Atlas Resources Partners LP (ARP) has made a friendly deal to take over privately held Barnett Shale operator Titan Operating LLC for $184 million, giving the Philadelphia-based operator another big natural gas liquids (NGL) lift in the heart of Texas.
The merger, announced on Thursday, gives ARP 43 producing wells that provide about 250 Bcfe of proved reserves and associated assets. The properties are 84% weighted to gas and 34% proved developed, with lease operating expenses and production taxes estimated at 65 cents/Mcfe.
"This transaction continues to solidify our position in the Barnett Shale through opportunistic purchases of ongoing production and associated assets," said ARP CEO Edward E. Cohen, who said the partnership would "continue to evaluate additional opportunities to expand."
The Titan transaction is ARP's second in the Texas shale play in two months, and it gives the operator a total of about 530 Bcfe of total net proved reserves in the Barnett. Last month ARP completed a deal to acquire 277 Bcfe of proved reserves, including undeveloped drilling locations, in the Barnett from Carrizo Oil & Gas for $190 million (see Shale Daily, March 19).
Total net proved reserves pro forma for the Titan acquisition are about 700 Bcfe, which is almost four times more than its original net reserves when it first began trading publicly on March 14, the management team noted.
Titan's 16,000 net acres primarily are in Denton, Tarrant, Johnson and Hood counties, close to ARP's acquired Carrizo assets. The Titan properties are 90% held by production, with current net output of around 24 MMcfe/d, including 370 b/d of NGL.
"ARP believes there are approximately 335 potential undeveloped drilling locations on the new position," management stated.
The transaction already has been OK'd by ARP's board of directors and would have an effective date of Jan. 1, 2012 with a closing date expected on July 1.
Because of the Titan acquisition, ARP plans to increase its distribution guidance for the second half of this year to a range of 90 cents to $1.00/unit, up from prior guidance of 85-90 cents/unit. ARP also increased 2013 distribution guidance to a range of $2.30 to $2.45/unit, higher than a previous forecast of $2.25-2.40.
The purchase is to be financed by issuing about 3.8 million ARP common units along with 3.8 million newly issued convertible preferred units to Titan's owners. The preferred units may be converted voluntarily to common units within three years at a strike price of $26.03/unit and are required to be converted by the end of the third year.