Gulfport Energy to acquire Paloma Partners III

Gulfport Energy Corp., Oklahoma City, has agreed to acquire Paloma Partners III LLC, Houston, for $300 million. The deal is expected to close in the third quarter.

Paloma holds 24,000 net nonproducing acres in the core of the dry gas window of the Utica shale in Belmont and Jefferson counties in Ohio. Following completion of the deal, Gulfport’s Utica holdings are expected to total 212,000 gross acres (208,000 net) under lease in the core of the play.

Gulfport in 2012 agreed to buy 30,000 net acres in the Utica from Windsor Ohio LLC, an affiliate of Wexford Capital LP, for $300 million (OGJ Online, Dec, 18, 2012). That was followed in 2013 by the purchase of an additional 22,000 net Utica acres from Windsor Ohio for $220 million (OGJ Online, Feb. 11, 2013).

Paloma Partners III is funded by EnCap Investments LP and a subsidiary of Macquarie Group. Paloma Partners II, whose leasehold resided in the Eagle Ford shale of South Texas, was acquired in 2012 by Marathon Oil Corp. for $750 million (OGJ Online, May 9, 2012).

Paloma Partners IV, meanwhile, holds 33,000 acres in the Tuscaloosa Marine shale of Louisiana and Mississippi, where it began nonoperated development drilling in late 2014.

Gulfport’s first quarter Utica production totaled 396 MMcfd of gas equivalent, or 93% of the company’s aggregate net production, compared with 93% and 78% of its aggregate production during fourth-quarter 2014 and first-quarter 2015, respectively.

The company’s first-quarter 2015 production represented an 11% increase over fourth-quarter 2014 production of 381.9 MMcfed and a 161% increase over first-quarter 2014 production of 162.5 MMcfed. Gulfport’s first-quarter 2015 production mix was 68% natural gas and 32% oil and natural gas liquids.

Gulfport also recently entered into additional firm transportation agreements with Rockies Express Pipeline (REX) and Texas Gas Transmission (TGT).

The company’s agreement with REX provides transportation for an additional 50,000 MMbtu/day of gas beginning in mid-2016 for 15 years. Gulfport’s agreement with TGT provides transportation for an incremental 54,000 MMbtu/day of gas beginning in April 2017 for 15 years.

Gulfport says it has secured total firm commitments covering 900,000 MMbtu/day of gas production by yearend 2016.

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