TULSA, Okla.–(BUSINESS WIRE)–Midstates Petroleum Company, Inc. (“Midstates” or the “Company”) (NYSE: MPO) today announced that it has executed a Purchase and Sale Agreement (“PSA”) with an undisclosed buyer for the sale of its Anadarko Basin producing properties located in the Texas panhandle and western Oklahoma for total consideration of $58 million, subject to standard closing and post-closing adjustments. These divested properties had fourth quarter 2017 net production of approximately 3,900 barrels of oil equivalent (“Boe”) per day and year-end 2017 proved developed PV-10 at SEC pricing of approximately $53 million. The transaction price represents a forward adjusted EBITDA multiple of 4.6x, which is accretive to the Company’s current adjusted EBITDA multiple of 2.6x.
In anticipation of the sale of these assets, Midstates completed a reduction-in-force in January 2018 to align our staffing levels with current activity, reducing adjusted cash G&A expense by $3 – $5 million annually.
David Sambrooks, President and Chief Executive Officer, commented, “The sale of our Anadarko Basin properties aligns perfectly with our strategy to focus our activity, reduce costs, generate substantial free cash flow and improve liquidity for maximum optionality. We are pleased to monetize these assets and generate significant cash to further strengthen our balance sheet, while retaining the upside optionality of our NW STACK position. As we look to the future, we will continue to focus on improving margins and increasing operational efficiencies in our Mississippian Lime assets.”
Upon closing, proceeds from the sale will be used to pay down a portion of the outstanding borrowings under the Company’s revolving credit facility and for general corporate purposes. Following the closing of this sale, Midstates will evaluate a range of options to make best use of its liquidity and free cash flow, including the possibility of M&A transactions, stock repurchases, or dividends to stockholders. The transaction has an effective date of January 1, 2018 and is expected to close in the second quarter of 2018, subject to customary closing conditions.
SunTrust Robinson Humphrey acted as advisor to the Company on this transaction.