HOUSTON, Nov. 04, 2015 (GLOBE NEWSWIRE) — Memorial Production Partners LP (MEMP) announced today that it has completed an acquisition of the remaining interests in its oil and gas properties offshore Southern California (the “Beta properties”) from a third party for approximately $101 million, subject to customary post-closing adjustments. The transaction closed on November 3, 2015.
MEMP first acquired its interests in the Beta properties in December 2012. The acquired interests in the transaction announced today primarily consist of the 48.25% remaining working interests in 58 gross producing wells in three Pacific Outer Continental Shelf blocks in the Beta Field, located in federal waters approximately eleven miles offshore the Port of Long Beach, California. The acquired interests also include the 48.25% remaining interest in associated facilities including (i) two combined production and drilling platforms, (ii) one production processing platform, (iii) a 17.5 mile long 16-inch diameter oil pipeline and (iv) an onshore pump station, tankage and metering facility.
- Expected to be immediately accretive to distributable cash flow and net asset value
- Estimated net proved reserves of 11.9 MMBbls (54% proved developed / 100% oil)
- Estimated current net production of approximately 1,900 Bbls/d (100% oil)
- Estimated proved reserve to production ratio of 17 years
- Properties have a stable, long-lived production profile with a projected average ten-year PDP decline rate of approximately 7%
- Significant additional low-cost development opportunities, including, drilling, recompletions and injection enhancement opportunities
- Estimated original oil in place (OOIP) of approximately 940 MMBbls, and cumulative production of approximately 91 MMBbls equates to a current estimated recovery factor of only 10%
- Single well returns (unhedged) projected to be in excess of 30% at current commodity prices
- Expected 2016 operating cash flow contribution next year of over $15 million, based on preliminary estimates for MEMP’s 2016 drilling program
“We are excited to announce today’s transaction to acquire the remaining interests in the Beta properties,” said John Weinzierl, Chairman and Chief Executive Officer of the general partner of MEMP. “We continue to have great confidence in the potential of this prolific reservoir and believe the properties are ideal MLP properties because they offer stable production, low decline and lower risk drilling opportunities. This transaction will also provide greater flexibility in our capital planning and will allow us to operate Beta more optimally within our portfolio of assets.”
“The Beta Field is estimated to have a tremendous amount of oil in place and is expected to be producing for a long, long time. Additionally, the development projects could offer some of the best returns in our portfolio,” said William J. (Bill) Scarff, President of the general partner of MEMP. “The ability to acquire such a prolific asset for less than $9.00 per Boe of proved reserves supports our rationale for this transaction. Further, while we initially funded the acquisition on the revolver, we are exploring several sources of capital beyond the traditional capital markets to provide additional liquidity.”
In connection with the transaction, MEMP acquired existing hedges for a portion of the acquisition production volumes. These acquired hedges were restructured into Brent Crude swaps at a weighted-average fixed price of $67.50 per Bbl on approximately 820 Bbls/d in November and December 2015 and approximately 820 Bbls/d in 2016. The acquired hedges will cover approximately 44% of expected production volumes based on current production rates.
Following the regularly-scheduled Fall 2015 borrowing base redetermination and including the impact of the acquisition described above, the borrowing base under MEMP’s $2.0 billion multi-year revolving credit facility was decreased from $1.3 billion to $1.175 billion.
As of November 3, 2015 and after giving effect to the acquisition, MEMP had total debt outstanding of $2.0 billion, which included $1.2 billion of senior notes and $833 million under its revolving credit facility. The revolving credit facility had $340 million of available borrowing capacity (including $2.1 million in letters of credit).
Memorial Production Partners LP is a publicly traded partnership engaged in the acquisition, production and development of oil and natural gas properties in the United States. MEMP’s properties consist of mature, legacy oil and natural gas fields. MEMP is headquartered in Houston, Texas. For more information, visit www.memorialpp.com.