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Evolution Acquires Non-operated Wyoming Natural Gas Interests

Evolution Petroleum announced that it has entered into a definitive agreement to acquire non-operated natural gas assets in the Jonah Field in Sublette County, Wyoming from privately-owned Exaro Energy III, LLC.

The purchase price of the transaction is $29.4 million, with the closing date scheduled for April 1, 2022.

As a result of this accretive transaction, Evolution Petroleum is able to diversify into natural gas assets in Wyoming, providing access to multiple attractive markets including to the west through the Opal market hub, with the optionality to flow to eastern markets, according to its president and CEO, Jason Brown.

The Houston-based company, Evolution, owns, manages, and develops producing properties with the aim of providing a sustainable dividend yield for its shareholders. As part of the company's long-term strategy, it will strive to develop a diversified portfolio of oil and natural gas assets.

At present, Evolution's portfolio of non-operated assets includes interests in multiple geological formations, including the Barnett Shale in North Texas, the Delhi Field in Louisiana, the Hamilton Dome Field in Wyoming, and assets in the Williston Basin in North Dakota — the result of a $25.9 million acquisition closed earlier in the year.

Due to the company's recent acquisitions in the Williston Basin and Jonah Field, the company has been able to boost cash flow generation and significantly grow production volumes through low-risk development drilling. The top management of Evolution also plans to extend dividend payments through these acquisitions for the next decade.

Among the assets are 42 billion cubic feet of natural gas equivalent (bcfe) of long-life proved developed producing reserves in the Jonah Energy LLC-operated natural gas field in the northwestern portion of the Green River basin. The field has 648 producing wells and spawns approximately 1,040 net acres.

A total of 14.2 MMcfe/d is currently being produced from acquired assets; 88% of that is natural gas, 6% is oil, and 6% is NGL. Jonah Energy has operated all of the wells since 2014, and the company is an established operator in Wyoming.

Within the last two years, Evolution has more than 400% increased production and reserves. Moreover, this growth and value creation have occurred without material shareholder dilution or onerous debts.

After taking into account expected incremental debt, Brown estimates a debt level post-closing to be below one-time Evolution's pro forma annualized EBITDA.

That transaction took effect on February 1. We anticipate closing on or about April 1. The deal is expected to be funded from cash on hand and borrowings under the Company's existing senior credit facility.

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Energy Transfer LP Races to Carry Permian Basin Gas to Gulf Coast Hubs

The ever-increasing demand for natural gas exports from the Gulf Coast started a race to further develop Permian Basin. Various companies, including Kinder Morgan and MPLX, are among those looking at building new pipelines in the region due to the demand spike. But Energy Transfer seems to edge past them into the lead since its project strikes as the most economical option for the basin outside of capacity expansions on existing pipelines and could essentially add 1.5-2 Bcf/d of transport capacity with just 260 miles of new pipe.

Still waters run deep: after patiently waiting for 2 years, Lime Rock Resources starts the year with a pair of acquisitions worth $358.5 million The two acquisitions include Abraxas Petroleum’s Williston Basin position in North Dakota: about 3,500 acres of land and 19,400 boed of net production, as well as properties situated in Burleson, Milam, and Robertson in Texas from a third party, that contain 46,000 contiguous net acres and produce 7,700 boed as of the closing of the deal. The company intends to intensify its focus on low-risk opportunities and margins, which will significantly boost Lime’s market position going further.

In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.

On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.

On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.

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