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American Energy Snaps Up More Permian Acreage

The Permian Basin affiliate of American Energy Partners LP (AELP) said Monday it is paying $440 million for 14,000 net acres in Reagan County, TX, which are producing 1,400 boe/d.

The transaction with Tall City Exploration LLC is being financed with cash and debt backed by private equity sponsor Denham Capital Management LP, American-Energy Permian Basin LLC (AEPB) said.

In October, AEPB agreed to pay about $720 million for 28,000 net acres in the Permian's Midland subbasin, including the Wolfcamp Shale, from multiple sellers (see Shale DailyOct. 29). The holdings include an estimated 49 million boe of proved reserves.

Once the transactions are completed, AEPB expects to have about 91,00 net acres in the Wolfcamp, mostly in Reagan County. The acreage is estimated to have more than 17,000 boe/d, 158 million boe of proved reserves and about 2,700 gross well locations. AELP, helmed by Aubrey McClendon, indicated in October that it expects to publicly launch the Permian business within a year.

Tall City was formed in May 2012 by CEO Michale A. Oestmann with $200 million in backing from Houston-based Denham. It also has investments from Henry Resources and Tall City Strategic Partners. Oestmann is a Midland, TX native who began his career with Exxon Co. USA in 1982. He spent 15 years with Exxon and worked for other operators before co-founding Piedra Resources with private equity partners. Piedra sold its assets to Berry Petroleum in 2011.

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