Item 2.01
Completion of Acquisition or Disposition of Assets
On November 22, 2016, Sanchez Production Partners LP (the
Partnership
) consummated the acquisition of 50% of the outstanding membership interests in Carnero Processing, LLC pursuant to the previously announced Purchase and Sale Agreement dated October 6, 2016 among the Partnership, Sanchez Energy Corporation (
Sanchez Energy
) and SN Midstream, LLC, a wholly-owned subsidiary of Sanchez Energy. Carnero Processing, LLC is constructing a cryogenic gas processing facility located in La Salle County, Texas. The Partnership paid aggregate cash consideration of approximately $55.5 million and agreed to assume approximately $24.5 million of remaining capital contribution commitments in connection with the acquisition, which purchase price was determined through arms length negotiations between the general partner of the Partnership and Sanchez Energy, including independent committees of both entities.
On November 22, 2016, the Partnership also consummated the acquisition of working interests in 23 producing Eagle Ford wellbores located in Dimmit and Zavala counties in South Texas together with escalating working interests in an additional 11 producing wellbores located in the Palmetto Field in Gonzales County, Texas, pursuant to the previously announced Purchase and Sale Agreement dated October 6, 2016 among SN Cotulla Assets, LLC and SN Palmetto, LLC, each a wholly-owned subsidiary of Sanchez Energy, on the one hand, and the Partnership and SEP Holdings IV, LLC, a wholly-owned subsidiary of the Partnership, on the other hand. The Partnership paid aggregate cash consideration of $25.6 million after $1.4 million in normal and customary closing adjustments, which purchase price was determined through arms length negotiations between the general partner of the Partnership and Sanchez Energy, including independent committees of both entities.
Antonio R. Sanchez, III is Sanchez Energys Chief Executive Officer and is a member of the board of directors of both Sanchez Energy and of the general partner of the Partnership. Sanchez Oil and Gas Corporation (
SOG
) is a private company that provides certain services to both Sanchez Energy and the Partnership. Antonio R. Sanchez, Jr., the father of Antonio R. Sanchez, III, is a member of the board of directors of Sanchez Energy and both are officers and directors of SOG. Patricio D. Sanchez, the son of Antonio R. Sanchez, Jr. and brother of Antonio R. Sanchez, III, is an Executive Vice President of Sanchez Energy, an officer of SOG and an officer and director of the general partner of the Partnership. Eduardo A. Sanchez, the son of Antonio R. Sanchez, Jr. and brother of Antonio R. Sanchez, III and Patricio D. Sanchez, is Sanchez Energys President and a director of the general partner of the Partnership. Antonio R. Sanchez, Jr., Antonio R. Sanchez, III, Patricio D. Sanchez and Eduardo A. Sanchez all directly or indirectly own certain equity interests in Sanchez Energy, the Partnership, the Partnerships general partner and SOG.