Midstates Petroleum to Acquire Oil-Weighted Properties in the Western
Anadarko Basin in Oklahoma and Texas
Transaction Significantly Increases Scope, Scale and Upside Potential
HOUSTON -- April 04, 2013
Midstates Petroleum Company, Inc. (NYSE: MPO) ("Midstates" or the "Company")
announced today that it has entered into a Purchase and Sale Agreement with
Panther Energy, LLC, and its partners Red Willow Mid-Continent, LLC and LINN
Energy Holdings, LLC (NASDAQ: LINE) (together, “Panther”), to acquire
producing properties as well as developed and undeveloped acreage in the
Anadarko Basin in Texas and Oklahoma for $620 million in cash. Both Panther
Energy, LLC and Red Willow Mid-Continent, LLC are subsidiaries of the Southern
Ute Indian Tribe Growth Fund. Primary horizontal drilling targets include the
Cleveland, Marmaton, Cottage Grove, and Tonkawa formations. The transaction
will be effective April 1, 2013 and closing is expected on or about May 31,
2013, subject to customary closing conditions.
Key highlights of the transaction include:
*Adds approximately 36.4 million barrels of oil equivalent (“Mmboe”) proved
reserves that are 45% oil and 21% natural gas liquids (“NGLs”), of which
34% are proved developed producing
*Increases net current daily production by approximately 8,000 Boe per day
*Enhances drilling inventory with over 700 low-risk, repeatable horizontal
*Expands acreage position with approximately 140,000 net acres with
multiple objectives; about 102,000 are in Texas and 38,000 are in
Oklahoma; 60% of total acreage is held by production
*Adds approximately 280 gross producing wells that are over 80% operated
with an average 69% working interest and 55% net revenue interest
*Provides more than 100 Mmboe in internally estimated resource potential
*Immediately accretive in 2013 to cash flow per share, as well as earnings,
EBITDA, proved reserves and production per share
John Crum, Midstates Chairman, Chief Executive Officer and President
commented, “The acquisition we announced today greatly enhances our scope,
scale and identified resource potential. On a variety of key metrics and in
particular cash flow, the transaction is immediately accretive in 2013, and
with a full year impact from the Panther assets is strongly accretive in 2014
and beyond. It increases our year-end 2012 proved reserves by almost 50%,
grows our fourth quarter production by over 50%, and nearly doubles our active
gross well count. We are very excited about the immediate positive impact it
will have on our Company in addition to the significant growth opportunities
it will provide us. This acquisition strengthens and diversifies Midstates’
investment portfolio and lowers the overall risk profile of the Company.”
Crum continued, “Adding this new third focus area provides Midstates the
opportunity to build upon our operational strengths and leverage our presence
in the Mid-Continent region that we established last year in Tulsa after
completing our Mississippian Lime acquisition. The Anadarko Basin is well
understood by our team and the industry and will enhance Midstates’ overall
investment profile. Returns on the wells in this region are very attractive
and the operating costs are comparable to our existing cost structure.”
Primary drilling targets on the properties acquired include the Cleveland,
Marmaton, Cottage Grove, and Tonkawa formations with potential upside from
drilling the deeper lower Pennsylvanian and Mississippian sections. Panther
currently employs three rigs in its drilling program. Midstates plans to
double that activity level by late summer 2013 and run a six-rig program with
three to four rigs drilling for the Cleveland formation and two to three
drilling for the Marmaton, Cottage Grove and Tonkawa formations.
During 2013, Midstates expects to drill approximately 40-45 wells on the newly
acquired acreage, all of which will be horizontal wells. Drilling and
completion costs have averaged approximately $3.0 million per horizontal well
which have been drilled to an average vertical depth of 6,000 to 8,000 feet
with 4,000 to 4,300 foot laterals and 15 to 17 stages of fracture stimulation.
The Company’s pro forma reserves including the acquisition will continue to be
oil and liquids-rich and total 111.8 Mmboe consisting of 48% oil, 20% NGLs,
and 32% natural gas. The reserve life of the assets being acquired is about
In connection with the acquisition, Midstates has secured $620 million in
bridge loan commitments from Morgan Stanley Senior Funding, Inc. and SunTrust
Robinson Humphrey, Inc. Midstates intends to permanently finance the
acquisition by raising $725 to $750 million of which $100 to $125 million
would be equity, pending market conditions, and the balance would be debt.
Additionally, Midstates has also received commitments from SunTrust Robinson
Humphrey, Inc. and Morgan Stanley Senior Funding, Inc. to increase the
borrowing base under the Company’s revolving credit facility to $425 million
at closing of the transaction. The Company believes these financing
arrangements are sufficient to both finance the acquisition and provide
liquidity to comfortably fund its drilling and development program through the
end of 2014.
Midstates’ Board of Directors has unanimously approved the transaction. The
Company will enter into a transition services agreement with Panther for a
six-month period following transaction closing.
Morgan Stanley & Co. LLC and SunTrust Robinson Humphrey, Inc. acted as
financial advisors to the Company in connection with the transaction.
