Aubrey McClendon's American Energy Partners LP (AEP) will fuse its Utica and Marcellus affiliates into one of the largest pure-play Appalachian E&P companies, AEP said Jan. 5.
The Oklahoma City-based company affiliates, American Energy – Utica LLC (AEU) and American Energy – Marcellus LLC (AEM), will combine in an all-stock transaction. Terms of the transaction weren't disclosed.
The companies will control 300,000 net acres in the prolific Utica and Marcellus shale plays located in eastern Ohio and northern West Virginia.
Together, the companies had estimated proved reserves of 1.5 trillion cubic feet equivalent (Tcfe), with about 77% gas, and estimated daily production of about 167 Mcfe, with 79% gas, for the quarter ended Sept. 30.
Jeffrey Fisher, COO of AEP, said at Hart Energy’s Executive Oil Conference in November that the companies were likely to be combined. Fisher cited synergies in field operations and technical staff and that the plays somewhat overlap one other.
“The Utica extending east into West Virginia and the Marcellus extending westward into Ohio—those businesses are likely to be combined,” he said.
Combining the companies will maximize returns by realizing administrative and operational efficiencies and merge downstream marketing efforts and opportunities, the release said.
Current AEU and AEM shareholders will own all of the common equity of a newly formed company, American Energy Appalachia Holdings LLC (AEA) after the deal is done.
AEU and AEM will remain wholly owned subsidiaries of AEA and their existing debt and convertible debt securities remain unaffected.
In August, AEU had raised about $3.16 billion in capital including $1.21 billion in private equity capital, most from lead investor The Energy & Minerals Group (EMG), based in Houston. AEM had raised $1.8 billion in capital.
AEA's other equity owners are First Reserve Corp., other institutional investors and management.
As of November, McClendon’s flagship company AEP has raised about $14 billion in institutional capital with EMG as lead investor. Additional equity has been provided by First Reserve, AEP’s management team and others.
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