Houston-based Contango Oil and Gas has bought up White Star Petroleum’s assets in the state of Oklahoma as part of that company’s Chapter 11 bankruptcy process, Contango said on Friday.
As part of the $132.5 million agreement, Contango will add about 315,000 net acres and about 15,000 barrels of oil equivalent per day in Oklahoma.
A majority of the acreage, around 230,000 net acres, is in the Cherokee region, along with 45,000 net acres in the Stack play and 31,800 in the Anadarko area.
White Star, which was founded as part of the late Aubrey McClendon’s American Energy Partners and was previously called American Energy – Woodford, filed voluntary petitions for Chapter 11 bankruptcy in late May.
"This opportunity became actionable as a result of our recent successful recapitalization of the company, and it is exactly the type of acquisition we said we’d be looking for when we last spoke to the investment community," Contango’s chief executive Wilkie Colyer said in a statement.
"We expect White Star to add approximately $60 million in asset level cash flow over the next twelve months. It increases the Company’s production by a factor of almost four times and more than doubles our PDP reserves, all at a very attractive purchase price that is substantially below PDP PV-10. It fits well from a geographic perspective with our recently announced pending acquisition of the Will Energy oil and gas assets."
The deal is expected to close in the fourth quarter of 2019, with an effective date of 1 July, and is subject to closing conditions. Contango is expected to pay less than $100 million at closing.
Colyer added that the company expects continued consolidation within the exploration and production sector, and that Contango "intends to be a consolidator." The company operates throughout Texas, in the Permian basin, Wyoming, and offshore in the US Gulf of Mexico.
Contango last year sold off its Eagle Ford shale assets in south Texas for $21 million as it shifted its efforts to the Delaware sub-basin of the Permian.