EV Energy Partners, LP (EVEP). Access Midstream and its partners will be responsible for gathering the gas to UEO in the 20% acreage area.
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