WildHorse Resource Development Corporation (NYSE:WRD) announced
today that it has executed a definitive purchase and sale agreement
to divest its North Louisiana assets to a third party for
consideration of approximately $217 million, subject to customary
purchase price adjustments. Additionally, WRD could receive
contingent payments of up to $35 million based on the number of
wells spud by the buyer on the North Louisiana assets over the next
four years. This transaction, which is subject to customary closing
conditions, is expected to close on or about March 30, 2018 and has
an effective date of January 1, 2018
WRD’s North Louisiana assets are primarily located in Webster,
Claiborne, Lincoln, Jackson, and Ouachita Parishes of Louisiana and
include approximately 90,000 net acres of leasehold and
approximately 473 operated wells. Estimated total proved reserves
from the divested properties at December 31, 2017 were 412.1 Bcfe
(41% proved developed and 98% natural gas). Estimated fourth
quarter 2017 production from the divested properties was
approximately 46.9 MMcfe/d (96% natural gas). Subsequent to the
closing of the divestiture, 100% of WRD’s proved reserves will be
located in the East Texas Eagle Ford and Austin Chalk.
Cash proceeds from the sale will be used to repay indebtedness
outstanding under WRD’s revolving credit facility. As a result of
the transaction, WRD estimates a year end net debt to annualized
EBITDAX ratio below WRD’s target leverage of less than 2.0x. Based
on initial discussions with its bank group, WRD anticipates that
the borrowing base on its revolving credit facility will remain
unchanged at $875 million in connection with the closing of the
transaction and will be reviewed along with its regularly scheduled
year-end redetermination on or about March 30, 2018.
Guggenheim Securities, LLC served as financial advisor and Locke
Lord LLP served as legal counsel to WRD on the North Louisiana
divestiture.
Lee County Eagle Ford Acquisition
In addition, WRD announced today that it has recently executed a
definitive purchase and sale agreement to acquire producing and
non-producing properties in Lee County, TX for approximately $19.3
million from an undisclosed seller. The deal is expected to close
on March 1, 2018 with an effective date of July 1, 2017.
The acquired properties consist of approximately 17,453 net
acres immediately contiguous to WRD’s existing Eagle Ford
properties and 1 operated (4 non-operated) producing horizontal
wells with combined net production of approximately 59 Boe/d. The
acquired acreage includes rights exclusively to the Eagle Ford and
is approximately 98% held by production. WRD estimates
approximately 110 net locations on the acquired acreage with an
average NRI of 82%. After the close of the acquisition, WRD expects
to hold over 404,000 net acres in the Eagle Ford.
WRD also announced today the results of two Eagle Ford refrac
tests located immediately adjacent to the acquisition acreage in
Lee County, TX. The first well, the Gold 107 #1, which is located
3.5 miles southwest of the Burleson County line, achieved a peak
24-hour rate of 1,078 Boe/d including both its base production and
the uplift from the refrac. The Gold 107 reached a peak 30-day
uplift(1) of 388 Boe/d (95% oil) on a 5,711’ lateral.
The second refrac well, the Fritsche 109 #1, which is located
10.5 miles southwest of the Lee and Burleson County line, came
online at a peak 30-day uplift of 481 Boe/d (88% oil) on a 5,387’
lateral. While there have been no prior Gen 3 wells in Lee County,
the Gold and Fritsche refracs utilize a Gen 3 style design and are
both performing in line with similar successful refracs completed
by WRD in Burleson County. These wells represent the first examples
of WRD’s strategy to cost effectively test the Gen 3 completion
design through the use of refracs in areas with only Gen 1 legacy
completions.
In addition, the Jurica #1H / Doughtie #1H pad, located
immediately next to the Lee and Burleson County line, is averaging
above the Eagle Ford type curve at an EUR of 96 Boe per foot and 90
Bo per foot. As previously announced on the third quarter 2017
earnings release, the two Eagle Ford wells came online at an
average IP-30 of 730 Boe/d (95% oil). The Jurica / Doughtie pad is
outside of Cawley Gillespie & Associates’ (“CG&A”) 3P area
at the year-end 2016 reserve report.
