HOUSTON and ARTESIA, N.M., Sept. 6,
2016 /PRNewswire/ --
- Creates Combined 424,000 Net Acre Position in the Delaware Basin
- Initiates Foothold in Emerging Northwest Shelf Plays of 150,000
Net Acres
- Raises Position in Permian Basin and Adjacent Plays to 574,000
Net Acres
- Doubles Powder River Basin
Position Encompassing 400,000 Net Acres
EOG Resources, Inc. (NYSE: EOG) (EOG) and Yates Petroleum
Corporation today announced definitive agreements under which EOG
has agreed to combine with Yates Petroleum Corporation, Abo
Petroleum Corporation, MYCO Industries, Inc. and certain other
entities (collectively, Yates). Under the terms of this private,
negotiated transaction, EOG will issue 26.06 million shares of
common stock valued at $2.3 billion
and pay $37 million in cash, subject
to certain closing adjustments and lock-up provisions. EOG will
assume and repay at closing $245
million of Yates debt offset by $131
million of anticipated cash from Yates, subject also to
certain closing adjustments.
"This transaction combines the companies' existing large,
premier, stacked-pay acreage positions in the heart of the
Delaware and Powder River basins, paving the way for years
of high-return drilling and production growth," said William R.
"Bill" Thomas, Chairman and Chief Executive Officer of EOG.
"We are excited by this unique opportunity to advance EOG's
strategy of generating high-return growth by developing premium
wells at low costs that enhance long-term shareholder value.
"Additionally we are thrilled to welcome Yates' 300 employees to
the EOG family and look forward to continuing the important
presence Yates has established in the community of Artesia, N.M."
Yates is a privately held, independent crude oil and natural gas
company with 1.6 million net acres across the western United States. Since 1924, when it drilled the
first commercial oil well on New Mexico
state trust lands, Yates has amassed a rich acreage position
across the western United States.
Highlights of Yates' assets are summarized below:
- Production of 29,600 barrels of crude oil equivalent per day,
net, with 48 percent crude oil
- Proved developed reserves of 44 million barrels of oil
equivalent, net
- Delaware Basin position of
186,000 net acres
- Northwest Shelf position of 138,000 net acres
- Powder River Basin position of
200,000 net acres
- Additional 1.1 million net acres in New Mexico, Wyoming, Colorado, Montana, North
Dakota and Utah.
EOG is the largest oil producer in the Lower 48, with average
net daily production of 551 thousand barrels of crude oil
equivalent and a reputation for technological leadership in the
development of unconventional resource plays.
"EOG is our partner of choice as we look to extend Yates'
93-year legacy," said John A. Yates
Sr., Chairman Emeritus of Yates Petroleum Corporation and
son of founder Martin Yates Jr. "As
we enter a new era of unconventional resource development, we are
excited to join forces with another pioneering company like
EOG."
Douglas E. Brooks, Chief
Executive Officer of Yates Petroleum Corporation, added, "This is a
tremendous opportunity to combine EOG's strong technical
competencies with the enormous resource potential of the Yates
acreage to create significant value for Yates and EOG shareholders
alike."
Yates immediately adds an estimated 1,740 net premium drilling
locations in the Delaware Basin
and Powder River Basin to EOG's
growing inventory of premium drilling locations, a 40 percent
increase. A premium drilling location is defined by EOG as a direct
after-tax rate of return of at least 30 percent assuming a
$40 flat crude oil price. EOG
plans to commence drilling on the Yates acreage in late 2016 with
additional rigs added in 2017.
"Through this transaction, our premium drilling strategy is
gaining added momentum. With improving well productivity and this
newly enhanced resource base, our organization can generate further
increases in returns and capital efficiency," Thomas
said. "The combination enhances the size and quality of EOG's
existing portfolio of oil resource plays."
Doubles Position in Delaware
Basin and Adjacent Plays
Yates has 186,000 net acres of
stacked pay in the Delaware Basin
in New Mexico that is highly
prospective for the Wolfcamp, Bone Spring and Leonard Shale formations. This brings the
combined company's total Delaware
Basin acreage position to approximately 424,000 net acres, a 78
percent increase to EOG's existing holdings.
Additionally, Yates has 138,000 net acres on the Northwest Shelf
in New Mexico that is prospective
for the Yeso, Abo, Wolfcamp and Cisco formations. These shallow
plays have the potential to contribute additional amounts of
premium inventory with the application of EOG's advanced completion
and precision targeting technologies and low cost structure. Along
with EOG's existing acreage, the newly combined company will have
574,000 net acres in the Delaware
Basin and Northwest Shelf. A summary of the acreage is listed
below.
Delaware Basin and
Northwest Shelf Acreage Summary
|
|
|
|
|
By
Play
|
Yates
|
EOG
|
Combined
|
Wolfcamp
|
186,000
|
168,000
|
354,000
|
Bone
Spring
|
186,000
|
111,000
|
297,000
|
Leonard
|
67,000
|
93,000
|
160,000
|
|
|
|
|
By
Area
Delaware
Basin
|
186,000
|
238,000
|
424,000
|
Northwest
Shelf
|
138,000
|
12,000
|
150,000
|
Total
|
324,000
|
250,000
|
574,000
|
Expands Powder River Basin
Acreage
The combination also adds 81,000 net acres from
Yates in the core development area of the Powder River Basin that
is prospective for the Turner Oil play. In total, Yates contributes
200,000 net acres in the Powder River Basin. This doubles EOG's
total Powder River Basin acreage
to 400,000 net acres. The enhanced acreage position has significant
exploration potential for multiple stacked-pay formations.
