The oil and gas and pipeline assets of the now-defunct Alta Mesa Resources were sold for $320 million to a partnership between an Oklahoma startup and a Houston private equity firm.
Source: Houston Chronicle
Houston’s Bayou City Energy Management and Oklahoma’s Mach Resources are scooping up the remaining parts of Houston-based Alta Mesa and its pipeline subsidiary Kingfisher Midstream. The deal was finalized after getting the green light from U.S. Bankruptcy Court in Houston, despite the objection from some of Alta Mesa’s bondholders.
A shale oil startup led by a former Anadarko Petroleum chief executive, Alta Mesa suffered a rapid rise and fall, plunging from $3 billion in Wall Street value in early 2018 to just $30 million by the time it filed for bankruptcy protection last fall.
Alta Mesa was dealing with collapsing finances and an SEC investigation into possible fraud. It was a dramatic fall from grace after significantly overestimating its potential in Oklahoma’s STACK shale play and other regions.
Hackett led the formation of the new Alta Mesa, although he initially took a backseat role as chairman. Alta Mesa was put together by Hackett’s acquisition entity, known as a blank-check firm, which was backed by Riverstone Holdings, an energy-focused private equity firm.
To create the new Alta Mesa, Hackett’s Silver Run Acquisition Corp. II combined with two privately held companies, Alta Mesa Holdings and Kingfisher Midstream, both of which focused on Oklahoma oil and gas acreage and pipelines. The company began trading in early 2018 under the “AMR” stock ticker, touting an aggregate Wall Street value of $3.8 billion.
Bayou City and Mach have named their joint venture BCE-Mach. Oklahoma shale plays have seen a rapid fall in drilling activity as the oil and gas production results have largely underachieved. BCE-Mach is focusing on scooping up cheap, distressed assets in the region.
“This was a unique opportunity to acquire a sizeable cash-flowing asset with the supporting midstream infrastructure, through a bankruptcy process, in an area of our team’s expertise and still have an extensive inventory for future development,” said Mach CEO Tom Ward. “Our strategic aim in partnership with BCE has been to aggressively consolidate and maximize underdeveloped, undercapitalized or otherwise distressed areas in the Mid-Continent. We have been successful in buying assets at a discount, increasing production in a cost-effective manner and avoiding overspending.”
The deal includes 30,000 barrels of daily oil equivalent of production, 72 million barrels of proved reserves, more than 900 operated wells and 130,000 net acres, in addition to a network of gas processing, gathering pipelines, water disposal pipelines and more.
The sale is expected to close in February.
