WildHorse Resource Development acquires Eagle Ford properties

WildHorse Resource Development Corp. (NYSE:WRD) has entered into a definitive agreement to acquire approximately 111,000 net acres and associated production from Anadarko Petroleum Corp. (APC) and affiliates of Kohlberg Kravis Roberts & Co. LP (KKR) for aggregate consideration of $625 million, subject to certain customary closing conditions. Fourth quarter 2016 net production on the acquired properties was 7,583 barrels of oil equivalent per day (Boe/d) consisting of 72% oil from 386 operated wells. The transaction is expected to close on or about June 30, 2017 with an effective date of January 1, 2017.

Acquisition highlights

  • Approximately 111,000 net acres (95% held by production) in Burleson, Brazos, Lee, Milam, Robertson, and Washington Counties next to WRD’s existing acreage position
  • Approximately 7.6 MBoe/d of net production for fourth quarter 2016 consisting of approximately 72% oil and 89% liquids from 68 Eagle Ford, 299 Austin Chalk, 19 Buda/Georgetown operated wells
  • 949 net Eagle Ford locations and 22.9 MMBoe of proved developed producing reserves (73% oil and 88% liquids)
  • Leverage neutral transaction structure maintains a pro-forma net debt to annualized EBITDAX target of 2.0x or less

"This transformative acquisition presented us with a strategic opportunity to consolidate our acreage position. With a total of 385,000 net acres, we have built a premier contiguous acreage base making us the second largest operator in the entire Eagle Ford trend. Furthermore, we have done so at prices we believe to be extremely attractive, providing highly economic returns on a full cycle basis. WRD’s pre-acquisition drilling schedule already includes 36 wells immediately adjacent to the acquired acreage. With the new acquisition, WRD can further optimize pad location and development planning with fewer limitations. As a result, this transaction immediately adds value to our existing program,” said Jay Graham, chairman and CEO. “In addition, we recently brought online some of the strongest East Texas Eagle Ford wells to date which makes us even more confident in our strategy. We look forward to incorporating the acquired assets into our 2017 program,” added Graham.

Terms and financing
Transaction consideration is $625 million including approximately $556 million of cash to APC and 6.3 million shares of WRD common stock valued at approximately $69 million to KKR. In conjunction with the transaction, The Carlyle Group, through its US buyout fund Carlyle Partners VI, has agreed to purchase $435 million of Series A Perpetual Convertible Preferred Stock from WRD. The remainder of the acquisition price is to be funded by borrowings under WRD’s revolving credit facility.

On April 4, 2017, the borrowing base on WRD’s revolving credit facility increased from $362.5 million to $450 million in connection with the semi-annual redetermination. WRD has been in preliminary talks with its bank group to re-determine its borrowing base as a result of the additional PDP reserves to be acquired in the transaction.

Barclays acted as financial advisor to WRD in regards to the acquisition and financing. Locke Lord LLP, Vinson & Elkins LLP and Akin Gump Strauss Hauer & Feld LLP acted as legal advisors to WRD in regards to the acquisition and financing. 

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