This week’s buyers: GeoPark, FourPoint and EnerVest, KKR and Fleur de Lis, Natural Resources

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GeoPark Announces Entry Into Peru With Acquisition Of The Morona Block

GeoPark Limited (“GeoPark”) (NYSE: GPRK), the Latin American oil and gas explorer, operator and consolidator with operations and producing properties in Chile, Colombia, Brazil and Argentina, today announces that it has executed a Joint Investment Agreement and Joint Operating Agreement with Petroleos del Peru S.A. (“Petroperu”) to acquire an interest in and operate the Morona Block located in northern Peru. GeoPark will assume a 75% working interest (“WI”) of the Morona Block, with Petroperu retaining a 25% WI. The transaction has been approved by the Board of Directors of both Petroperu and GeoPark.

The Morona Block, also known as Lote 64, covers an area of 1.9 million acres on the western side of the Maranon Basin, one of the most prolific hydrocarbon basins in Peru. More than 1 billion barrels of oil have been produced from the surrounding blocks in this basin. The Morona Block contains the Situche Central oil field, which has been delineated by two wells (with short term tests of approximately 2,400 and 5,200 bopd of 35-36° API oil each) and by 3D seismic. The independent reservoir engineering firm, Ryder Scott, has certified proven and probable (2P) reserves of 55 million barrels of oil (mmbo) and 3P reserves of 85 mmbo for the Situche Central field for Petroperu. GeoPark used a 2P reserve estimate of 30-40 mmbo for its internal evaluation of this project.

In addition to the Situche Central field, the Morona Block has a large exploration potential with several high impact prospects and plays – with exploration resources currently estimated to range from 200 to 600 mmbo. This important component of the project will significantly increase GeoPark’s overall inventory of exploration resources and complement GeoPark’s growing reserve and cash flow base already established in Colombia, Chile and Brazil. The Morona Block includes geophysical surveys of 2,783 km (2D seismic) and 465 sq km (3D seismic), and an operating field camp and logistics infrastructure. The area has undergone oil and gas exploration activities for the past 40 years, and there exist ongoing association agreements and cooperation projects with the local communities.

The expected work program and development plan for the Situche Central oil field is to be completed in three stages. The goal of the initial stage will be to put the field into production through a long term test to help determine the most effective overall development plan and to begin to generate cash flow. This initial stage requires an investment of approximately $140 million to $160 million and is expected to be completed within 18 to 24 months after closing. GeoPark has committed to carry Petroperu during this initial phase and has the funds and cash flow to support this program.

The subsequent work program stages, which will be initiated once production has been established, are focused on carrying out the full development of the Situche Central field, including transportation infrastructure, and new exploration drilling of the Block. Petroperu will also have the right to increase its WI in the Block up to 50%, subject to GeoPark recovering its investments in the Block by certain agreed factors.

James F. Park, Chief Executive Officer of GeoPark, said, “This is a potentially transformational acquisition for GeoPark – and a great strategic fit for our existing Latin American project portfolio. We are excited to be entering into Peru – a culturally-rich country with immense hydrocarbon potential and a secure and attractive economic and political environment. The Morona Block has all the attributes we look for: a discovered oil field with the opportunity to establish production and cash flow in the near term; an agreed work program that is technically-sound and fits our budget; a big exploration upside within a proven hydrocarbon system in a prolific oil region; and a great partner, Petroperu, who has a strong presence throughout the region. The Maranon Basin is a priority target for us in Latin America and we see this as a unique opportunity to enter into a potentially high value-generating project and to approach it in a new way – both below and above ground. In addition to our oil-finding and operating track-record, one of GeoPark’s strengths is our commitment to building long term mutually-beneficial relationships, based on transparency, dialogue and respect, with the communities where we operate.”

FourPoint Energy and EnerVest Agree to Partner in the Anadarko Basin

FourPoint Energy, LLC announced today the acquisition of certain producing and undeveloped oil and gas properties and related midstream assets in the Western Anadarko Basin from affiliates of EnerVest, Ltd. Under the terms of the agreement, FourPoint Energy has purchased for $268 million an ownership stake in both the Laredo Petroleum and SM Energy acquisitions closed by EnerVest in the second half of 2013. The acquisition includes interest in over 1,200 producing wells with net production to FourPoint Energy of over 35 MMcfed.

FourPoint Energy and EnerVest have also entered into a Joint Development Agreement and Area of Mutual Interest Agreement to own, operate and develop oil and gas properties in the Western Anadarko Basin. Each company will hold a 50% interest in the AMI and EnerVest is designated as operator. The companies hold a strong acreage position with over 90,000 net acres in one of the most prolific multi-pay regions of the country. The companies will share all future lease and producing property acquisitions within the joint development area, encompassing 14 counties in Texas and Oklahoma and will work together as partners to advance an aggressive acquisition and development plan.

The partnership combines the extensive technical, operational, and transactional expertise of both companies while launching a well-capitalized venture to capture future opportunities through acquisitions and the drill bit. “This is a strategic partnership that marries the strengths of both companies and the FourPoint team couldn’t be more excited to be working with such a quality team of professionals at EnerVest,” said George Solich, President and CEO of FourPoint Energy.

This will be the first entry back into the Western Anadarko Basin for FourPoint Energy since the sale of their previous company, Cordillera Energy Partners to Apache Corporation in 2012. “Launching this new venture and simultaneously returning to this area provides an advantage for optimal value creation for our investors,” said Tad Herz, Executive Vice President and CFO.

