Aubrey McClendon has had little time off since his publicized ouster from his first E&P empire (Chesapeake Energy – ticker: CHK). Since founding American Energy Partners (AEP) in April 2013, McClendon has quietly amassed acreage in several major North American plays. AEP’s structure has expanded to a platform with subsidiaries named for their respective basins: the Marcellus, Permian, Utica and Woodford, in addition to a midstream and non-operated arm.
McClendon, acting as Chairman and Chief Executive Officer of American Energy Partners, has been a difficult man to reach. The only means of communication, thus far, has been press releases through the company site. Listed below is a timeline of developments issued by the Oklahoma City-based company.
October 9, 2013. The first release hits the wire a half-year after the company is founded, and it was worth the wait. AEP announced it raised $1.7 billion from private commitments and term loans to enter the southern portion of the Utica Shale. The capital was used to acquire and develop 105,000 net acres in the region, with the first rig starting operations in Q4’13.
November 11, 2013. Jeff Fisher, a 10 year veteran of Chesapeake, is appointed Chief Operating Officer. His previous role with CHK was Executive Vice President – Production.
January 29, 2014. AEP announces an additional $250 million investment from The Energy & Minerals Group.
February 3, 2014. AEP’s Utica position expands to 260,000 net acres with the purchase of 130,000 net acres from companies like Exxon Mobil (ticker: XOM) and Hess Corporation (ticker: HES). According to AEP, 90% of the acreage is in the core plays of Jefferson, Belmont, Guernsy, Harrison, Monroe and Noble counties. Future plans include drilling 1,600 net wells (2,700 gross) throughout the next decade.
February 19, 2014. AEP upsizes its convertible subordinated notes to $750 million from $500 million and expands its borrowing base to $950 million. Upon the closing of the notes, the company had raised $2.9 billion to date.
February 24, 2014. The company dives into the Woodford Shale in Oklahoma with an additional $680 million from bank borrowings and private commitments. The position spans 120,000 net acres and holds production of approximately 6,000 BOEPD. In the release, the company said it intends to build up its leasehold to 200,000 net acres.
June 2, 2014. Jeff Agosta, the previous Chief Financial Officer of Devon Energy (ticker: DVN) is hired for the same position at AEP. Jeff Mobley is also added to the staff as Senior Vice President – Major Acquisitions after serving as Senior Vice President – Investor Relations at Chesapeake.
June 9, 2014. AEP gains stakeholds in the Permian and Marcellus for $4.25 billion. The Permian assets, acquired for $2.5 billion, consist of roughly 63,000 net acres in Reagan and Irion counties with approximate production of 16,000 BOEPD. Plans for the new properties include running six to eight rigs by year-end 2015 and drilling up to 1,750 net wells (2,500 gross) throughout the next decade. The Marcellus/Utica position, acquired for $1.75 billion, spans 75,000 net acres in West Virginia and Ohio. Total net production of the properties is 175 MMcfe/d. Future plans consist of utilizing four to six rigs by the end of 2015.
At the time of the announcement, the company compiled $10 billion in total accumulated equity and debt capital in only nine months. Its Utica position garnered $3.5 billion of capital and has 1,560 net wells (2,600 gross) in its drilling inventory. The company would later revise its inventory to more than 3,000 gross wells with $20 to $25 billion in future capital commitments for the Marcellus/Utica alone.
June 18, 2014. A midstream arm is created.
August 1, 2014. AEP closes on $1.6 billion offering of senior unsecured notes.
August 7, 2014. AEP midstream enters joint venture with Regency Energy Partners to construct a 52 mile pipeline in the Utica. The 36-inch pipeline will be capable of delivering 2.1 Bcf/d with the potential of reaching 3.5 Bcf/d. With an in-service date of 2015, the project is expected to cost $500 million with AEP financing 25% as a non-operator.
September 29, 2014. Another ex-Chesapeake executive joins the fold. John Reinhardt is hired as Chief Operating Officer of two platform companies, leaving his position as Senior Vice President – Operations at CHK.
October 28, 2014. The company updates its Permian assets in its longest, most detailed press release to date.
Its Permian acreage expanded to 90,000 net acres with the addition of 27,000 new acres for a purchase price of $726 million. Its bolt-on acquisition, located in the Wolfcamp window of Reagan County, is believed by AEP to hold as many as six different intervals. A total of 2,300 net drilling locations (2,700 gross) are identified in the Permian at average drilling costs of $7.0 to $8.5 million per well.
Four recently completed wells from its first Permian acquisition targeted the Wolfcamp A interval with laterals ranging from 7,500 to 10,000 feet. Average production rates were 1,518 BOEPD and 887 BOEPD on 24-hour and 30-day periods, respectively. All are tracking at or above the company’s type curve of 527 MBOE.
2015 volumes are estimated at 33 to 38 MBOEPD (up to 75% oil) with a total of 12 horizontal rigs in operation by the end of 2015. Proved reserves are approximately 158 MMBOE. Management expects to conduct an initial public offering on the AEP Permian branch in the same year.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
