Riverstone Energy Limited (ticker: RSE) has signed an agreement alongside other funds affiliated with Riverstone Holdings, LLC to acquire a majority stake in Centennial Resource Development LLC from NGP Energy Capital and certain other related coinvestment funds.

The investment by REL is expected to comprise up to US$175 million depending upon approval for the transaction by the other Riverstone affiliated funds. Closing of the transaction is expected to occur in late September 2016.

REL is a closed-ended investment company under Riverstone Holdings that invests exclusively in the global energy industry, mainly E&P and midstream. To date, REL has made 16 investments spanning conventional and unconventional oil and gas activities in the GOM, onshore U.S., Western Canada, the U.K. North Sea, the Norwegian Sea, and Mexico.

Denver-based Centennial Resource Development is focused on unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin. Its assets are concentrated in the Delaware Basin, with contiguous acreage blocks in Reeves, Ward and Pecos counties in West Texas.

On June 22, 2016, Centennial filed for a proposed $100 million IPO on Nasdaq under the symbol CDEV. Centennial filed an amended S-1 registration statement with the SEC on June 28, 2016.

From Nasdaq’s IPO summary for CDEV:

As of June 15, 2016, our portfolio included 61 operated producing horizontal wells. Our horizontal wells span an area approximately 45 miles long by 20 miles wide where we have established commercial production in five distinct zones: the 3rd Bone Spring Sandstone, Upper Wolfcamp A, Lower Wolfcamp A, Wolfcamp B and Wolfcamp C. As a result, we have broadly appraised our acreage across various geographic areas and stratigraphic zones, which we expect will allow us to efficiently develop our drilling inventory with a focus on maximizing returns to our stockholders. In addition, we believe our acreage may be prospective for the 2nd and 3rd Bone Spring shales and Avalon Shale, where other operators have experienced drilling success near our acreage.

We have leased or acquired approximately 42,500 net acres, approximately 83% of which we operate, as of June 15, 2016. Our acreage is predominantly located in the southern portion of the Delaware Basin, where production and reserves typically contain a higher percentage of oil and natural gas liquids and a correspondingly lower percentage of natural gas compared to the northern portion of the Delaware Basin.

After temporarily suspending drilling activity at the end of March 2016 to preserve capital, we added one horizontal rig in June 2016 and expect to add a second horizontal rig in the fourth quarter of 2016. During 2015, we operated, on average, one rig and placed 13 horizontal wells on production. Our development drilling plan is comprised exclusively of horizontal drilling with an ongoing focus on reducing drilling times, optimizing completions and reducing costs.

We have assembled a multi-year inventory of horizontal drilling projects. As of June 15, 2016, we had identified 1,357 gross horizontal drilling locations in the 3rd Bone Spring Sandstone, Upper Wolfcamp A, Lower Wolfcamp A, Wolfcamp B and Wolfcamp C zones across our Delaware Basin acreage based on spacing of four wells per 640-acre section in the 3rd Bone Spring Sandstone and five to six wells per 640-acre section in the Wolfcamp zones.

Our drilling inventory includes 366 extended lateral locations of either 9,500 or 7,500 lateral feet. Our near-term drilling program is focused on both the Upper and Lower Wolfcamp A zones, but we also intend to drill locations in the 3rd Bone Spring Sandstone, Wolfcamp B and Wolfcamp C zones. Based on our and other operators’ well results and our analysis of geologic and engineering data, we believe the 2nd and 3rd Bone Spring shales and Avalon Shale may also be prospective across our acreage, and we may integrate these zones into our future drilling program as they become further delineated. The following table provides a summary of our gross horizontal drilling locations by zone as of June 15, 2016.

Gross Identified Horizontal Drilling Locations


3rd Bone Spring Sandstone                      64

Upper Wolfcamp A                                    398

Lower Wolfcamp A                                    329

Wolfcamp B                                               300

Wolfcamp C                                               266


Total Horizontal Locations                    1,357


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