Oilman Jim Hackett Is Back With an Oklahoma Shale Play- Update
August 16 2017 - 9:18PM
Dow Jones News
By Lynn Cook
Jim Hackett has found his new calling in the oil patch.
Investors this spring gave the former Anadarko Petroleum Corp.
chief executive, who left the company in 2013 to get a theology
degree at Harvard Divinity School, a $1 billion check, with a
command to go forth and find yield.
His answer: a $3.8 billion double-play in central Oklahoma.
Mr. Hackett's Silver Run Acquisition Corp. II, backed Riverstone
Holdings LLC, announced late Wednesday that it will buy Alta Mesa
Holdings LP, a private exploration and production outfit that
drills in the Stack shale play due west of Oklahoma City, and
Kingfisher Midstream LLC, a pipeline company that operates in the
area.
The combined companies will be renamed Alta Mesa Resources Inc.
and trade on the Nasdaq, with a market capitalization of $3.8
billion. Financial terms were not disclosed.
"We formed Silver Run II with the objective of acquiring
low-breakeven, stacked-pay, oil-weighted assets, preferably with an
integrated related midstream platform," Mr. Hackett said in a
statement.
Well economics in Oklahoma's Scoop and Stack plays rate second
only to the Permian Basin of West Texas and New Mexico, according
to analyst Housley Carr with RBN Energy. Like the Permian, the
Stack and nearby Scoop shale plays are also constrained by a lack
of infrastructure to deliver oil to the market.
Combining Alta Mesa with Kingfisher creates a kind of vertically
integrated independent shale producer that will get first bite at
the apple for space on pipelines.
Alta Mesa's core acreage in Northeast Kingfisher County has
among the lowest breakevens in the U.S. at around $25 per barrel,
the company said.
Mr. Hackett will serve as executive chairman of the new Alta
Mesa once the business combination is complete, expected in the
fourth quarter of this year.
Alta Mesa's current management slate -- CEO Harlan Chappelle,
Chief Operating Officer Michael Ellis and Chief Financial Officer
Michael McCabe -- will retain their roles in the new company.
Mr. Hackett's Silver Run was staked by Riverstone Holdings, an
energy-focused investment fund that also created another
blank-check shale company, now known as Centennial Resource
Development Inc., when it funded Mark Papa, the former head of Wall
Street darling EOG Resources Inc.
Riverstone and Alta Mesa management will control a sizable
portion of the new company, with 34% of the pro forma market
capitalization.
Houston-based Alta Mesa has 120,000 contiguous acres in
Oklahoma, with 4,200 drilling spots it considers promising. The
company is among the largest, most active operators in the Stack.
Since 2012, it has drilled 205 horizontal wells in the area, and
167 of those are producing oil and gas.The company did not disclose
its production.
Kingfisher owns more than 300 miles of pipeline, 50,000 barrels
of oil storage capacity and gas processing plants in the area.
Maria Armental contributed to this article.
Write to Lynn Cook at lynn.cook@wsj.com
(END) Dow Jones Newswires
August 16, 2017 22:03 ET (02:03 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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