Memorial Production Partners LP (NASDAQ:MEMP) (MEMP) has entered into an agreement to acquire Memorial Production Partners GP LLC (MEMP GP) from Memorial Resource Development Corp. (NASDAQ:MRD) (MRD) for $0.75 million in cash. MEMP GP is the general partner of MEMP and holds the general partner interest and 50% of the incentive distribution rights (IDRs) in MEMP.
As part of the transaction, MEMP will also acquire the other 50% of the IDRs held by Natural Gas Partners. MEMP expects to close the transaction by the end of the second quarter 2016, subject to customary closing conditions. Following the completion of the transaction MEMP will be fully separated from MRD and will operate as an independent entity.
In connection with the closing of the transaction, the omnibus agreement pursuant to which MRD provided administrative, management and operational services to MEMP GP and MEMP will be terminated, subject to certain exceptions. MRD and MEMP will enter into a transition services agreement to manage post-closing separation costs and activities.
In its April 28 energy daily update, Raymond James analysts commented on the deal. "While not especially significant from a financial standpoint, the primary benefit of this transaction will be to simplify the reporting structure and reduce confusion among investors in MRD over time."
The board of directors of Memorial Production Partners GP LLC, the Conflicts Committee of the MEMP Board and the Conflicts Committee of the Board of Directors of MRD have unanimously approved the transaction. Evercore acted as financial advisor to the MEMP Conflicts Committee. Akin Gump Strauss Hauer & Feld LLP acted as legal advisor to MEMP and Richards Layton & Finger LLP acted as legal advisor to the MEMP Conflicts Committee.