This fourth enterprise led by George Solich and the core leadership team from Cordillera will possess the same performance driven, opportunistic, goal-oriented culture. Building on the experience of three successful companies in 12 years, FourPoint Energy will direct its initial focus to the core areas of the Western Anadarko and Permian Basins. “The Permian Basin offers multi-stacked pays with extensive vertical well control with industry transitioning to a more robust horizontal development model,” said Kamil Tazi, Executive Vice President and COO.

Simultaneous with the EnerVest transactions, FourPoint Energy raised over $1 billion of committed capital including $200 million in direct private equity and $800 million in term debt from EIG Global Energy Partners, LLC and funds advised by GSO Capital Partners, LP. In addition, FourPoint Energy also entered into a $250 million credit facility with JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A.

The debt and equity securities have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

FourPoint Energy is a privately held acquisition, exploration and production company headquartered in Denver, CO. Join our team at FourPointEnergy.com.

Jefferies LLC acted as sole financial advisor, JPMorgan Securities, LLC acted as sole lead arranger and book runner on the credit facility and Andrews Kurth LLP acted as legal advisor to FourPoint Energy in connection with this transaction.

KKR Natural Resources and Fleur de Lis Energy to Acquire Permian Basin Properties from Linn Energy LLC

KKR today announced that it has signed a definitive agreement to acquire certain oil and gas properties in Ector and Midland Counties of the Permian Basin (the “Assets”) from Linn Energy, LLC for $350 million. The transaction, which is expected t close in the fourth quarter, is being made through the KKR Natural Resources’ (“KNR”) partnership with Fleur de Lis Energy (“FDL”) that is focused on pursuing investments in producing North American oil and gas properties.

Commenting on the acquisition, FDL CEO Porter Trimble stated: “These are high quality assets that fit our acquisition and development strategy perfectly. This field has an extensive geologic column consisting of multiple producing horizons within the Permian Basin. This will allow the FDL team to access over 33 MMBOE of long life reserves.”

The Assets are comprised of over 7,200 contiguous acres producing from multiple hydrocarbon-rich zones, including the Strawn, Wolfcamp and Spraberry formations. FDL estimates fourth quarter production of over 5,200 boe/d, the majority of which is oil, and contain an attractive inventory of near-term development opportunities.

“We believe this represents an exciting opportunity to acquire high-quality producing assets that will benefit from ongoing development, and the application of new technologies, within the hydrocarbon rich Permian Basin. This is an important step as we continue to expand our natural resources platform in partnership with Fleur de Lis Energy,” said Jonathan Smidt, a Member of KKR and Head of KKR Natural Resources.

KKR announced its partnership with Fleur de Lis Energy in March 2014. Founded by former Merit Energy Company Vice Chairman, Porter Trimble, FDL currently manages a portfolio of natural gas producing assets in Southern Mississippi. This is KKR’s second investment behind operating partner FDL, following the July 2014 acquisition of Selma Chalk properties from Penn Virginia Corporation (NYSE: PVA).

KKR’s Global Energy & Infrastructure business invests across the entire energy supply chain. Since 2009, KKR, through its investment funds and vehicles, has invested or committed approximately $4.7 billion to energy-related investments spanning buy-outs, minority equity investments, joint-ventures, and various asset-level and structured investments, making KKR one of the more active private-market investors in the energy space during this period.

Natural Resource Partners L.P. to Acquire Additional Williston Basin Oil and Gas Interests for $340 million

Natural Resource Partners L.P. (NYSE: NRP) today reported that it has signed a definitive agreement to acquire non-operated working interests in oil and gas properties located in the Bakken/Three Forks play of the Williston Basin from an affiliate of Kaiser-Francis Oil Company for $340 million, subject to customary purchase price adjustments. The assets, located in the Sanish Field in Mountrail County, North Dakota, are all held by production and operated by Whiting Petroleum Corporation. The transaction, which is subject to customary closing conditions, will have an effective date of October 1, 2014 and is expected to close in November 2014. The acquisition is expected to be immediately accretive to NRP’s distributable cash flow and is expected to generate $58 million to $60 million of EBITDA in 2015.

In connection with the acquisition agreement, NRP received a firm commitment from Wells Fargo Bank, National Association to underwrite an expansion of the borrowing base in NRP’s existing oil and gas credit facility to $150 million. NRP anticipates using borrowings under the credit facility, together with proceeds from equity and debt offerings, to fund the transaction. Upon closing, the Partnership intends to hedge approximately 80% of the acquired current production volumes through 2016, with a small percentage of that production to be hedged for 2017 and 2018. NRP will opportunistically seek to hedge additional volumes beyond 2016 as the market provides favorable opportunities.

“Together with our existing interests in the Williston Basin, these assets give NRP extensive exposure to one of the premier oil plays in the United States,” said Wyatt Hogan, President of Natural Resource Partners. “This acquisition represents another significant step in our efforts to diversify NRP, and we anticipate that we will derive approximately 25% of our 2015 EBITDA from oil and gas. Further, we believe that the combination of our oil and gas interests, soda ash business, our recently acquired VantaCore aggregates operations and our other non-coal assets will contribute approximately 50% of our EBITDA in 2015 and position NRP as a truly diversified natural resource company.”

Below are a few details regarding the assets to be acquired:

  • Estimated average current production of approximately 3,100 Boe/d
  • Includes 186 producing wells and 10 wells in various stages of development
  • Approximately 5,700 net acres, all held by production
  • Average working interest of approximately 15%
  • 100% operated by Whiting Petroleum

Evercore Group L.L.C. acted as exclusive financial advisor to NRP and Tudor, Pickering, Holt & Co. acted as exclusive financial advisor to Kaiser-Francis Oil Company with respect to the transaction.

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