WildHorse Resource Development Corporation Announces Divestment of North Louisiana Assets and Acquisition of Lee County Properties
WildHorse Resource Development Corporation (NYSE:WRD) announced today
that it has executed a definitive purchase and sale agreement to divest
its North Louisiana assets to a third party for consideration of
approximately $217 million, subject to customary purchase price
adjustments. Additionally, WRD could receive contingent payments of up
to $35 million based on the number of wells spud by the buyer on the
North Louisiana assets over the next four years. This transaction, which
is subject to customary closing conditions, is expected to close on or
about March 30, 2018 and has an effective date of January 1, 2018
WRD’s North Louisiana assets are primarily located in Webster,
Claiborne, Lincoln, Jackson, and Ouachita Parishes of Louisiana and
include approximately 90,000 net acres of leasehold and approximately
473 operated wells. Estimated total proved reserves from the divested
properties at December 31, 2017 were 412.1 Bcfe (41% proved developed
and 98% natural gas). Estimated fourth quarter 2017 production from the
divested properties was approximately 46.9 MMcfe/d (96% natural gas).
Subsequent to the closing of the divestiture, 100% of WRD’s proved
reserves will be located in the East Texas Eagle Ford and Austin Chalk.
Cash proceeds from the sale will be used to repay indebtedness
outstanding under WRD’s revolving credit facility. As a result of the
transaction, WRD estimates a year end net debt to annualized EBITDAX
ratio below WRD’s target leverage of less than 2.0x. Based on initial
discussions with its bank group, WRD anticipates that the borrowing base
on its revolving credit facility will remain unchanged at $875 million
in connection with the closing of the transaction and will be reviewed
along with its regularly scheduled year-end redetermination on or about
March 30, 2018.
Guggenheim Securities, LLC served as financial advisor and Locke Lord
LLP served as legal counsel to WRD on the North Louisiana divestiture.
Lee County Eagle Ford Acquisition
In addition, WRD announced today that it has recently executed a
definitive purchase and sale agreement to acquire producing and
non-producing properties in Lee County, TX for approximately $19.3
million from an undisclosed seller. The deal is expected to close on
March 1, 2018 with an effective date of July 1, 2017.
The acquired properties consist of approximately 17,453 net acres
immediately contiguous to WRD’s existing Eagle Ford properties and 1
operated (4 non-operated) producing horizontal wells with combined net
production of approximately 59 Boe/d. The acquired acreage includes
rights exclusively to the Eagle Ford and is approximately 98% held by
production. WRD estimates approximately 110 net locations on the
acquired acreage with an average NRI of 82%. After the close of the
acquisition, WRD expects to hold over 404,000 net acres in the Eagle
Ford.
WRD also announced today the results of two Eagle Ford refrac tests
located immediately adjacent to the acquisition acreage in Lee County,
TX. The first well, the Gold 107 #1, which is located 3.5 miles
southwest of the Burleson County line, achieved a peak 24-hour rate of
1,078 Boe/d including both its base production and the uplift from the
refrac. The Gold 107 reached a peak 30-day uplift(1) of 388
Boe/d (95% oil) on a 5,711’ lateral.
The second refrac well, the Fritsche 109 #1, which is located 10.5 miles
southwest of the Lee and Burleson County line, came online at a peak
30-day uplift of 481 Boe/d (88% oil) on a 5,387’ lateral. While there
have been no prior Gen 3 wells in Lee County, the Gold and Fritsche
refracs utilize a Gen 3 style design and are both performing in line
with similar successful refracs completed by WRD in Burleson County.
These wells represent the first examples of WRD’s strategy to cost
effectively test the Gen 3 completion design through the use of refracs
in areas with only Gen 1 legacy completions.
In addition, the Jurica #1H / Doughtie #1H pad, located immediately next
to the Lee and Burleson County line, is averaging above the Eagle Ford
type curve at an EUR of 96 Boe per foot and 90 Bo per foot. As
previously announced on the third quarter 2017 earnings release, the two
Eagle Ford wells came online at an average IP-30 of 730 Boe/d (95% oil).
