Sanchez Production Partners Closes Acquisition of Assets from Sanchez Energy
November 22 2016 - 4:45PM
Sanchez Production Partners LP (NYSE MKT:SPP) (“SPP” or the
“Partnership”) today announced that it has closed on the previously
announced definitive agreement to acquire a 50 percent interest in
Carnero Processing, LLC (“Carnero Processing”) from Sanchez Energy
Corporation (NYSE:SN) (“Sanchez Energy”) for total consideration of
approximately $80 million. In conjunction with the closing, the
Partnership paid cash consideration of $55.5 million and assumed
remaining capital commitments to Carnero Processing, which are
estimated at $24.5 million.
The Partnership also announced that it has
closed on the previously announced definitive agreement to acquire
certain producing oil and natural gas assets, located in South
Texas, from Sanchez Energy for total consideration of approximately
$27 million. After normal and customary closing adjustments, the
Partnership paid cash consideration of approximately $25.6 million
to Sanchez Energy at closing.
MANAGEMENT COMMENTARY“Having now closed the two
transactions announced in October 2016, we have successfully
executed and financed transactions with Sanchez Energy for total
value of nearly $600 million,” said Gerry Willinger, Chief
Executive Officer of the general partner of SPP. “In the process,
we have demonstrated how our strategic relationship with Sanchez
Energy can be leveraged to enable each company to better optimize
its respective strategies, capital resources, and financial
targets. We are excited to be further aligned with Sanchez Energy
and its plans for development in South Texas, and look forward to
capitalizing on additional opportunities to grow alongside this
leading Eagle Ford operator over time.”
LIQUIDITY UPDATEAfter debt repayment scheduled
for Nov. 23, 2016, the Partnership anticipates that it will have
$148.0 million in debt outstanding under its credit facility, which
has a borrowing base of $205.1 million, and outgoing letters of
credit totaling approximately $15 million related to the funding of
remaining capital commitments to Carnero Processing and Carnero
Gathering, LLC. Based on an elected commitment amount of $200
million, the Partnership projects pro forma liquidity on Nov. 23,
2016 of approximately $53.1 million, which includes projected
borrowing capacity net of outstanding letters of credit plus cash
and cash equivalents after the scheduled debt repayment. The
reserve-based lending component of the Partnership’s borrowing base
is scheduled for redetermination in the fourth quarter 2016 and the
midstream component of the borrowing base is scheduled for
redetermination during the first quarter 2017.
ABOUT THE PARTNERSHIPSanchez Production
Partners LP (NYSE MKT:SPP) is a publicly-traded limited partnership
focused on the acquisition, development, ownership and operation of
midstream and production assets in North America. The Partnership
owns an oil and natural gas gathering and processing system located
in the Eagle Ford Shale in Dimmit, Webb and La Salle Counties,
Texas. The Partnership also currently owns producing reserves in
the Eagle Ford Shale in South Texas, the Gulf Coast region of Texas
and Louisiana, and across several basins in Oklahoma and Kansas.
The Partnership previously announced and continues to explore the
possible divestiture of its remaining assets and operations in
Oklahoma and Kansas.
ADDITIONAL INFORMATIONAdditional information
about SPP can be found in the Partnership’s documents on file with
the U.S. Securities and Exchange Commission (www.sec.gov) and in
the “Investor Presentation” available on the Partnership’s website
(www.sanchezpp.com).
FORWARD-LOOKING STATEMENTSThis press release
contains, and the officers and representatives of the Partnership
and its general partner may from time to time make, statements that
are considered forward–looking statements within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934.
These forward-looking statements are subject to a number of risks
and uncertainties, many of which are beyond our control, which may
include statements about our: business strategy; acquisition
strategy; financing strategy; ability to make, maintain and grow
distributions; the ability of our customers to meet their drilling
and development plans on a timely basis or at all and perform under
gathering and processing agreements; future operating results;
future capital expenditures; and plans, objectives, expectations,
forecasts, outlook and intentions. All of these types of
statements, other than statements of historical fact included in
this press release, are forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
“may,” “could,” “should,” “expect,” “plan,” “project,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,”
“pursue,” “target,” “continue,” the negative of such terms or other
comparable terminology.
The forward-looking statements contained in this
press release are largely based on our expectations, which reflect
estimates and assumptions made by our management. These estimates
and assumptions reflect our best judgment based on currently known
market conditions and other factors. Although we believe such
estimates and assumptions to be reasonable, they are inherently
uncertain and involve a number of risks and uncertainties that are
beyond our control. In addition, management’s assumptions about
future events may prove to be inaccurate. Management cautions all
readers that the forward-looking statements contained in this press
release are not guarantees of future performance, and we cannot
assure any reader that such statements will be realized or the
forward-looking events and circumstances will occur. Actual results
may differ materially from those anticipated or implied in the
forward-looking statements due to factors listed in the “Risk
Factors” section in our filings with the U.S. Securities and
Exchange Commission and elsewhere in those filings. The
forward-looking statements speak only as of the date made, and
other than as required by law, we do not intend to publicly update
or revise any forward-looking statements as a result of new
information, future events or otherwise. These cautionary
statements qualify all forward-looking statements attributable to
us or persons acting on our behalf.
PARTNERSHIP CONTACT
Charles C. Ward
Chief Financial Officer
Sanchez Production Partners GP LLC
(877) 847-0009
General Inquiries: (713) 783-8000
www.sanchezenergycorp.com