[Context: On September 4, Kayne Anderson through its Kayne Private Energy Income Fund is backing Flywheel Energy. The Oklahoma City-based Flywheel also announced the acquisition of Fayetteville assets for $1.865bn from Southwestern Energy (NYSE: SWN). Further details, advisors and related links are below.]
Kayne Backs Flywheel Energy to Acquire Southwestern Energy Company’s Fayetteville Shale Business; $1.865 Billion Purchase of Southwestern Energy Company’s Integrated Fayetteville Shale Business; Flywheel Energy, LLC Receives $700 Million Equity Commitment from Kayne
OKLAHOMA CITY–September 04, 2018–(BUSINESS WIRE)–Flywheel Energy, LLC (“Flywheel”), announced today the closing of an equity commitment of $700 million by the Kayne Private Energy Income Funds platform and members of Flywheel management. The commitment represents the platform’s second partnership with the Flywheel management team, following its original investment in 2017 (originally as Valorem Energy, LLC).
Concurrent with the new commitment, Flywheel has signed definitive agreements to acquire Southwestern Energy Company’s natural gas properties and affiliated midstream business in the Fayetteville Shale in Arkansas for $1.865 billion. The transaction is expected to close in the fourth quarter, subject to customary regulatory and other approvals.
The assets include 716 mmcf/d of net production from 4,033 producing wells across over 900,000 net acres and an integrated midstream gathering system with over 2,000 miles of gathering pipelines and more than 50 compressor stations, all located in central Arkansas.
“Flywheel Energy is proud to join the Arkansas community as an operator in the historic Fayetteville Shale,” commented Justin Cope, Chief Executive Officer of Flywheel. “We believe this is another great step as we work to execute our long term strategy and achieve superior risk-adjusted returns for our investors. The Fayetteville Shale has played a prominent role in the American shale revolution. We look forward to being a part of its next chapter and to providing affordable energy to the U.S. gas market for decades to come.”
“We are thrilled to be partnering with the Flywheel team once again to acquire these long-life natural gas assets in the Fayetteville Shale,” commented Danny Weingeist, Managing Partner of the Kayne Private Energy Income Funds. “Southwestern’s Fayetteville assets are an ideal fit for our Funds’ strategy, generating significant free cash flow through low-risk, legacy natural gas production.”
“We believe having a high quality team is critical to our company’s future success and we are honored to join an organization with an exceptional track record of safe and reliable operations,” said Cope. “We look forward to working with this experienced operations team to continue the Fayetteville legacy.”
Wells Fargo Bank, N.A, along with Citibank, N.A. provided an underwritten debt commitment for debt financing as part of the acquisition. Wells Fargo Securities, LLC served as financial and technical advisor to Flywheel. In addition, Vinson & Elkins LLP provided legal counsel to Flywheel, Mobius Risk Group served as marketing and derivates advisor to Flywheel and Alvarez & Marsal North America, LLC has been retained by Flywheel for transaction due diligence.
ABOUT FLYWHEEL ENERGY
Flywheel Energy began as Valorem Energy in early 2017 with backing from the Kayne Anderson Private Energy Income Fund. In 2017, Valorem acquired interests in the Williston Basin for $285 million, which the Flywheel organization continues to retain. In August 2018, the platform committed a second time to the management team with $700 million of equity in the form of the newly-formed Flywheel Energy. Flywheel Energy is a private exploration and production company formed to acquire and operate large, producing onshore U.S. oil and gas assets with an emphasis on the Rockies and Mid-Continent. With this acquisition, Flywheel entities will have made over $2.1 billion of acquisitions since 2017.
ABOUT KAYNE ANDERSON CAPITAL ADVISORS
Kayne Anderson Capital Advisors, L.P. (“Kayne Anderson” or the “Firm”), founded in 1984, is a leading alternative investment management firm focused on niche investing in upstream oil and gas companies, energy infrastructure, specialized real estate, middle market credit, and growth private equity. Kayne Anderson manages over $29 billion in assets (as of July 31, 2018) and employs more than 300 professionals in eight offices across the U.S.
The Kayne Private Energy Income Funds platform is part of Kayne Anderson’s successful energy private equity practice that has raised over $8 billion since 1998. The strategy was formed in late 2014 to take advantage of the market opportunity to acquire and develop large, long-life producing oil and gas assets in North America.
The Firm is headquartered in Los Angeles with offices in Houston, New York City, Chicago, Denver, Dallas, Atlanta, and Boca Raton.