The US-based oil and gas company will purchase the assets from Paloma Partners IV, a limited liability company backed by EnCap Investments and its affiliates, using new debt financing and has already received firm commitments from a group of lenders
Mach Natural Resources has agreed to acquire certain interests in oil and gas properties, rights and associated assets in the Anadarko Basin in Oklahoma from Paloma Partners IV for $815m in cash.
Paloma Partners IV is a limited liability company backed by EnCap Investments and its affiliates.
The acquisition is expected to be completed on 29 December 2023, with an effective date of 1 September 2023, subject to customary terms, conditions, and closing price adjustments.
Mach intends to finance the acquisition with new debt financing and has already received financing commitments from a group led by Chambers Energy Management and EOC Partners.
The financing group includes Mercuria Investments, funds managed by Farallon Capital Management, and Macquarie Group, among other financial institutions.
Mach said that the $825m senior secured term loan will be completed at the same time as the closing of the acquisition.
The assets included in the transaction, with PDP reserves of around 75 million barrels of oil equivalent (MMBoe), have recently produced around 32,000 barrels of oil equivalent (boepd).
They cover around 62,000 net acres in the Anadarko Basin, which spans across parts of Oklahoma, Kansas, Texas, and Colorado regions in the US.
Currently, one rig is operating in Grady County and six additional wells are expected to be completed between the effective and closing dates of the acquisition.
Mach said the acquisition will advance its strategic objectives of being accretive to both total cash available for distribution and expected cash distribution per unit.
It complements its disciplined acquisition strategy that includes acquiring PDP reserves and expansive SCOOP/STACK inventory at a discount to PDP PV103.
Also, the newly acquired assets add a one-rig programme to the company’s current two-rig development programme, which enables a below 50% reinvestment rate.
Kirkland & Ellis served as legal advisor to Mach, Vinson & Elkins served as legal advisor, RBC Richardson Barr as financial advisor to the sellers, and Latham & Watkins served as legal advisor for the term loan participants.