| FOR IMMEDIATE RELEASE
American Energy Appalachia Holdings, LLC Announces Name Change To Ascent Resources, LLC; American Energy - Utica, LLC Announces $407 Million Asset Sale And $977 Million Equity And Debt Financing
OKLAHOMA CITY, June 9, 2015 /PRNewswire/ -- American Energy Appalachia Holdings, LLC announced today that it is changing its name to Ascent Resources, LLC (Ascent) and is transitioning to a standalone operating company, fully independent of the broader American Energy Partners, LP (AELP) platform, a process that has been contemplated since the company's founding in September 2013 and that it expects to complete by year-end 2015. The primary equity owners of Ascent will be unchanged. Further, one of Ascent's two operating subsidiaries, American Energy - Utica, LLC (AEU), announced it has agreed to sell approximately 35,000 net acres and certain associated gathering assets to Gulfport Energy Corporation (NASDAQ: GPOR) for approximately $407 million cash (subject to customary purchase price adjustments) and has completed a combined equity and debt financing of approximately $977 million. The combined proceeds of $1.4 billion will provide the company with $700 million of immediate liquidity after repaying certain existing debt. Ascent plans to efficiently deploy this capital for ongoing development of its world-class assets.
Jeffrey A. Fisher, Chairman of the Board and Chief Executive Officer, commented, "Today marks an extremely important day in the life of our company. These transactions place Ascent on strong footing from a liquidity standpoint and allow the company to continue to develop its tremendous asset base. We have what I believe are some of the very best assets in the Appalachian Basin and, therefore, the entire country. We are also pleased to announce the start of our long-anticipated migration to a standalone company, as Ascent Resources, LLC. We have worked diligently over the last two years to create a leading asset position and build a team with the operational talent to grow our production, reserves, and cash flow into the future. We appreciate the support that we received from our sponsors and AELP and look forward to taking Ascent to the next level."
The $977 million financing consists of $250 million of equity invested by affiliates of The Energy & Minerals Group (EMG), First Reserve, and Aubrey K. McClendon, as well as $250 million of senior secured debt, $200 million of which will be used to retire AEU's revolving credit facility, and $477 million of junior secured debt, $277 million of which will be used to retire an equal amount of AEU's existing convertible notes. The asset sale consists of approximately 35,000 net acres in Belmont, Monroe, and Jefferson Counties, Ohio that were not scheduled for near-term development by the company and are a better fit for Gulfport's planned development activities.
Pro forma for the asset sale, Ascent had estimated proved reserves of approximately 1.8 trillion cubic feet equivalent (73% natural gas) as of March 31, 2015, and approximately 235,000 net acres in the Utica and Marcellus shale plays in Ohio and West Virginia. Ascent's current estimated daily production is approximately 280 million cubic feet equivalent.
Created in December 2014 through the combination of the holding companies of AEU and American Energy – Marcellus, LLC (AEM), Ascent is one of the largest pure-play Appalachian E&P companies with approximately 235,000 net acres in the Utica and Marcellus shale plays, including 190,000 net acres in eastern Ohio and 45,000 net acres in northern West Virginia.
This press release contains forward-looking statements. Forward-looking statements express views regarding future plans and expectations. They include statements that include words such as "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar words or expressions, although not all forward-looking statements contain such identifying words.
Forward-looking statements in this press release include, but are not limited to, statements regarding dispositions, future operations and operating costs, business strategy, future values of anticipated reserves and future production. These statements are based on numerous assumptions and are subject to known and unknown risks and uncertainties, many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes and the uncertainty inherent in estimating oil and natural gas reserves and in projecting future rates of production, cash flow and access to capital. Actual future results may vary materially from those expressed or implied in these forward-looking statements, and Ascent's business, financial condition and results of operations could be materially and adversely affected by numerous factors, including such known and unknown risks and uncertainties. As a result, forward-looking statements should be understood to be only predictions and statements of our current beliefs, and not as guarantees of performance.
All of the forward-looking statements in this press release are qualified by risks, including those risks related to our ability to: complete our acquisitions and dispositions; access the capital markets on terms acceptable to us or at all; execute on future drilling plans; hold our leasehold by production and convert reserves into production on an economic basis; manage rapid growth; to realize attractive oil, NGLs and natural gas prices; develop a successful marketing plan for the oil, NGLs and natural gas produced by Ascent and its subsidiaries; successfully identify and acquire additional productive leasehold; recruit and retain appropriately qualified personnel; effectively utilize technology, to execute our drilling program; mitigate credit risk posed by significant customers; respond to intense competition in the onshore E&P industry; respond to shifting and increasing government regulatory requirements with respect to unconventional resource recovery, including hydraulic fracture stimulation; accurately predict the timing of infrastructure development (including longhaul pipelines) and tie-in of wells; accurately predict the timing and amount of future production of oil, NGLs and natural gas; access water, sourcing, distribution and disposal systems; generate sufficient cash flow to pay fixed charges; control our operating expenses and other costs; execute on our financial strategy and access the capital required for our development program; implement our hedging strategy and deliver expected results; navigate through general credit market and economic conditions; and to avoid material legal or environmental liabilities.
This press release provides disclosure of the proved reserves of Ascent that is derived from third-party and internally developed reserve reports. Proved reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Quantities that may be ultimately recovered from the interests of Ascent may differ substantially. There is no commitment by Ascent to drill all of the drilling locations that have been attributed to these quantities. Factors affecting ultimate recovery include the scope of the ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors, and actual drilling results, including geological and mechanical factors affecting recovery rates. The production expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
About Ascent Resources, LLC:
Ascent Resources, LLC (formerly American Energy Appalachia Holdings, LLC) was created in December 2014 through the combination of American Energy Ohio Holdings, LLC and American Energy Marcellus Holdings, LLC, which respectively own American Energy – Utica, LLC and American Energy – Marcellus, LLC.
About American Energy Partners, LP:
American Energy Partners, LP was founded by Aubrey K. McClendon in April 2013 to capitalize on opportunities available in unconventional resource plays. For additional information, please visit www.americanenergypartners.com.
About The Energy & Minerals Group:
EMG is the management company for a series of specialized private equity funds. The Firm was founded by John Raymond (majority owner and CEO) and John Calvert in 2006. EMG focuses on investing across various facets of the global natural resource industry including the upstream and midstream segments of the energy complex. EMG has approximately $16.8 billion of regulatory assets under management (RAUM) and approximately $8.3 billion in commitments have been allocated across the energy sector since inception. For additional information, please visit www.emgtx.com.
About First Reserve:
First Reserve is the largest global private equity and infrastructure investment firm exclusively focused on energy. With over 30 years of industry insight, investment expertise and operational excellence, the Firm has cultivated an enduring network of global relationships and raised more than USD $30 billion of aggregate capital since inception. Putting these to work, First Reserve has completed more than 550 transactions (including platform investments and add-on acquisitions) on six continents. Its portfolio companies span the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and infrastructure. For additional information, please visit www.firstreserve.com.
SOURCE American Energy Partners, LP