Memorial Production Partners To Buy Oil And Gas Assets For About $606 Mln

(RTTNews) - Memorial Production Partners LP (MEMP) said Monday that it has agreed to buy certain oil and gas properties in the Permian Basin, East Texas, and the Rockies for about $606 million.

The properties will be acquired from MEMP's sponsor, Memorial Resource Development LLC, and affiliates of Natural Gas Partners. The purchase price is subject to customary purchase price adjustments.

The terms of the transaction were approved by the board of directors of the general partner of MEMP and by the board's conflicts committee, which is comprised entirely of independent directors. The transaction has an effective date of July 1, 2013 and is expected to close in October 2013.

John Weinzierl, Chairman, President and Chief Executive Officer of MEMP said, "We are excited to announce our largest acquisition to date with meaningful entries in the Permian Basin and the Rockies as well as adding scale in our core area of East Texas. This acquisition marks another example of the commitment to grow MEMP through accretive transactions."

The acquired properties consist of 648.6 net wells on 136,000 net acres in Texas, New Mexico, Wyoming and Colorado. Houston, Texas-based MEMP will operate 94 percent of total proved reserves and 74 percent of the producing wells.

MEMP will buy about 275 Bcfe of proved reserves, which are located approximately 48 percent in the Permian Basin, 31 percent in East Texas and 21 percent in the Rockies. The company noted that the acquisition will increase its proved reserves by 36 percent to over 1.0 Tcfe and average daily production for May by 42 percent to about 152 MMcfe/d.

The properties have estimated proved reserves of about 275 Bcfe, comprising 57 percent proved developed and 51 percent liquids. The estimated May net production of these properties were about 45.3 MMcfe/d.

Looking ahead to fiscal 2013, MEMP raised its adjusted EBITDA guidance to a range of $202 million to $206 million from the prior range of $154 million to $158 million. The company now forecasts annual production in a range of 46 Bcfe to 48 Bcfe.

MEMP expects to fund the transaction through borrowings under its $1 billion multi-year revolving credit facility, which carries a current borrowing base of $480 million prior to any increases for the acquisition. As of July 1, 2013, MEMP had $441 million of available borrowing capacity.

MEMP closed Friday's trading at $19.30, up $0.12 on a volume of 120,800 shares.