The Jurica / Doughtie pad is outside of Cawley Gillespie & Associates’
(“CG&A”) 3P area at the year-end 2016 reserve report.
“With the sale of our North Louisiana assets, WRD will become a
pure-play Eagle Ford producer with oil representing approximately 70% of
our production in 2018. While North Louisiana is a tremendous asset, our
Eagle Ford position has comparatively more scale and significant runway
with over 30 years of inventory at our current annual pace. Furthermore,
by monetizing the North Louisiana asset, we can help fund our 2018 capex
program and reinforce our already solid balance sheet,” said Jay Graham,
Chairman and Chief Executive Officer of WRD. “In addition, our Lee
County acquisition demonstrates our successful strategy of acquiring
excellent acreage with the advantage of well results unavailable to the
rest of the market. The Gold and Fritsche refracs indicate that this
position shows great potential for our Gen 3 well design and our
development program. We are excited about focusing entirely on our now
404,000 net acre Eagle Ford position where we see enormous opportunity.”
About WildHorse Resource Development Corporation
WildHorse Resource Development Corporation is an independent oil and
natural gas company focused on the acquisition, exploration, development
and production of oil, natural gas and NGL properties primarily in the
Eagle Ford Shale in East Texas and the Over-Pressured Cotton Valley in
North Louisiana. For more information, please visit our website at
www.wildhorserd.com.
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(1)
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The initial production rates represent the peak average of the
initial production rates for the applicable consecutive days of
production. The refrac uplift is an estimate of the additional
production incurred as a result of the refrac over what the legacy
well would have otherwise produced without a refrac completion.
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(2)
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Based on the Cawley Gillespie & Associates (“CG&A”) audited year-end
2016 proved reserves.
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Cautionary Statements and Additional Disclosures
This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements can be identified by words such as
“anticipates,” “intends,” “will,” “plans,” “seeks,” “believes,”
“estimates,” “could,” “expects” and similar references to future
periods. Such forward-looking statements are subject to a number of
risks and uncertainties, many of which are beyond WRD’s control. All
statements, other than historical facts included in this press release,
that address activities, events or developments that WRD expects or
anticipates will or may occur in the future, including such things as
WRD’s future capital expenditures (including the amount and nature
thereof), business strategy and measures to implement strategy, future
drilling locations and inventory, competitive strengths, goals,
expansion and growth of WRD’s business and operations, plans, successful
consummation and integration of acquisitions and other transactions,
market conditions, references to future success, references to
intentions as to future matters and other such matters are
forward-looking statements. All forward-looking statements speak only as
of the date of this press release. Although WRD believes that the plans,
intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance that
these plans, intentions or expectations will be achieved. Therefore,
actual outcomes and results could materially differ from what is
expressed, implied or forecast in such statements.
WRD cautions you that these forward-looking statements are subject to
risks and uncertainties, most of which are difficult to predict and many
of which are beyond WRD’s control, incident to the exploration for and
development, production, gathering and sale of natural gas and oil.
These risks include, but are not limited to: commodity price volatility;
inflation; lack of availability of drilling and production equipment and
services; environmental risks; drilling and other operating risks;
regulatory changes; the uncertainty inherent in estimating natural gas
and oil reserves and in projecting future rates of production, cash flow
and access to capital; and the timing of development expenditures.
Information concerning these and other factors can be found in WRD’s
filings with the SEC, including its Forms 10-K, 10-Q and 8-K.
Consequently, all of the forward-looking statements made in this press
release are qualified by these cautionary statements and there can be no
assurances that the actual results or developments anticipated by WRD
will be realized, or even if realized, that they will have the expected
consequences to or effects on WRD, its business or operations. WRD has
no intention, and disclaims any obligation, to update or revise any
forward-looking statements, whether as a result of new information,
future results or otherwise.
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