Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy”, “SN” or the
“Company”) announced today that it and funds managed by Blackstone
Energy Partners (NYSE:BX) (“Blackstone”) have entered a strategic
50/50 partnership and together they have signed a definitive
purchase agreement to acquire Anadarko Petroleum Corporation’s
(NYSE:APC) (“Anadarko”) working interest in approximately 318,000
gross operated acres in the Western Eagle Ford for approximately
$2.3 billion, subject to normal and customary closing conditions
and purchase price adjustments (the “Comanche Eagle Ford Asset”).
Sanchez Energy and Blackstone will use cash on hand and
commitments received from financial partners and commercial banks
to provide financing for the acquisition and anticipate that the
transaction will close in the first quarter of 2017.
TRANSACTION OVERVIEW (UNLESS OTHERWISE
NOTED, HIGHLIGHTS BELOW REFERENCE THE INTERESTS HELD 50/50 BY SN
AND BLACKSTONE)
- Approximately 318,000 gross operated acres (155,000 net to
Sanchez Energy and Blackstone), contiguous to the Company’s
Catarina asset;
- Current production of approximately 67,000 Boe/d (70 percent
liquids) from the acquired assets, provides a substantial amount of
immediate cash flow;
- Proved reserves of approximately 300 MMBoe (70 percent liquids,
75 percent proved developed) from the acquired asset;
- Estimated total resource potential of over 1,100 MMBoe;
- Significant near-term, low-risk production growth driven by 132
gross drilled but uncompleted wells (“DUCs”) located in the most
attractive areas of the asset, with individual rates of return
expected to exceed 100 percent;
- More than 4,000 Eagle Ford drilling locations, which provides
over 20 years of economic drilling inventory at current strip
prices;
- Eagle Ford Shale development covers approximately 80 percent of
the acreage, with significant resource potential from the Austin
Chalk and Pearsall Shale;
- Sanchez Energy will fully fund its 50% of the acquisition
through a combination of cash on hand and commercial bank and
preferred equity commitments at a newly formed non-recourse
subsidiary; and
- Blackstone will fund its 50% of the acquisition through a
separate entity via equity and commercial bank commitments.
Net to Sanchez Energy |
|
|
|
|
|
Total (MMBoe) |
150 |
|
Production (Boe/d) |
~33,500 |
|
|
|
|
|
Proved Reserves (MMBoe): |
|
Drilling Inventory: |
|
PDP |
100 |
|
Net Acres |
~77,500 |
PDNP |
16 |
|
DUCs |
132 |
PUD |
34 |
|
Drilling locations |
4,000+ |
MANAGEMENT COMMENTS“This accretive and
transformative acquisition more than doubles our drilling
inventory, adds 132 high rate of return DUCs, increases Sanchez
Energy’s resource potential by over 550 MMBoe and provides a path
for strong growth within projected cash flow,” said Tony Sanchez,
III, Chief Executive Officer of Sanchez Energy. “With the asset
strategically located adjacent to our existing Catarina asset, we
anticipate substantial operating synergies and other benefits
arising from the scale and concentration of our Eagle Ford
position. Our continued focus on the Western Eagle Ford, expertise
at multi-bench development, efficient cost structure and strong
liquidity position will enable us to create significant value from
the acquired assets.
“Upon completion of the acquisition, we will
triple our exposure to the Upper and Middle Eagle Ford trends that
have been successfully developed by the Company at Catarina. The
Upper and Middle Eagle Ford sections thicken in Southern Dimmit
County, where the majority of the acquired leasehold is
concentrated. Upon closing the transaction, we believe we will have
locked up the core of the trend within the volatile oil
window. With the ability to duplicate the cost structure of
our Catarina and Maverick operations throughout the Comanche Eagle
Ford Asset, we expect to further improve operating efficiencies
while enhancing our capability to achieve sustainability of well
cost reductions over time.
“The Comanche Eagle Ford Asset generates free
cash flow that can be allocated to help fund our 2017 capital
budget and comes with a large inventory of high rate of return
drilling opportunities that will build upon our already high
quality drilling program. As a result, we project that
Sanchez Energy will be producing in excess of 100,000 Boe/d while
operating within cash flow in the next 12 to 18 months.
Importantly, this transaction is expected to improve the Company’s
leverage ratio by over one turn in the next 12 to 18 months.
