HOUSTON, Nov. 22, 2016 (GLOBE NEWSWIRE) — Sanchez Production Partners LP (NYSE MKT:SPP) (“SPP” or the “Partnership”) today announced that it has closed on the previously announced definitive agreement to acquire a 50 percent interest in Carnero Processing, LLC (“Carnero Processing”) from Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy”) for total consideration of approximately $80 million. In conjunction with the closing, the Partnership paid cash consideration of $55.5 million and assumed remaining capital commitments to Carnero Processing, which are estimated at $24.5 million.
The Partnership also announced that it has closed on the previously announced definitive agreement to acquire certain producing oil and natural gas assets, located in South Texas, from Sanchez Energy for total consideration of approximately $27 million. After normal and customary closing adjustments, the Partnership paid cash consideration of approximately $25.6 million to Sanchez Energy at closing.
“Having now closed the two transactions announced in October 2016, we have successfully executed and financed transactions with Sanchez Energy for total value of nearly $600 million,” said Gerry Willinger, Chief Executive Officer of the general partner of SPP. “In the process, we have demonstrated how our strategic relationship with Sanchez Energy can be leveraged to enable each company to better optimize its respective strategies, capital resources, and financial targets. We are excited to be further aligned with Sanchez Energy and its plans for development in South Texas, and look forward to capitalizing on additional opportunities to grow alongside this leading Eagle Ford operator over time.”
After debt repayment scheduled for Nov. 23, 2016, the Partnership anticipates that it will have $148.0 million in debt outstanding under its credit facility, which has a borrowing base of $205.1 million, and outgoing letters of credit totaling approximately $15 million related to the funding of remaining capital commitments to Carnero Processing and Carnero Gathering, LLC. Based on an elected commitment amount of $200 million, the Partnership projects pro forma liquidity on Nov. 23, 2016 of approximately $53.1 million, which includes projected borrowing capacity net of outstanding letters of credit plus cash and cash equivalents after the scheduled debt repayment. The reserve-based lending component of the Partnership’s borrowing base is scheduled for redetermination in the fourth quarter 2016 and the midstream component of the borrowing base is scheduled for redetermination during the first quarter 2017.
ABOUT THE PARTNERSHIP
Sanchez Production Partners LP (NYSE MKT:SPP) is a publicly-traded limited partnership focused on the acquisition, development, ownership and operation of midstream and production assets in North America. The Partnership owns an oil and natural gas gathering and processing system located in the Eagle Ford Shale in Dimmit, Webb and La Salle Counties, Texas. The Partnership also currently owns producing reserves in the Eagle Ford Shale in South Texas, the Gulf Coast region of Texas and Louisiana, and across several basins in Oklahoma and Kansas. The Partnership previously announced and continues to explore the possible divestiture of its remaining assets and operations in Oklahoma and Kansas.