This week’s buyers: Warren Resources, Rice Energy, Rockwater, and San Antonio Ventures

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Warren Resources buys Citrus Energy Corporation – 7 July.

Warren Resources (Nasdaq:WRES) today announced that it has executed a purchase and sale agreement to acquire essentially all of the Marcellus assets of Citrus Energy Corporation and two additional working interest owners for $352.5 million. As part of the total consideration, Warren will issue $40 million in Warren common stock priced at $6.00 per share, with the remainder to be funded through fully committed debt financing. This acquisition provides Warren with a substantial new basin platform in the prolific Marcellus Shale and adds a new core area to Warren’s existing California oil and Wyoming natural gas assets.

The assets are currently producing approximately 82 million net cubic feet per day of natural gas, as of June 2014. Estimated net proved reserves, as of the July 1, 2014 economic effective date, totaled approximately 208.3 billion cubic feet, 55% proved developed, as estimated by Netherland, Sewell & Associates, Inc., Warren’s independent petroleum engineering firm.

President and Co-Founder of Citrus, Lance Peterson, will be joining Warren on its Board of Directors upon closing of the acquisition. In addition, Citrus’ key technical, operating and land personnel will be transitioning over to Warren as employees, including Zachary Waite, who will assume the role of Vice President of Business Development and Marcellus Operations, and Daniel Collins, who will assume the role of Vice President of Marcellus Land.

Transaction Highlights:

  • Acquisition is of “core-of-the-core” Marcellus Shale assets in Wyoming County, Pennsylvania, which include some of the top performing Marcellus wells drilled to date
  • Wells being acquired generate substantial cash flow to fund future drilling and completion expenses in the Marcellus
  • Acquired assets will be 100% operated by Warren, are all held by production and are complemented with complete midstream infrastructure
  • Pro forma net production will increase by more than 200% from approximately 36 million cubic feet equivalent per day to approximately 118 million cubic feet equivalent per day 1
  • Pro forma net proved reserves will increase by more than 100% from approximately 202.5 Bcfe to 410.8 Bcfe 2
  • Warren’s operating and technical teams will expand and a solid platform for additional growth is established
  • Warren’s long-life California oil and Wyoming natural gas assets are complemented
  • Highly accretive

Rice Energy buys acreage from Chesapeake Appalachia – 7 July.

Rice Energy Inc. (NYSE: RICE) today announced that it has signed a definitive purchase and sale agreement to acquire approximately 22,000 net acres and 12 developed Marcellus wells in western Greene County, Pennsylvania, from Chesapeake Appalachia, LLC and its partners for approximately $336 million. The transaction is expected to close in August 2014, subject to customary closing conditions, with an effective date of February 1, 2014.

Acquisition Highlights:

  • Approximately 22,000 net acres (100% operated, average 95% working interest), representing a 24% increase in our net acreage position as of March 31, 2014
  • Approximately 152 net risked locations, representing a 47% increase to our Marcellus inventory of 325 net risked locations as of March 31, 2014
  • Current net production of approximately 20 MMcf/d from 7 wells, plus 5 additional wells in various stages of development

Toby Rice, President and Chief Operating Officer, commented, “This transaction is consistent with our strategy of acquiring high-quality shale assets. We are adding a significant number of drilling locations within an area we have been successfully developing since 2009. The acquired assets provide us with a foothold to pursue additional leasehold opportunities and further grow our inventory of low-risk, high-return projects.”

The acquisition is to be funded through a combination of cash on hand, borrowings under our revolving credit facility and are evaluating the equity capital markets. Rice is still on track to achieve its goal of organically adding 30,000 net leasehold acres this year.

Rockwater Energy Solutions buys Neohydro Corporation – 7 July.

Rockwater Energy Solutions, Inc., a water management and environmental solutions provider to the oilfield industry, announced today the purchase of Neohydro Corp., a provider of water treatment technology to the oilfield since 2007. This transaction solidifies the partnership formed with Neohydro in 2012, in order to further accelerate growth opportunities for Rockwater’s Fluids Conditioning services and bring much needed water treatment options to operators.

As part of the purchase agreement, Rockwater has obtained ownership of the patent pending Neohydro® Pathocell™ technology, a unique form of electro-oxidation which can reduce bacteria by over 99%, reduce total suspended solids by over 99%, reduce total petroleum hydrocarbons by 99%, and reduce heavy metals by 40-90% (including strontium, barium and iron), yielding a clean brine suitable for reuse in hydraulic fracturing. Deployed on mobile rover units, Neohydro builds on a mix of treatment capabilities provided by Rockwater, including filtration, microbial management, and “variable” desalinization at the top-end. Already the technology has been field proven by Rockwater with successful customer operations in the Permian and Eagle Ford shale in Texas, as well as Utah, Colorado, Wyoming, Oklahoma, and Canada.

“We’re incredibly proud of what we’ve achieved over the past two years,” commented Rockwater’s Dean Themy, General Manager and Inventor – Neohydro Technology. “Rockwater has given us access to the marketplace, industry know-how, and the ability to scale our resources to develop solutions that are changing the way water treatment is performed in the oilfield.”

Since partnering with Rockwater in 2012, Neohydro Corp. has moved the majority of its operations to Rockwater facilities with further integration planned to continue its growth.

“What our customers want is a cost-effective solution to treat produced and flowback water to a level compatible with hydraulic fracturing fluids. A thorough understanding of this intricate chemistry requires both the technology and expertise that Rockwater delivers,” said Larry O’Donnell, Chairman, President and CEO of Rockwater. “This acquisition enables Rockwater to further align our focus and resources around advancing our Fluids Conditioning services to continue to expand the depth, breadth and scope of our comprehensive water management solutions, including water treatment, water transfer, flowback and well testing, high capacity above-ground storage tanks (ASTs) and chemical technology offerings.”

San Antonio Ventures signs letter of intent to acquire R2 Energy – 10 July.

San Antonio Ventures Inc. (TSX VENTURE:SAN) has entered into a non-binding letter of intent dated July 4, 2014 with R2 Energy Ltd., pursuant to which the parties propose that San Antonio will acquire all of the issued and outstanding common shares of R2 in exchange for common shares of San Antonio on a one-for-one post-consolidation basis by way of a court approved plan of arrangement, three-cornered amalgamation or such other transaction structure as is mutually agreed upon by San Antonio and R2 given applicable corporate, tax and securities law considerations.

As part of the Proposed Transaction, San Antonio will consolidate its issued and outstanding common shares on two (2) old for one (1) new basis and change its name to “R2 Energy Ltd.” or such other name as is acceptable to applicable regulatory authorities and R2, in its sole discretion.

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