INDUSTRY BRIEFS

LINN ENERGY TO SELL REMAINING PERMIAN WOLFCAMP ACREAGE

LINN Energy LLC has signed a definitive agreement to sell its remaining position in Howard County in the Permian Basin for a contract price of $281 million. The transaction is expected to close in the third quarter 2015.The properties sold include approximately 6,400 net acres prospective for horizontal Wolfcamp drilling and approximately 2.0 Mboe/d of current production from 133 gross wells. RBC Richardson Barr acted as financial advisor to LINN for the transaction. In late 2014, LINN closed the trade with Exxon Mobil Corp. whereby LINN received ExxonMobil's interest in California's South Belridge Field and ExxonMobil received production and acreage prospective for horizontal Wolfcamp drilling in the Permian Basin.

COMSTOCK TO DIVEST CERTAIN EAST TEXAS ASSETS

Comstock Resources Inc. has agreed to sell oil and gas properties in and around Burleson County, TX for $115 million to a privately-held company. The properties being sold are producing approximately 1,900 barrels of oil per day and 5.5 MMcf/d of natural gas. As of Dec. 31, 2014, Comstock's proved reserves included 3.7 million barrels of oil and 3.9 bcf of natural gas related to the interests being sold. The company expects to realize a pre-tax loss on the divestiture ranging from $100 to $110 million. Taking the divestiture into account, Comstock revised its 2015 oil production guidance to 9,000 to 9,500 barrels per day and its natural gas production guidance to 125 to 150 MMcf/d. The company has recently added 10 MMcf/d of natural gas hedges at $3.20 per MMcf for the 12 months beginning on July 1. BMO Capital Markets served as exclusive financial advisor, and Locke Lord LLP served as legal advisor to Comstock on the transaction. The $115 million (6.7x 2016E cash flow) implies "substantially less NAV than previously thought for the undeveloped portion of the company's 32K net acres in the play (we had originally dialed in ~$4K/acre in our NAV, but we estimate CRK netted less than $500/acre). In addition, while liquidity is enhanced in the short term, we see 2015/2016 net debt/EBITDA settling at 7.2x/7.3x, virtually unchanged from 7.3x/7.1x previously," noted Global Hunter Securities analysts following the announcement. Stifel analysts saw it this way: "Pro forma the sale, we project CRK will have approximately $270 million of cash on its balance sheet, no outstanding borrowings on its credit revolver, and $1.395 billion of long-term debt with no maturities until 2019-2020. However, we project the company's YE15 debt/TTM EBITDA will increase to 6.5x, up from 2.4x at YE14."

FOURPOINT ENERGY TO ACQUIRE WESTERN ANADARKO ASSETS FROM CHESAPEAKE SUBSIDIARIES

FourPoint Energy LLC agreed to purchase oil and gas assets in the Anadarko Basin of Oklahoma from Chesapeake subsidiaries Chesapeake Exploration LLC (CEX) and CHK Cleveland Tonkawa LLC. The $840 million deal is the second large deal in the region for privately-held FourPoint Energy in the last eight months. For Chesapeake, the deal could reduce CHK Cleveland Tonkawa LLC liability. The assets include an interest in approximately 1,500 producing wells primarily in the Cleveland, Tonkawa, and Marmaton formations with average daily net production of approximately 21,500 boe/d over the 12 months ending in April. The production mix is 7,000 bbl/d of oil, 5,000 bbl/d of natural gas liquids and 57 MMcf/d of natural gas. The assets cover nearly 250,000 net acres centered in Roger Mills and Ellis counties, Oklahoma. Approximately 95% of the leasehold is held by production. FourPoint will assume full operations of the assets at closing, which is anticipated to be Aug. 31. The acquisition will be funded by $619 million in FourPoint Holdings equity issued to funds managed by GSO Capital Partners and cash drawn from existing FourPoint Energy credit facilities. Pro forma for the acquisition and prior to customary post-closing adjustments, FourPoint's Western Anadarko footprint will exceed 400,000 net acres with net production estimated at 260 MMcfe/d from approximately 4,600 gross wells, with half of the production coming from oil and natural gas liquids. Pricing of the deal looks decent given the current environment, noted Wunderlich Securities analysts following the announcement. "The assets went for about $40,000 per flowing boe; a price that is clearly lower than we saw during a higher commodity priced world, but we believe that overall it makes sense to do this as it should nicely help improve the balance sheet while keeping most all of the upside potential on CHK's core assets." Jefferies LLC acted as financial advisor and Andrews Kurth LLP acted as legal advisor to FourPoint Energy in connection with the transactions.

