ARLP generates income from coal production and oil and gas mineral interests located in strategic producing regions across the US.
Image: The transaction is expected to further strengthen ARLP's position in the Permian Basin. Photo courtesy of rawpixel from Pixabay.
US-based diversified natural resource company Alliance Resource Partners (ARLP) has signed a definitive agreement to acquire oil and gas mineral interests Wing Resources and Wing Resources II for a cash purchase price of £113m.
The transaction is expected to further strengthen ARLP’s position in the Permian Basin through the addition of approximately 9,000 net royalty acres in the Midland Basin, with exposure to more than 400,000 gross acres.
In addition, the transaction includes 783 gross horizontal wells that are currently producing on the acreage, delivering an estimated 460 BOE per day, comprising 70% oil, and 14% NGLs to the Wing interests.
The assets also include an additional 441 drilled but uncompleted wells and 279 permits, which are under active development by well-capitalized operators bringing visible and near-term growth to current production.
ARLP chairman, president and chief executive officer Joseph W. Craft III said: “Today’s announcement reflects ARLP’s commitment to build its oil and gas minerals segment as a growth platform for the future.
“The Wing acquisition enhances our already significant ownership position in the prolific, liquids-rich Permian Basin and, upon completion, these assets are expected to complement our existing coal and oil and gas businesses, contributing to long-term cash flow growth for ARLP and value creation for our unitholders.”
ARLP intends to close the transaction in early August 2019
ARLP said that it would to fund the transaction with cash on hand and borrowings under its credit facility.
Under the agreement, the effective date for transaction is 1 May 2019, and the transaction is expected to be closed in early August 2019.
Following the acquisition of Wing’s assets, ARLP is expected to directly own approximately 51,000 net royalty acres concentrated in the Permian Basin (47.0%), SCOOP/STACK (40.0%), Bakken (8.0%) and Appalachian Basin (5.0%).
Furthermore, it also indirectly owns approximately 3,950 net royalty acres through its limited partner interest in AllDale Minerals III.