As the result of an active drilling and leasing program and 15-plus acquisitions, Grenadier Energy Partners said it has grown its original 7,000 net-acre position in Howard County to over 20,000 acres, according to its website. (Source: Hart Energy)
Surge Energy US Holdings Co. agreed on Jan. 31 to a “significant Midland Basin acquisition” for about $420 million.
Based in Houston, Surge Energy currently holds approximately 93,000 net acres in the Permian Basin. The acquisition on Jan. 31, from private equity-backed Grenadier Energy Partners II LLC, will add leasehold interest and producing wells in Howard County, Texas, where Surge Energy’s position in the northern Midland Basin is partly located.
“This acquisition is consistent with our strategy of building a long-term, sustainable oil and gas company,” Surge Energy CEO Linhua Guan said in a statement on Jan. 31. “The combination of both production and high-quality inventory support both near-term cash flow and strong economic returns for years to come.”
Grenadier Energy Partners is an upstream oil and gas company with headquarters in The Woodlands, Texas, and backing from EnCap Investments LP and Kayne Anderson Capital Advisors.
In late 2019, Grenadier had previously agreed to a three-way merger agreement with HighPeak Energy and blank-check company Pure Acquisition Corp. However, the combination, which was expected to create the largest pure-play northern Midland Basin E&P company, was ultimately terminated in April 2020 following the oil market crash.
Grenadier originally entered the Midland Basin in November 2016 through a joint venture development agreement with a large independent in Howard County. As the result of an active drilling and leasing program and 15-plus acquisitions, the company has grown its original 7,000 net-acre position in Howard County to over 20,000 acres, according to its website.
In its Jan. 31 release, Surge Energy said it signed a purchase and sale agreement to acquire Grenadier II’s leasehold interest covering approximately 18,010 net acres in Howard County. The acquired assets also include an operated inventory of approximately 120 high-quality, economic future drilling locations and average production of about 9,000 boe/d, roughly 75% of which is oil.
Analysts with Enverus estimate Surge Energy is acquiring Grenadier’s largely undeveloped position, which offsets Surge to the southeast, for roughly $9,300 per undeveloped acre.
“The deal screens relatively cheap compared to recent transactions in Howard of similar scale,” the Enverus analysts wrote in a research note on Feb. 1.
“The acquisition provides additional runway in Howard, a region with superior reservoir quality to the company’s acreage to the north in Borden County,” the Enverus analysts added.
Grenadier II formed in July 2012 with funding in the amount of $340 million from EnCap Investments and Kayne Anderson Capital. Additionally, Grenadier II has established a $300 million credit facility with J.P. Morgan Chase Bank, the company website said.
Surge Energy expects to close the Grenadier II transaction late in the first quarter. Citi was financial adviser to Surge Energy. Jefferies LLC was financial adviser to Grenadier II. Legal advisers included Thompson & Knight LLP for Surge Energy and Vinson & Elkins LLP for Grenadier II.
Recommended Reading
Post Oak Backs New Permian Team, But PE Faces Uphill Fundraising Battle
2024-10-11 - As private equity begins the process of recycling inventory, likely to be divested from large-scale mergers, executives acknowledged that raising funds has become increasingly difficult.
Midstream M&A Adjusts After E&Ps’ Rampant Permian Consolidation
2024-10-18 - Scott Brown, CEO of the Midland Basin’s Canes Midstream, said he believes the Permian Basin still has plenty of runway for growth and development.
EQT to Cut Workforce 15% Following Close of Equitrans Acquisition
2024-10-02 - EQT Corp. closed its $5.5 billion all-stock buy of Equitrans Midstream Corp. on Sept. 22.
TC Energy Completes Spinoff of Liquids Pipeline Business South Bow
2024-10-01 - South Bow Corp. will commence trading on the Toronto Stock Exchange on Oct. 2.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.