RSP Permian Acquires Silver Hill in Deal Worth $2.4 Billion
Multiples
Transaction Details:
Closing Announcement Part II - November 29, 2016
Silver Hill Energy Partners has closed its previously announced sale to RSP Permian, Inc. for a purchase price of approximately $604 million of cash and 15 million shares of RSP common stock.
Closing Announcement Part I - November 28, 2016
RSP Permian has completed the first part of its previously announced acquisitions of Silver Hill Energy Partners.
The Company closed the acquisition of SHEP I for an aggregate purchase price of approximately $604 million of cash and 15 million shares of RSP common stock.
RSP anticipates closing the acquisition of SHEP II in the first quarter of 2017 for a purchase price of approximately $646 million of cash and approximately 16 million shares of RSP common stock, following a shareholder vote to approve the issuance of shares.
Initial Announcement - October 13, 2016
RSP Permian has entered into a deal to acquire Silver Hill Energy Partners, LLC and Silver Hill E&P II, LLC for $1.25 billion of cash and 31.0 million shares of RSP common stock, implying a total purchase price of approximately $2.4 billion (based on the 20-day volume weighted average price of RSP Shares as of October 12, 2016).
Previously, Diamondback had expressed interest in acquiring Silver Hill, but the deal was cancelled.
Silver Hill is comprised of two privately held entities controlled by affiliates of Kayne Anderson Capital Advisors and Ridgemont Equity Partners that collectively own ~68,000 gross / ~41,000 net acres in northeast Loving and northwest Winkler Counties, Texas with ~15 MBoe/d of current net production from 58 producing wells (49 horizontals) and ~3,200 gross / ~1,950 net total undeveloped locations.
While both transactions will have an effective date of November 1, 2016, the two transactions will close separately. SHEP I is expected to close in the fourth quarter of 2016, with Silver Hill receiving approximately $604 million of cash and 15.0 million RSP Shares. SHEP II is expected to close in the first quarter of 2017, with Silver Hill receiving approximately $646 million of cash and 16.0 million RSP Shares. Both transactions are subject to certain closing conditions, customary purchase price adjustments, and regulatory and third party approvals.
Upon closing of SHEP II, Kayne Anderson, Ridgemont and other Silver Hill shareholders are expected to collectively own approximately 20% of RSP's outstanding shares pro forma for the issuance to Silver Hill and the concurrent equity offering that will fund a portion of the consideration for the acquisition. In addition, RSP expects to add Kyle D. Miller, CEO of Silver Hill, to RSP's Board of Directors upon closing SHEP II.
Transaction Highlights
- Unparalleled opportunity to unite two premier, growth-focused companies in the Permian Basin with complementary asset bases
- Combination is accretive to RSP on a cash flow, production and net asset value basis
- The acquisition creates substantial scale with combined current production of approximately 50 MBoe/d, over 100,000 net surface acres, over 500,000 net effective horizontal acres and over 3,600 net drilling locations with substantial additional upside from tighter spacing assumptions
- Unique acquisition of a highly contiguous acreage position in the core of the Delaware Basin that has approximately 68,000 gross / 41,000 net surface acres located in Loving and Winkler counties
- Acreage located in the thickest, deepest part of the Delaware Basin, which is significantly over-pressured
- Blocked up acreage configuration conducive for longer laterals and efficient development
- Located in an oil-weighted area of the Delaware Basin
- ~250,000 net effective horizontal acres across 7 horizontal pay zones
- Significant operational control with over 80% of acreage operated
- Average working interest in operated properties of approximately 83%
- One operated rig holds acreage position
- Offset operators include EOG, Anadarko, Shell, Matador and Devon
- Meaningful and growing production base with current net production of approximately 15.0 MBoe/d (69% oil, 86% liquids) and two operated horizontal rigs currently drilling on acreage position
- Deep inventory of attractive horizontal drilling locations across multiple horizontal stacked pay zones, including the Wolfcamp B, upper and lower Wolfcamp A, 3rd Bone Spring, 2nd Bone Spring, Avalon, and Brushy Canyon
- EURs of ~1.0 MMBoe common across acreage position based on management's estimates
- ~3,200 gross / ~1,950 net locations with average lateral length of approximately 6,300'
- Acreage trades on-going for longer lateral development
- Ability to leverage RSP's efficient, low-cost operating capabilities and technical knowledge of multi-zone, horizontal development and apply to early and evolving drilling and completion techniques in the DelawareBasin
Transaction Financing
The Company intends to finance the cash portions of the SHEP I and SHEP II transactions through potential capital market transactions, which may include equity or debt offerings prior to the closing of each transaction. The Company anticipates that the financing transactions will be leverage neutral or result in lower leverage metrics on a forward-looking and pro forma basis.
Permian - Delaware Basin Deal Activity In Last 12 Months
Announced Date | Buyer | Seller | Deal Value($mm) | Location | Category |
---|---|---|---|---|---|
Dec-15-2023 | - | - | Click here | Texas | E&P |
Sep-13-2023 | - | - | Click here | Texas | E&P |
Jun-20-2023 | - | - | Click here | New Mexico | E&P |
May-03-2023 | - | - | Click here | Texas | E&P |
Jan-24-2023 | - | - | Click here | New Mexico | E&P |
Date | Deal Headline | Price | $/acre |
---|---|---|---|
Jan-04-2024 | APA Corp to Acquire Permian Pure Player- Callon In All Stock Deal | - | - |
Nov-21-2023 | Northern Oil Acquires Additional Permian Working Interest; Enters Utica | - | - |
Aug-21-2023 | Permian Resources Acquires Earthstone Energy | - | - |
Announced Date | Buyer | Seller | Deal Value($mm) | Location | Category |
---|---|---|---|---|---|
Jan-31-2024 | - | - | Click here | North Dakota | E&P |
Mar-14-2022 | - | - | Click here | Texas | E&P |
Jan-19-2016 | - | - | Click here | Texas | E&P |
Other RSP Permian Inc. Deals
Announced Date | Buyer | Seller | Deal Value($mm) | Location | Category |
---|---|---|---|---|---|
Mar-28-2018 | - | - | Click here | New Mexico | E&P |
Aug-07-2017 | - | - | Click here | Texas | E&P |
Oct-07-2015 | - | - | Click here | Texas | E&P |
Aug-04-2015 | - | - | Click here | Texas | E&P |
Jul-25-2014 | - | - | Click here | Texas | E&P |