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Athlon Buys Midland Basin Assets For $873 Million

|Includes:Athlon Energy Inc. (ATHL)

Athlon Energy has entered into multiple agreements with five unrelated third-party sellers to acquire certain producing properties and undeveloped acreage in Texas' Midland Basin for an aggregate purchase price of $873 million in cash. The properties are 100% operated and are concentrated primarily on the western side of the northern Midland Basin in Martin, Upton, Andrews, and Glasscock counties. The transactions are expected to close by or before Jun-2014.

Assets overview

· 23,500 net acres with an average 97% working interest (73% net revenue interest)

· 840 gross identified vertical drilling locations

· 425 gross identified horizontal drilling locations in Wolfcamp A & B, Lower and Middle Spraberry, Wolfcamp D, and Clearfork horizons

· Current net production of approximately 4.8 MBOE/d (67% oil)

· Total estimated net reserve potential of over 250 MMBOE

· Net 1P reserves of 31 MMBOE (39% Proved Developed); based on Athlon's internal estimates

The acquired properties will require one vertical rig drilling approximately 20 wells per year to hold the acreage. Athlon is currently operating one horizontal rig and plans to add its second horizontal rig at end-Apr-2014. A third horizontal rig will be added at the closing of the acquisitions. The company also plans to accelerate to four operated horizontal rigs by early Q4-2014.

In Jan-2014, Athlon Energy entered into an agreement to acquire certain assets in the northern Midland Basin for $88 million.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: ATHL