“With the sale of our North Louisiana assets, WRD will become a
pure-play Eagle Ford producer with oil representing approximately
70% of our production in 2018. While North Louisiana is a
tremendous asset, our Eagle Ford position has comparatively more
scale and significant runway with over 30 years of inventory at our
current annual pace. Furthermore, by monetizing the North Louisiana
asset, we can help fund our 2018 capex program and reinforce our
already solid balance sheet,” said Jay Graham, Chairman and Chief
Executive Officer of WRD. “In addition, our Lee County acquisition
demonstrates our successful strategy of acquiring excellent acreage
with the advantage of well results unavailable to the rest of the
market. The Gold and Fritsche refracs indicate that this position
shows great potential for our Gen 3 well design and our development
program. We are excited about focusing entirely on our now 404,000
net acre Eagle Ford position where we see enormous
opportunity.”
About WildHorse Resource Development Corporation
WildHorse Resource Development Corporation is an independent oil
and natural gas company focused on the acquisition, exploration,
development and production of oil, natural gas and NGL properties
primarily in the Eagle Ford Shale in East Texas and the
Over-Pressured Cotton Valley in North Louisiana. For more
information, please visit our website at www.wildhorserd.com.
(1) The initial production rates
represent the peak average of the initial production rates for the
applicable consecutive days of production. The refrac uplift is an
estimate of the additional production incurred as a result of the
refrac over what the legacy well would have otherwise produced
without a refrac completion. (2) Based on the Cawley Gillespie
& Associates (“CG&A”) audited year-end 2016 proved
reserves.
Cautionary Statements and Additional Disclosures
This press release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements can be identified by words such
as “anticipates,” “intends,” “will,” “plans,” “seeks,” “believes,”
“estimates,” “could,” “expects” and similar references to future
periods. Such forward-looking statements are subject to a number of
risks and uncertainties, many of which are beyond WRD’s control.
All statements, other than historical facts included in this press
release, that address activities, events or developments that WRD
expects or anticipates will or may occur in the future, including
such things as WRD’s future capital expenditures (including the
amount and nature thereof), business strategy and measures to
implement strategy, future drilling locations and inventory,
competitive strengths, goals, expansion and growth of WRD’s
business and operations, plans, successful consummation and
integration of acquisitions and other transactions, market
conditions, references to future success, references to intentions
as to future matters and other such matters are forward-looking
statements. All forward-looking statements speak only as of the
date of this press release. Although WRD believes that the plans,
intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance
that these plans, intentions or expectations will be achieved.
Therefore, actual outcomes and results could materially differ from
what is expressed, implied or forecast in such statements.
WRD cautions you that these forward-looking statements are
subject to risks and uncertainties, most of which are difficult to
predict and many of which are beyond WRD’s control, incident to the
exploration for and development, production, gathering and sale of
natural gas and oil. These risks include, but are not limited to:
commodity price volatility; inflation; lack of availability of
drilling and production equipment and services; environmental
risks; drilling and other operating risks; regulatory changes; the
uncertainty inherent in estimating natural gas and oil reserves and
in projecting future rates of production, cash flow and access to
capital; and the timing of development expenditures. Information
concerning these and other factors can be found in WRD’s filings
with the SEC, including its Forms 10-K, 10-Q and 8-K. Consequently,
all of the forward-looking statements made in this press release
are qualified by these cautionary statements and there can be no
assurances that the actual results or developments anticipated by
WRD will be realized, or even if realized, that they will have the
expected consequences to or effects on WRD, its business or
operations. WRD has no intention, and disclaims any obligation, to
update or revise any forward-looking statements, whether as a
result of new information, future results or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20180212005544/en/
WildHorse Resource Development CorporationPearce Hammond, CFA,
713-255-7094Vice President, Investor
Relationsir@wildhorserd.com
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