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.

OAG360 Comments:

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.

[sam_ad id=”32″ codes=”true”]

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Legal Notice