“We are looking forward to working
collaboratively with Blackstone in the development of these assets
and to facilitate the growth of the Company.”
Angelo Acconcia, a Senior Managing Director at
Blackstone Energy Partners who oversees their oil and gas
investments, said, “We are excited to form this strategic
partnership with Sanchez Energy, to help effectuate this
transformative acquisition and to help Sanchez Energy grow and
facilitate future acquisitions in the area. Sanchez
Energy is a best in class operator, with a synergistic asset base
and is uniquely positioned to drive significant value from these
assets and future acquisitions in the area.”
“Sanchez is positioned to accelerate growth
based on its scale, proven operational capability and financial
structure,” commented Robert Horn, Senior Managing Director of GSO
Capital. “We are excited to partner on this transformative
transaction and future opportunities with Sanchez Energy.”
COMANCHE EAGLE FORD ASSET FINANCING AND
STRUCTURESanchez Energy’s portion of the acquisition will
be funded utilizing two components. Through a restricted
subsidiary, the Company expects to fund its portion of the
acquisition with cash on hand. Additionally, a newly formed
unrestricted subsidiary of Sanchez Energy (“UnSub”) will finance
its portion of the acquisition with proceeds from non-convertible
perpetual preferred equity issued to GSO Capital Partners LP
(“GSO”), borrowings under a new revolving credit facility
(non-recourse to SN), and a $100 million contribution in cash from
Sanchez Energy. The preferred equity is structured to provide a 10
percent annual cash dividend and a 14 percent required return upon
redemption to GSO and is not convertible into Sanchez Energy common
stock. While the entirety of the transaction will be
consolidated for financial reporting, the preferred equity and debt
of UnSub will be non-recourse to SN.
The following table provides a breakdown of the
assets and purchase price allocation:
|
|
|
|
Sanchez Energy |
|
|
|
|
Blackstone |
|
Parent |
UnSub |
|
Total |
Asset
Allocation: |
|
|
|
|
|
|
|
PDP |
|
|
50 |
% |
|
|
0 |
% |
|
50 |
% |
|
|
100 |
% |
PDNP |
|
|
50 |
% |
|
|
30 |
% |
|
20 |
% |
|
|
100 |
% |
PUD |
|
|
50 |
% |
|
|
30 |
% |
|
20 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
Funding Source
($MM): |
|
|
|
|
|
|
|
Cash |
|
|
|
$394(1) |
$ |
0 |
|
|
$ |
394 |
|
RBL
Draw/Preferred Equity |
|
|
|
$ |
0 |
|
$ |
744 |
|
|
$ |
744 |
|
|
|
|
|
|
|
|
|
Total(2) |
|
$ |
1,137 |
|
|
$ |
394 |
|
$ |
744 |
|
|
$ |
2,275 |
|
|
|
|
|
|
|
|
|
(1)
Includes $100 million contribution to UnSub |
|
|
|
(2) Prior
to any purchase price adjustments |
|
|
|
|
TRANSACTION PRESENTATION AND CONFERENCE
CALLManagement expects to host a conference call on
Friday, January 13, 2017 to discuss the transaction. The Company
will post dial-in information and a presentation with additional
information on the transaction under the Investor section of the
Company’s website (www.sanchezenergycorp.com). Additional detail
will be provided at Sanchez Energy’s 2017 Analyst Day event
scheduled for January 23, 2017, which will be webcast.
ADVISORSIntrepid Partners served as the sole
financial advisor for Sanchez Energy. Intrepid Partners is the
advisory business of Intrepid Financial Partners, an energy-focused
merchant bank that provides merger & acquisition and
restructuring advice and makes principal investments. Legal
advice was provided by Akin Gump Strauss Hauer & Feld LLP and
Kirkland & Ellis LLP. JPMorgan Chase & Co. and Citigroup
Global Markets Inc. are acting as joint lead arrangers and joint
bookrunning managers on the new secured credit facility.
ABOUT SANCHEZ ENERGY
CORPORATIONSanchez Energy Corporation (NYSE:SN) is an
independent exploration and production company focused on the
acquisition and development of unconventional oil and natural gas
resources in the onshore U.S. Gulf Coast, with a current focus on
the Eagle Ford Shale in South Texas where we have assembled over
200,000 net acres, and the Tuscaloosa Marine Shale. For more
information about Sanchez Energy Corporation, please visit our
website: www.sanchezenergycorp.com.
