Privately held exploration and production firm BCE-Mach LLC said it has purchase and sale agreements for two Midcontinent acquisitions totaling $66.5 million, both of which are slated to close in the first quarter of 2022.
In the first deal, BCE-Mach will acquire additional working interest across 61 wells it operates in Kingfisher County, OK. The transaction is BCE-Mach’s fourth acquisition in the Sooner Trend of the Anadarko Basin, aka STACK.
Separately, BCE-Mach is adding 66,000 net acres and 193 operated wells primarily in Barber County, KS, targeting the Mississippi Lime formation. Through the deal, BCE-Mach also will add 16 produced water disposal wells and corresponding gathering systems.
BCE-Mach is backed by private equity firms Bayou City Energy Management LLC (BCE) and independent oil and gas producer Mach Resources LLC (Mach).
“Our strategy since forming BCE-Mach in 2018 hasn’t changed,” said CEO Tom Ward. “Despite changing commodity prices and investor interest in our industry, we have consistently been able to deploy capital and acquire assets at approximately 2.5 times cash flow. Additionally, our acquisitions have delivered significant value through adding targeted drilling locations and pre-existing midstream infrastructure while purchasing at discounts to” present value, aka PV10.
“Our strategy is working,” added Bayou City Energy Founder & Managing Partner Will McMullen. “Investors want free cash flow, and we are on track to deliver about half a billion dollars of free cash flow on an annualized basis and growing.”
BCE-Mach’s average net daily production stood at about 52,000 boe/d as of Sept. 30, with a 45% liquids cut.
BCE-Mach’s Midcontinent footprint covers about 678,000 net acres, of which 97% is held by production. Its assets comprise 3,096 gross operated wells with a 63% average working interest.
Its proved reserves stand at around 211 million boe, comprising roughly 55% natural gas and 45% liquids.
BCE-Mach’s midstream portfolio, meanwhile, includes 330 MMcf/d of owned and operated natural gas processing capacity across three plants, 820 miles of gas gathering lines, and 825 miles of water disposal pipelines with 70 disposal wells.
The company “will maintain a highly disciplined approach to its drilling program and will continue only undertaking projects that will deliver excellent well-level” internal rates of return (IRR) with short payback periods,” management said. “With two rigs running currently, BCE-Mach is consistently identifying drilling opportunities meeting its criteria of 100+% IRRs across its STACK and Mississippi Lime assets.
“As the operator of a substantial portion of its acreage, BCE-Mach can direct its development program, including the timing, location and well completion design, which provides nearly complete control over its capital expenditures.”
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