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Falcon to Soar in Eagle Ford with Osprey, Royal Combination

Osprey Energy Acquisition Corp. on Monday agreed to acquire private equity-backed Royal Resources’ Eagle Ford Shale assets in a transaction estimated to be worth $894 million.

Osprey, formed last summer as an energy-focused special purpose acquisition entity, has a definitive agreement to acquire Royal’s assets, which are owned by funds managed by Blackstone Energy Partners and Blackstone Capital Partners.

The combined company is to become Falcon Minerals Corp., which would have Eagle Ford and Austin Chalk assets covering 251,000 gross unit mineral acres concentrated in the South Texas counties of Karnes, DeWitt and Gonzalez. It also would have about 58,000 gross unit mineral acres in the Marcellus Shale.

"Osprey went public in July 2017 with the intent to find a world class and unique energy business that was poised to benefit from a new phase as a public company, and we believe that is exactly what we are creating with Falcon Minerals," said Osprey CEO Jonathan Z. Cohen. He is to lead Falcon with Osprey Chairman Edward Cohen and President Daniel Herz.

"We will have a unique opportunity to benefit from some of the highest quality acreage in the United States, driven by the best operators in the play dedicated to significantly growing their production across our position.”

Jonathan Cohen co-founded Atlas Resource Partners LP (ARP), where Edward Cohen served as CEO. In 2014, Targa Resources Corp. bought ARP subsidiary Atlas Pipeline Partners LP and ARP spun off the exploration and production unit. Herz was CEO of the reconstituted ARP, which drilled its first Eagle Ford well in 2015.

Blackstone Senior Managing Director Angelo Acconcia said the firm had known Osprey’s management team for many years. "Their prior experience in thoughtfully and accretively building and realizing significant value at both Atlas Pipeline and Atlas Energy demonstrate their capability, and the like mindedness we share in the opportunity, to generate significant long-term value at Falcon Minerals.”

During the first quarter, Osprey and Royal separately produced a total of 4,764 boe/d from more than 1,789 producing wells, 73% weighted to liquids. Falcon is forecast to produce about 6,352 boe/d net this year.

Falcon is to reorganized as an “up-C,” with its operating assets are held in a separate, limited partnership. Blackstone is contributing the Royal assets in exchange for $400 million and 40 million common units of the Falcon operating partnership. Blackstone also could earn an additional 10 million common units if Falcon’s common stock trades above $12.50/share for 30 days on a volume-weighted average basis, and another 10 million common units if the stock trades above $15.00/share for 30 days on a volume-weighted average basis.

The transaction was unanimously approved by the Osprey board but still requires shareholder approval. Once completed, Falcon would trade on the New York Stock Exchange. Falcon is to have an 11-member board, including six directors appointed by Blackstone, two by Osprey and three independent directors.

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