Silver Run Acquisition II to merge with Alta Mesa, Kingfisher Midstream

Silver Run Acquisition Corp. II (NASDAQ: SRUN, SRUNU, SRUNW) has entered into definitive agreements to combine with Alta Mesa Holdings LP and Kingfisher Midstream LLC. Alta Mesa is an independent exploration and production company with assets located in the STACK play in Oklahoma. Kingfisher is a company engaged in the gathering, processing, and marketing of hydrocarbons in the STACK play.

With approximately 120,000 contiguous net acres and about 4,200 gross identified drilling locations, Alta Mesa is among the largest and most active operators in the STACK.  Since 2012, Alta Mesa has drilled to total-depth 205 STACK horizontal wells, in order to further delineate and de-risk its approximate 300 square mile position in the up-dip oil window of the STACK. To date, Alta Mesa has completed 173 of these wells, with 167 on production. Based upon production through the second quarter of 2017, Alta Mesa expects EURs at year end to exceed 650 MBOE per well or approximately 140 BOE per foot of lateral.

Kingfisher Midstream is a private midstream company with a position in the STACK play, with Alta Mesa serving as its anchor producer.  Kingfisher’s assets include over 300 miles of pipeline, 50 thousand barrels of crude storage capacity, and 60 MMcf/d of gas processing capacity with an additional 200 MMcf/d cryogenic plant expansion expected to commence operations in the fourth quarter of 2017.  With approximately 300,000 gross dedicated acres from Alta Mesa and five other third party customers, Kingfisher is positioned to capitalize on the increasing development activity in the STACK.

At consummation of the transaction, Silver Run II is expected to be renamed Alta Mesa Resources Inc. and trade on the NASDAQ stock exchange under the ticker symbol “AMR”. The combined company is valued at approximately $3.8 billion. James T. Hackett, chairman and CEO of Silver Run II, will serve as executive chairman following the consummation of the business combination, while Harlan H. Chappelle, Michael E. Ellis, and Michael A. McCabe will continue as CEO, COO, and CFO of Alta Mesa Resources Inc., respectively.

Alta Mesa Resources will have an aggregate market capitalization of approximately $3.8 billion.  At $10.00 per share, the combined company would represent a valuation of 7.1x FV/2018E EBITDA.  Alta Mesa would represent 6.1x FV/2018E EBITDA, and Kingfisher would represent 7.3x FV/2018E EBITDA.  Riverstone and Alta Mesa management will collectively own a significant portion of the combined company, representing approximately 34% of the pro-forma market capitalization.

Advisors
Citigroup acted as capital markets advisor to Silver Run II, Tudor, Pickering, Holt & Co. acted as financial advisor to Silver Run II, and Latham & Watkins LLP acted as its legal counsel.

Citigroup acted as sole financial advisor and lead capital markets advisor to Alta Mesa.  Goldman Sachs and Morgan Stanley also acted as capital markets advisors to Alta Mesa.  Haynes & Boone LLP acted as legal advisor to Alta Mesa.

JP Morgan served as lead financial advisor and Barclays acted as co-financial advisor to Kingfisher. Bracewell LLP acted as legal advisor to HPS Investment Partners and Kingfisher, Durham, Jones & Pinegar acted as legal advisor to ARM and Kirkland & Ellis LLP represented Bayou City Energy.

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