In connection with the Company’s hedging strategy, Midstates has entered into
additional hedge contracts for the remainder of 2013, and for 2014 and 2015.
The Company’s hedge portfolio is presented in the table below.
Conference Call Information
The Company will host a conference call to discuss the acquisition, today,
April 4 at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). A slide deck has
been posted to Midstates’ web site that will be referenced in today’s
conference call. Participants may join the conference call by dialing (877)
645-4610 (for U.S. and Canada) or (707) 595-2723 (International). The
conference access code is 32357875 for all participants. To listen via live
web cast, please visit the Investors section of the Company's website,
An audio replay of the conference call will be available approximately two
hours after the conclusion of the call. The audio replay will remain available
for seven days until Wednesday, April 11, 2013 at 11:59 p.m. Eastern Time
(10:59 p.m. Central Time) and can be accessed by dialing (855) 859-2056 (for
U.S. and Canada) or (404) 537-3406 (International). The conference call replay
access code is 32357875 for all participants. The replay will also be
available in the Investors section of the Company's website approximately two
hours after the conclusion of the call and remain available for approximately
90 calendar days.
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements that are not statements of historical
fact, including statements regarding the Company's strategy, future
operations, financial position, estimated revenues and losses, projected
costs, prospects, plans and objectives of management, and the closing,
financing and benefits of the acquisition are forward-looking statements.
Without limiting the generality of the foregoing, these statements are based
on certain assumptions made by the Company based on management's experience,
expectations and perception of historical trends, current conditions,
anticipated future developments and other factors believed to be appropriate.
Although the Company believes that its plans, intentions and expectations
reflected in or suggested by the forward-looking statements made in this press
release are reasonable, the Company gives no assurance that these plans,
intentions or expectations will be achieved when anticipated or at all.
Moreover, such statements are subject to a number of factors, many of which
are beyond the control of the Company, which may cause actual results to
differ materially from those implied or expressed by the forward-looking
statements. These factors include, but are not limited to, the inability of
the Company to close the acquisition; costs and difficulties related to the
integration of the acquired businesses and operations with Midstates’ business
and operations; unexpected costs, charges or expenses resulting from the
acquisition; litigation relating to the acquisition; variations in the market
demand for, and prices of, oil and natural gas; uncertainties about the
Company's estimated quantities of oil and natural gas reserves; the adequacy
of the Company's capital resources and liquidity including, but not limited
to, access to additional borrowing capacity under its revolving credit
facility; general economic and business conditions; failure to realize
expected value creation from property acquisitions; uncertainties about the
Company's ability to replace reserves and economically develop its current
reserves; risks related to the concentration of the Company's operations.
drilling results; and potential financial losses or earnings reductions from
the Company's commodity derivative positions.
Any forward-looking statement speaks only as of the date on which such
statement is made and the Company 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.
About Midstates Petroleum Company, Inc.
Midstates Petroleum Company, Inc. is an independent exploration and production
company focused on the application of modern drilling and completion
techniques to oil-prone resources in previously discovered yet underdeveloped
hydrocarbon trends. The Company’s operations are currently focused on
oilfields in the Upper Gulf Coast Tertiary trend onshore in central Louisiana
and in the Mississippian Lime trend in northwestern Oklahoma and southern
Kansas. The Company is headquartered in Houston, Texas. Additional information
about the Company is available at www.midstatespetroleum.com.
Midstates Petroleum Company, Inc.
Summary of Commodity Derivative Contracts as of April 4, 2013
Second Third Fourth
Quarter Quarter Quarter 2014 2015
2013 2013 2013
Hedged Volume 483,460 672,094 672,120 2,425,950 1,460,000
Hedged Volume 5,313 7,305 7,306 6,646 4,000
Average Fixed $ 94.70 $ 95.01 $ 95.65 $ 88.98 $ 86.69
Hedged Volume 50,751 50,751 50,751 164,400
Hedged Volume 558 552 552 450
Average Floor $ 85.27 $ 85.27 $ 85.27 $ 88.49
Average $ 100.70 $ 100.70 $ 100.70 $ 97.94
WTI to LLS
Swaps ^ (1)
Hedged Volume 438,970 413,034 330,760 501,000
Hedged Volume 4,824 4,490 3,595 1,373
Average $ 5.93 $ 5.76 $ 5.80 $ 5.35
Hedged Volume 558,249 558,249 558,249 1,685,004
Hedged Volume 6,135 6,068 6,068 4,616
Average Floor $ 3.68 $ 3.68 $ 3.68 $ 3.99
Average $ 4.91 $ 4.91 $ 4.91 $ 5.09
Hedged Volume 64,500 64,500 64,500 151,500
Hedged Volume 709 701 701 415
Average Fixed $ 63.42 $ 63.42 $ 63.42 $ 62.16
(1) The Company enters into swap arrangements intended to capture the positive
differential between the Louisiana Light Sweet (“LLS”) pricing and West Texas
Intermediate (“NYMEX WTI”) pricing.
Midstates Petroleum Company, Inc.
Al Petrie, 713-595-9427
Garrett Galloway, 713-595-9323
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