LEGACY ENTERS PERMIAN FUNDING DEAL, EAST TEXAS PURCHASE TRANSACTION

The operating subsidiary of Legacy Reserves LP has entered into an agreement with funds managed by TPG Special Situations Partners (TSSP) to fund horizontal development of certain of Legacy's Spraberry, Wolfcamp, and Bone Spring rights in the Permian Basin. The primary acreage covered by the arrangement is approximately 6,000 net acres in Howard, Reagan, and Crockett counties, Texas, and Lea County, New Mexico, on which Legacy estimates there are over 150 horizontal locations requiring more than $700 million of capital deployment net to the Legacy and TSSP interests. Legacy and TSSP will establish tranches of proposed horizontal locations, with TSSP funding 95% of Legacy's drilling and completion costs and receiving 87.5% of certain of Legacy's interests in any wells in such tranche until it achieves a 1.0x return on investment. Legacy will fund 5% of the drilling and completion costs and retain 12.5% of certain of its interests prior to the ROI Hurdle. Upon achievement, TSSP will revert to 63% of Legacy's initial interest, while Legacy will revert to 37% until TSSP achieves a 15% internal rate of return. Upon achievement, TSSP will revert to 15% of Legacy's initial interest while Legacy will revert to 85%, and all the remaining undeveloped interests will revert to Legacy but remain available for future development. TSSP has committed $150 million to fund the first tranche. TSSP has the right to participate in any future identified horizontal development opportunities in the Delaware and Midland basins under the same economic terms. Jefferies LLC acted as sole financial advisor and Andrews Kurth LLP acted as legal advisor to Legacy. Vinson & Elkins LLP acted as legal advisor to TSSP. Additionally, Legacy has entered into separate agreements with affiliates of Anadarko Petroleum and Western Gas Partners LP to purchase natural gas properties and gathering and processing assets in East Texas for a combined $440 million. These properties represent Legacy's entry into a new basin in East Texas and into gathering and processing operations supporting the natural gas properties. Legacy anticipates funding these transactions with borrowings under its revolver.

RING COMPLETES DELAWARE BASIN ACQUISITION

Ring Energy Inc. closed its acquisition of the Delaware Basin acreage located in Culberson and Reeves counties, Texas, for $75 million. The acquisition was financed with proceeds from the company's recently completed public common stock offering and its new senior credit facility. The acquired property, in the Delaware Basin of West Texas, consists of 14,645 gross acres (14,322 net) with current net production to the company of approximately 1,300 boe/d. Ring will be the operator, and will have a 98% working interest and net revenue interest of 79%. Commenting on the acquisition, analysts from Roth Capital Partners said, "Ring is acquiring a group of properties that, in our view, fit well with the company's existing properties and the talent and experience of the management and technical team. Ring has long been on the hunt for an acquisition but Ring didn't 'follow the crowd' and chase Bone Spring deals or Wolfcamp deals. Ring is sticking to what the company knows best," the analysts said, an approach that "usually bodes well." With the closing of the deal, Ring increases its proved reserves by 45% and approximately doubles production and Permian Basin net acreage. The analysts put the crude oil content "favorably high" at 93%.

WPX INCREASES WILLISTON BASIN ACTIVITY

WPX Energy plans to increase its activity in the Williston Basin during the second half of 2015 by resuming completions and increasing its rig count from one to three before year-end. The company's estimated drilling and completion costs in the basin are approaching $8 million per well with 6 million pound completions, representing a decrease of more than 30% vs. its average in 2014. The company is now recognizing a blended type curve of approximately 750 Mboe for its wells in the Middle Bakken and Three Forks formations, up 25% per well from previous estimates of 600 Mboe. WPX has more than 85,000 net acres in the core of the Williston Basin, and reported proved reserves of 119 million barrels of oil equivalent for its Williston operations at year-end 2014. The company has 14 Williston wells awaiting completion. This work is scheduled to resume in August, starting with a four-well pad. WPX has one rig deployed on its Williston acreage, with a second rig planned in August and a third in November.

STATOIL REFINANCES REVOLVING CREDIT FACILITY

Statoil ASA, guaranteed by Statoil Petroleum AS, has signed a US$5 billion multicurrency revolving credit facility. The facility, which was coordinated by Barclays Bank PLC, Deutsche Bank AG, and DNB Bank ASA, received support from the group of existing and new relationship banks invited to participate in the facility. Statoil elected to increase the facility by US$500 million from the initial launch size of US$4.5 billion, along with scaling back the participating banks' commitments. The facility has a five-year maturity with two one-year extension options and will be used for general corporate purposes and as backup for commercial paper programs. Statoil's existing US$3 billion multicurrency revolving credit facility dated Dec. 20, 2010, will be canceled as part of the refinancing process.

AETHON ENERGY, REDBIRD CAPITAL ACQUIRE SM ENERGY'S ARK-LA-TEX ASSETS

Aethon Energy Management LLC, a private investment firm focused on onshore oil and gas, together with its partner, RedBird Capital Partners LLC, closed on a deal to acquire certain Ark-LA-Tex assets from SM Energy Co. Terms were not disclosed. SM Energy's Ark-LA-Tex assets comprise 76,300 net acres with current net production of 29 MMcfe/d, 98% of which is gas, which implies $1,724 per flowing Mcfe based on previous expectations of approximately $50 million in proceeds, said analysts with Global Hunter Securities. Aethon now manages assets in the Ark-LA-Tex area producing 56 MMcfe/d. SM Energy's sale of its remaining Mid-Con assets is in line with the company's previously announced plan, and according to the analysts, the company sits on "ample liquidity" of approximately $2.3 billion pro forma with "potential catalysts on the horizon (stack/stagger could double current inventory of ~1,050 locations) and a cheap valuation (4.5x 2016E EV/EBITDA vs. mid-cap peers at 8.4x)." Weil Gotshal & Manges LLP and Ringet & Collier PLC served as legal counsel to Aethon. Gardere Wynne Sewell LLP served as legal counsel to RedBird. RedBird's financial advisor was Evercore Partners Inc.

GASTAR CLOSES NON-CORE OK ASSET SALE

Gastar Exploration Inc. has completed the sale of certain non-core assets in Oklahoma to an undisclosed private third-party for a total of $46.1 million of net proceeds. Analysts at Global Hunter Securities view the sale positively as it "it boosts liquidity in the near term (Q1 liquidity of $147M goes to $193M pro forma) and avoids lease renewal payments in the coming years ($9.5M-$10M), while still allowing GST to retain meaningful running room in the play (103,700 net acres, 575+ locations to drill)."