This week’s buyers: San Leon and Tallgrass

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Source: DollarPhotoClub

San Leon buys Petromaroc

San Leon Energy, the AIM listed company focused on oil and gas exploration in Europe and North Africa, has announced the acquisition of Petromaroc’s 1.5% net working interest in the Sidi Moussa licence, offshore Morocco.

The drilling of the SM-1 well on the Nour prospect is currently underway by the operator, Genel Energy PLC, for a consideration limited to assuming Petromaroc’s share of expenditure of the Minimum Work Obligations. Serica Energy PLC and Genel have been notified of this transfer.

Petromaroc has also transferred its 22.5% net working interest in the Tarfaya Onshore licence to San Leon, the operator of the licence. Petromaroc will pay San Leon its share of expenditure during the current exploration period. San Leon is now in the process of obtaining an extension of the current period and a revised work programme.

The above transfers of interest will be effective upon the approval of Moroccan authorities (joint Ministerial orders).

Oisin Fanning, San Leon Executive Chairman, commented: “We are delighted to have acquired additional interests in our two highly prospective licences in Morocco at no additional costs to the Company. The excellent fiscal terms and high potential upside all contribute to make Morocco one of the last exploration frontiers.”

Tallgrass Energy buys interest in Pony Express

Tallgrass Energy Partners, LP (NYSE: TEP) announced today that it has closed on the acquisition of a 33.3% interest in Tallgrass Pony Express Pipeline, LLC from a wholly-owned subsidiary of Tallgrass Development, LP, for total consideration valued at $600 million.

“We are pleased to announce the completion of our second dropdown transaction at TEP. This acquisition further diversifies the operations and footprint of TEP and continues to demonstrate the execution of our growth strategy. We expect this acquisition to be immediately accretive to our unitholders, and as a result, anticipate recommending that our Board of Directors increase the next two quarterly distributions to result in an aggregate distribution increase of at least $0.40 on an annualized basis,” said Tallgrass President and CEO, David G. Dehaemers, Jr.

The purchase price for Pony Express was comprised of $597 million in cash and the issuance of 70,340 common units of TEP to Tallgrass Development, LP, which equates to $3 million based on the Partnership’s September 4, 2014 closing price. The terms of the transaction provide TEP a minimum quarterly distribution preference payment of $16.65 million through the quarter ending September 30, 2015 (pro-rated to approximately $5.4 million for the quarter ending September 30, 2014) with distributions of available cash generally shared pro rata thereafter. The terms of the transaction do not require TEP to contribute any additional capital to complete the remaining initial build out of the Pony Express crude oil pipeline project; additional capital would be contributed by Tallgrass Development, LP, without dilution to the Partnership’s 33.3% membership interest.

Pony Express owns and is developing an oil pipeline project. That project consists of two components that include (i) the conversion of an approximately 430-mile natural gas pipeline and the construction of an approximately 260-mile southward pipeline extension that, when complete, will result in an oil pipeline from Guernsey, Wyoming to Cushing, Oklahoma (the “Pony Mainline”), and (ii) the construction of an approximate 66-mile lateral in Northeast Colorado that will interconnect with the mainline (the “Northeast Colorado Lateral”).

The Pony Mainline has approximately 206,000 bbls/d of committed capacity with five year contract terms and is expected to be in service during the third quarter of 2014. The Northeast Colorado Lateral has approximately 81,000 bbls/d of committed capacity with five year contract terms and is expected to be in service sometime during the first half of 2015. The firm contracts commence on the date the Pony Mainline or Northeast Colorado Lateral, as applicable, are placed in commercial service.

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