The acquired acreage is primarily located in Payne, Lincoln, Logan and Garfield Counties in Oklahoma, with most of the position held by production. Net production from the Mississippian assets averaged 12,800 oil-equivalent barrels (boe) per day in the first quarter of 2016 from approximately 555 operated and non-operated Mississippi Lime and Woodford Shale horizontal wells, of which approximately 30% was oil. At Dec. 31, 2015, proved reserves associated with these properties amounted to 11 million boe. Field-level cash flow accompanying these assets, which excludes overhead costs, totaled $8 million in the first quarter.
For White Star Petroleum, the approximately 210,000 largely contiguous net acres acquired double the company's production and acreage footprint in Central Northern Oklahoma.
"This acquisition will be significantly accretive to production, liquidity, reserves, and leverage metrics, and will allow White Star to continue to leverage our core competency in low-cost Mississippian and Woodford resource development. Furthermore, upon signing, we executed hedges covering a substantial portion of acquired PDP production, providing stability to our cash flows while preserving upside," noted White Star's CEO, Elliot J. Chambers, in a statement.
For Devon, the deal means "another important step in executing on our plan to divest $2 billion to $3 billion of non-core assets across our portfolio during 2016," said Dave Hager, Devon's president and CEO. Currently, Devon's divestiture process for remaining non-core assets is ongoing. The company is currently marketing its 50% interest in the Access Pipeline in Canada and anticipates an announcement in the first half of 2016. Efforts to monetize remaining upstream assets in the US are also ongoing.
Until March 25, White Star Petroleum LLC was known as American Energy – Woodford LLC. In a statement today, White Star Petroleum reiterated plans by its sponsor, The Energy and Minerals Group (EMG), to complete White Star's transition to a standalone company, fully independent of the American Energy Partners LP platform during the second quarter of 2016. On February 26, 2016, the board of managers appointed Elliot J. Chambers as CEO, in addition to his role as CFO, and promoted Joseph D. Craig to COO from his previous role as vice president of operations.
Jefferies LLC acted as the lead financial advisor to Devon on the transaction. RBC Richardson Barr also acted as a financial advisor to Devon on the transaction. Vinson & Elkins LLP acted as legal advisor to Devon. White Star's legal advisor for this transaction is Porter Hedges LLP.
The transaction is subject to customary terms and conditions and is expected to close in the second quarter of 2016 with an effective date of Jan. 1, 2016.