ABOUT BLACKSTONE ENERGY
PARTNERSBlackstone Energy Partners is Blackstone's
energy-focused private equity business, with a successful record
built on our industry expertise and partnerships with exceptional
management teams. Blackstone has invested over $10 billion of
equity globally across a broad range of sectors within the energy
industry.
Blackstone is one of the world's leading
investment firms. We seek to create positive economic impact and
long-term value for our investors, the companies in which we
invest, and the communities in which we work. We do this by
using extraordinary people and flexible capital to help companies
solve problems. Our asset management businesses, with over
$360 billion in assets under management, include investment
vehicles focused on private equity, real estate, public debt and
equity, non-investment grade credit, real assets and secondary
funds, all on a global basis. Further information is available at
www.blackstone.com. Follow Blackstone on Twitter @Blackstone.
ABOUT GSO CAPITAL PARTNERSGSO
Capital Partners LP is the global credit investment platform of
Blackstone. With approximately $89 billion of assets under
management, GSO is one of the largest alternative managers in the
world focused on the leveraged-finance, or non-investment grade
related, marketplace. GSO seeks to generate attractive
risk-adjusted returns in its business by investing in a broad array
of strategies including mezzanine debt, distressed investing,
leveraged loans and other special-situation strategies. Its funds
are major providers of credit for small and middle-market companies
and they also advance rescue financing to help distressed
companies.
FORWARD-LOOKING STATEMENTSThis
press release contains, and our officers and representatives may
from time to time make, 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.
All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that Sanchez Energy expects, believes or anticipates
will or may occur in the future are forward-looking statements,
including statements relating to the anticipated closing date of
the acquisition, the expected financial and operational results of
the acquired assets, and the expected synergies and benefits
related to the acquisition, including the anticipated improvements
to the Company’s leverage metrics. These statements are based on
certain assumptions made by the Company based on management's
experience, perception of historical trends and technical analyses,
current conditions, anticipated future developments and other
factors believed to be appropriate and reasonable by management.
When used in this press release, the words "will,"
"potential," "believe," "estimate," "intend," "expect," "may,"
"should," "anticipate," "could," "plan," "predict," "project,"
"profile," "model," "strategy," "future," or their negatives, other
similar expressions or the statements that include those words, are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words.
Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of Sanchez Energy, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements, including, but not limited to our inability to close
the acquisition, the failure of the acquired assets and our joint
ventures to perform as anticipated, failure or delays on the part
of our joint venture partners, failure to continue to produce oil
and gas at historical rates, costs of operations, delays, and any
other difficulties related to producing oil or gas or completing
our ongoing joint venture projects, the price of oil or gas,
marketing and sales of produced oil and gas, estimates made in
evaluating reserves, competition, general economic conditions and
the ability to manage our growth, our expectations regarding our
future liquidity, our expectations regarding the results of our
efforts to improve the efficiency of our operations to reduce our
costs and other factors described in Sanchez Energy's most recent
Annual Report on Form 10-K and any updates to those risk factors
set forth in Sanchez Energy's Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K. Further information on such
assumptions, risks and uncertainties is available in Sanchez
Energy's filings with the U.S. Securities and Exchange Commission
(the "SEC"). Sanchez Energy's filings with the SEC are
available on our website at www.sanchezenergycorp.com and on the
SEC's website at www.sec.gov. In light of these risks,
uncertainties and assumptions, the events anticipated by Sanchez
Energy's forward-looking statements may not occur, and, if any of
such events do occur, Sanchez Energy may not have correctly
anticipated the timing of their occurrence or the extent of their
impact on its actual results. Accordingly, you should not place any
undue reliance on any of Sanchez Energy's forward-looking
statements. Any forward-looking statement speaks only as of
the date on which such statement is made and Sanchez Energy
undertakes no obligation to correct or update any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as required by applicable law.
COMPANY CONTACT:
Howard J. Thill
EVP & Chief Financial Officer
(713) 783-8000
Kevin Smith
VP Investor Relations
(281) 925-4828
Cham King
Investor Relations & Capital Markets
(713) 756-2797
General Inquiries: (713) 783-8000
www.sanchezenergycorp.com
Anadarko Petroleum (NYSE:APC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Anadarko Petroleum (NYSE:APC)
Historical Stock Chart
From Sep 2023 to Sep 2024