A subsidiary of EP Energy Corp., Houston, has entered into a drilling joint venture with private capital investor Wolfcamp Drillco Operating LP to fund future crude oil and natural gas development in EP Energy's Wolfcamp program in the Permian basin.
The JV plans a drilling program of up to 150 wells in two 75-well tranches on EP Energy's acreage, including in Reagan and Crockett counties, Tex. EP Energy will operate all wells in the program.
Wolfcamp Drillco will fund $450 million for 60% of drilling, completion, and equipping costs over the life of the program in exchange for 50% working interest in the JV wells.
Once Wolfcamp Drillco records a 12% internal rate of return on its invested capital in each tranche, its working interest will revert to 15%. The first wells under the JV began production in January 2017.
Wolfcamp Drillco is managed by, and its equity is owned by, affiliates of New York City private equity firm Apollo Global Management LLC, which beneficially own 45% of EP Energy's common stock and have representatives on its board.