LRR Energy, L.P. to Acquire Oil and Gas Producing Properties from Lime Rock Resources
HOUSTON--(BUSINESS WIRE)-- LRR Energy, L.P. (NYSE: LRE) (LRR Energy or LRE) announced today that it has signed a definitive agreement to acquire certain oil and natural gas properties in the Permian Basin region in New Mexico and onshore Gulf Coast region in Texas from its sponsor, Lime Rock Resources, for a purchase price of $67.0 million. LRE expects to finance the transaction with borrowings under its existing bank credit facility. Terms of the transaction were approved on May 2, 2012 by the Board of Directors of the general partner of LRE and on May 1, 2012 by the Board's conflicts committee, which is comprised entirely of independent directors. The transaction is expected to close on or about June 1, 2012, subject to customary approvals and closing conditions.
Eric Mullins, Chairman and Co-Chief Executive Officer, commented, "We are excited to announce our first transaction, which consists predominately of oily, mature properties that are an ideal fit for our MLP strategy. Charlie Adcock, Co-Chief Executive Officer, noted, These assets are great additions to our existing footprint in the Permian Basin and Gulf Coast regions. In addition, we expect this transaction to be immediately accretive to distributable cash flow per unit.
The properties are located primarily in Eddy County, New Mexico and DeWitt County, Texas.
" Estimated net proved reserves of approximately 1,728 MBoe
" Approximately 83% of proved reserves are oil and natural gas liquids
" 92% of proved reserves are proved developed producing
" Current net production of approximately 765 Boe per day
" Producing wells: 31 gross (20 net)
" 82% of proved reserves are operated
The acquisition is expected to be immediately accretive to both distributable cash flow per unit and net asset value per unit. Management will evaluate the impact of the acquisition on current distribution levels in relation to its goal of improving LREs distribution coverage ratio as it integrates the acquired assets. Consistent with its hedging strategy, LRE intends to hedge 85% of estimated production from total proved developed producing reserves of the acquired properties through 2016.
The conflicts committee engaged Tudor, Pickering, Holt & Co. Securities, Inc. to act as its financial advisor and Bracewell & Giuliani LLP to act as its legal advisor.
About LRR Energy, L.P.
LRR Energy (LRE) is a Delaware limited partnership formed in April 2011 by affiliates of Lime Rock Resources to operate, acquire, exploit and develop producing oil and natural gas properties in North America. LRR Energy's properties are located in the Permian Basin region in West Texas and southeast New Mexico, the Mid-Continent region in Oklahoma and East Texas and the Gulf Coast region in Texas.
This press release includes "forward-looking statements" that is, statements related to future events. Forward-looking statements are based on the current expectations of LRR Energy and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "may," "predict," "pursue," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "target," "continue," "potential," "should," "could" and other similar words. Actual results and future events could differ materially from those anticipated or implied in such statements. Forward-looking statements involve certain risks and uncertainties, and ultimately may not prove to be accurate. These risks and uncertainties include, among other things, a decline in oil, natural gas or NGL prices, the risk and uncertainties involved in producing oil and natural gas, competition in the oil and natural gas industry, governmental regulations and other factors. Actual results could differ materially from those anticipated or implied in the forward-looking statements due to the factors described under the captions "Risk Factors" in LRR Energy's Annual Report on Form 10-K for the year ended December 31, 2011 and LRR Energy's subsequent filings with the Securities and Exchange Commission (the SEC). All forward-looking statements speak only as of the date of this release. LRR Energy does not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only "reserves" as defined by SEC rules. Estimates of reserves in this press release are based on economic assumptions with regard to commodity prices that differ from the prices required by the SEC (historical 12 month average) to be used in calculating reserves estimates prepared in accordance with SEC definitions and guidelines. In addition, the estimates of reserves in this press release were prepared by our internal reserve engineers and are based on various assumptions, including assumptions related to oil and natural gas prices as discussed above, drilling and operating expenses, capital expenditures, taxes and availability of funds. Our internal estimates of proved reserves may differ materially from the estimates of our proved reserves prepared by Miller & Lents, Ltd. and Netherland, Sewell & Associates, Inc. as a result of the SEC pricing and other assumptions employed by an independent reserve engineering firm.
LRR Energy, L.P.
Todd Hassen, (713) 292-9534
Director of Finance
Jaime Casas, (713) 345-2126
Chief Financial Officer
Source: LRR Energy, L.P.Copyright Business Wire 2012