Alta Mesa Exits Eagle Ford Shale in $210 Million Deal

Sale Includes Non-Operated Acreage Primarily in Karnes County, TX to ReOil Eagle I, LLC

Houston, TX-based Alta Mesa Eagle, LLC, a subsidiary of Alta Mesa Holdings, LP, will soon exit the Eagle Ford Shale, agreeing to sell its remaining assets to ReOil Eagle I, LLC in a$210-million deal announced on Dec. 10, 2014.

ReOil will initially pay Alta Mesa $175-million, with an additional $25-million paid after the drilling of ten upper Eagle Ford Shale wells. ReOil Eagle I, LLC, has also agreed to pay an additional $10-million if the Calendar Year 2016 NYMEX strip closes above $80 per barrel for two consecutive months in 2015.

The properties included in the divestiture are primarily located in Karnes County, TX, and all are non-operated. At the end of 2013, Alta Mesa officials say the reserves associated with these properties were 7.3-million BOE, with 9% of the volumes classified as proved developed.

In March of 2014, Alta Mesa engaged in another large Eagle Ford Shale asset divestiture, selling 15,200 (800 net) acres in Karnes County to Houston, TX-based Memorial Production Partners for $173-million.

Read more: Memorial Production Partners Buys Eagle Ford Assets in $173-Million Deal

Alta Mesa’s most recent transaction has an effective date of September 1, 2014. The effect of this transaction on the company’s borrowing base is yet to be determined. The closing is expected in mid-January and subject to normal and customary closing conditions including approval of the transaction by Alta Mesa’s Board of Directors.


Eagle Ford Player Alta Mesa Increases Borrowing Base

Q3 2014 Eagle Ford Production Down 400 boe/d Year Over Year

Houston-based Alta Mesa LP, an Eagle Ford player with acreage in Karnes, Goliad and DeWitt Counties, announced an increase in its borrowing base from $350-million to $375-million this week.

Alta Mesa’s credit facility is provided by a syndicate of ten banks agented by Wells Fargo Bank, N.A. and co-agented by Union Bank, N.A.

Alta Mesa Recent Eagle Ford Divestiture

Alta Mesa entered the Eagle Ford in 2010 with its acquisition of the Eagleville Field from Meridian Resources Corp. Alta Mesa also has interest across East Texas, South Louisiana and the Sooner trend in Oklahoma.

In the first quarter of this year, Alta Mesa sold some its interests in the Eagleville Field to Memorial Production Partners in a $173 million deal, divesting 15,200 (800 net) acres in Karnes County.

Read more: Memorial Production Partners Buys Eagle Ford Assets in $173-Million Deal

Alta Mesa Q3 Eagle Ford Operations

During the third-quarter, Alta Mesa’s Eagle Ford production dropped 400 boe/d in the Eagle Ford quarter-over-quarter to 3,000 boe/d. Company officials cited the partial Eagleville divestiture during the first-quarter as the primary reason for the drop in the company’s most recent operations update released this week.

Alta Mesa is focused on downspacing and increasing its operational efficiencies in the Eagle Ford. Currently, staggered 20 acre downspacing is being tested. Company officials say that could add ~3 years of additional drilling in the Upper Eagle Ford at the company’s current 2 rig pace. As of November of 2014, Alta Mesa expects to place four additional 20-acre Upper Eagle Ford Shale staggered spaced wells online. In 2014, the company’s capital expenditures are expected to total $50-million in the Eagle Ford.