Memorial Production Partners To Buy Oil Producing Assets In Wyoming For $935 Mln

(RTTNews) - Memorial Production Partners LP (MEMP) announced Monday that it agreed to acquire certain oil producing properties in Wyoming for a purchase price of approximately $935 million, subject to customary purchase price adjustments. The transaction has an effective date of April 1, 2014. It is expected to close in the third quarter of 2014.

The acquired properties consist of established tertiary CO2 floods located in two fields in the Bairoil Complex in Sweetwater and Carbon Counties in Wyoming. The Bairoil Complex properties are 100% operated with an average working and net revenue interest of 100% and 88%, respectively. The properties cover approximately 6,800 gross acres and include 140 producing wells and 166 injection wells.

The transaction is expected to be immediately accretive to distributable cash flow and net asset value.

MEMP expects to fund the transaction through borrowings under its $2.0 billion multi-year revolving credit facility, which currently carries a borrowing base of $870 million prior to any increase for the acquisition. As of April 30, 2014, MEMP had $496 million of available borrowing capacity.

The transaction is expected to result in a significant borrowing base increase, and MEMP is working with its lenders to complete a redetermination of the borrowing base pro forma for the acquisition.

MEMP's liquidity position is expected to be in excess of $200 million following the close of the transaction.

Citigroup Global Markets Inc. acted as MEMP's financial advisor for the transaction. Consistent with its hedging strategy, MEMP intends to hedge up to 85% of projected production volumes related to this acquisition for three to six years.

The company revised its 2014 Adjusted EBITDA guidance to a range of $355 million - $375 million from the previously announced range of $303 million - $311 million.

The company also revised its 2014 Distributable Cash Flow guidance to a range of $183 million - $203 million from the previously announced range of $158 million - $166 million.

The company said it has layered on incremental commodity hedges that cover up to 85% of projected production volumes related to this acquisition through 2016. These incremental commodity hedges represent total oil volumes of 3.5 MMBbls for the period July 2014 - December 2016 at a weighted average fixed price of $88.57; and 511,200 Bbls of NGLs for the period July 2014 - December 2015 at an average fixed price of $75.71.