[Context: On November 1, Kayne Anderson-backed Amistad Energy announced the sale of producing assets for $18m by Approach Resources. Further details and related links are below.]
FORT WORTH, Texas, Nov. 01, 2017 (GLOBE NEWSWIRE) — Approach Resources Inc. (NASDAQ:AREX) today reported third quarter 2017 financial and operational results and a bolt-on acquisition.
> Producing Wolfcamp shale assets adjacent to Company’s Project Pangea acreage
> Current production of approximately 550 Boe/d, 51% oil
> Estimated PDP reserves 1.8 MBoe, 42% oil
> Transaction value $18 million, payable in Approach common shares
Ross Craft, Approach’s Chairman and CEO, commented, “Results for this quarter highlight our relentless focus on operational efficiency, cost controls and capital discipline. Our infrastructure system provided operational flexibility in the face of Hurricane Harvey and the results of our optimized completions are driving strong well performance. Due to our continued focus on cash operating expenses and improved realized prices, EBITDAX is up 7% over prior quarter and unhedged cash margin per Boe has increased 13% quarter over quarter and from the prior period last year.
We also are excited to announce an acquisition of producing properties that are complementary to our existing assets, and are pleased to welcome an experienced, upstream E&P investor like Kayne Anderson as a shareholder. As operators in the Permian work to consolidate acreage, we believe our large, contiguous acreage position provides the foundation for future growth as we continue to build value through prudent capital spending and one of the lowest operating cost structures in the Permian Basin.”
The Company has entered into a definitive agreement with Amistad Energy Partners, LLC (“Amistad”) to acquire complementary Wolfcamp shale assets directly adjacent to the Company’s Pangea West project in the Southern Midland Basin, for 7,573,215 shares of Company common stock valued at $18.05 million, based on a 20-day volume weighted average share price, and subject to customary purchase price adjustments. The transaction is subject to customary closing conditions, and the Company expects the acquisition will close in the fourth quarter of 2017, with an effective date of September 1, 2017. Amistad is a portfolio company of Kayne Anderson Capital Advisors, L.P., an independent alternative investment management firm with $24.5 billion in assets focused on investing in upstream oil and gas companies, energy infrastructure, specialized real estate, middle market credit and growth private equity.
The transaction includes current net production of approximately 550 Boe/d (51% oil), estimated PDP reserves of approximately 1.8 MMboe (42% oil), approximately 3,200 net acres held by production, along with existing field infrastructure and facilities and over 35,000 of additional net undeveloped acres that are subject to near-term expiration if a continuous drilling obligation is not met or extended.