Transaction Terms
Under the terms of the agreements,
which were approved by the boards of directors of EOG and Yates,
and the Yates stockholders, EOG will issue 26.06 million shares of
common stock valued at $2.3 billion
and pay $37 million in cash, subject
to certain closing adjustments and lock-up provisions. EOG will
assume and repay at closing $245
million of Yates debt offset by $131
million of anticipated cash from Yates, subject also to
certain closing adjustments. Closing is anticipated in early
October 2016, subject to customary
closing conditions. Following the transaction closing, EOG intends
to maintain Yates' office in Artesia,
N.M., to support the newly combined operation.
Wells Fargo Securities, LLC acted as exclusive financial and
technical advisor to Yates Petroleum Corporation, Abo Petroleum
Corporation and MYCO Industries, Inc. for this transaction.
Thompson & Knight LLP, Modrall Sperling Law Firm and Kemp Smith
LLP acted as legal advisors to Yates Petroleum Corporation, Abo
Petroleum Corporation and MYCO Industries, Inc., respectively. Akin
Gump Strauss Hauer & Feld LLP acted as legal advisor to
EOG.
Conference Call Tuesday, September 6,
2016
EOG will host a conference call to discuss the
transaction that will be available via live audio webcast at
10 a.m. Central time (11 a.m. Eastern time) on Tuesday, September 6, 2016. To listen, log on to
the Investors Overview page on the EOG website at
http://investors.eogresources.com/overview. The webcast will
be archived on EOG's website through September 20, 2016.
EOG Resources, Inc. is one of the largest independent
(non-integrated) crude oil and natural gas companies in
the United States with proved
reserves in the United States,
Trinidad, the United Kingdom and China. EOG Resources,
Inc. is listed on the New York Stock Exchange and is traded under
the ticker symbol "EOG." For additional information about EOG,
please visit www.eogresources.com.
Yates Petroleum Corporation is a privately owned, independent
exploration and production company, headquartered in Artesia, N.M. Yates Petroleum Corporation has
a rich acreage position across the western United States in proven, horizontal resource
plays. Yates' focus areas in the Permian Basin and Powder River
Basins are stacked oil plays with low-risk, multi-zone
opportunities. Yates has a valuable resource in its employees, who
possess a deep technical knowledge across all of its areas of
operation. For additional information about Yates, please visit
www.yatespetroleum.com.
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. All statements herein, other than statements of historical
fact, including, among others, statements regarding EOG's
projections and expectations with respect to the future operations
of the combined company, the future drilling activities and
production growth in respect of the acquired Yates acreage, the
returns and performance to be achieved from the combined company's
assets, EOG's business strategy, plans and objectives in respect of
the acquired Yates acreage and the anticipated closing date of the
transaction described herein, are forward-looking statements.
Forward-looking statements are not guarantees of performance.
Although EOG believes the expectations reflected in its
forward-looking statements are reasonable and are based on
reasonable assumptions, no assurance can be given that these
assumptions are accurate or that any of these expectations will be
achieved (in full or at all) or will prove to have been
correct. Moreover, EOG's forward-looking statements may be
affected by known, unknown or currently unforeseen risks, events or
circumstances that may be outside EOG's control. Important
factors that could cause EOG's actual results to differ materially
from the expectations reflected in EOG's forward-looking statements
are enumerated in EOG's most recent Quarterly Reports on Form 10-Q
filed with the United States Securities and Exchange Commission
(SEC); see the sections entitled "Information Regarding
Forward-Looking Statements" therein. Also, see "Risk Factors"
on pages 13 through 21 of EOG's Annual Report on Form 10-K for the
fiscal year ended December 31, 2015
filed with the SEC for a discussion of certain risk factors that
affect or may affect EOG's business, financial position and results
of operations. You should not place any undue reliance on any
of EOG's forward-looking statements. EOG's forward-looking
statements speak only as of the date made, and EOG undertakes no
obligation, other than as required by applicable law, to update or
revise its forward-looking statements, whether as a result of new
information, subsequent events, anticipated or unanticipated
circumstances or otherwise. Reconciliation and calculation
schedules for EOG non-GAAP financial measures can be found on the
EOG website at www.eogresources.com.
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose not only "proved" reserves (i.e., quantities of
oil and gas that are estimated to be recoverable with a high degree
of confidence), but also "probable" reserves (i.e., quantities of
oil and gas that are as likely as not to be recovered) as well as
"possible" reserves (i.e., additional quantities of oil and gas
that might be recovered, but with a lower probability than probable
reserves). Statements of reserves are only estimates and may
not correspond to the ultimate quantities of oil and gas recovered.
Any reserve estimates provided in this press release or
accompanying investor presentation that are not specifically
designated as being estimates of proved reserves may include
"potential" reserves and/or other estimated reserves not
necessarily calculated in accordance with, or contemplated by, the
SEC's latest reserve reporting guidelines. Investors are urged
to consider closely the disclosure in EOG's Annual Report on Form
10-K for the fiscal year ended December 31,
2015, available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor
Relations). You can also obtain this report from the SEC by calling
1-800-SEC-0330 or from the SEC's website at www.sec.gov.
Investors
Cedric W.
Burgher
(713) 571-4658
David J. Streit
(713)
571-4902
Kimberly M.
Ehmer
(713) 571-4676
Media
K Leonard
(713) 571-3870
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SOURCE EOG Resources, Inc.