[Context: On August 9, Kelso-backed Ajax Resources announced the sale of its northern Midland Basin assets to Diamondback Energy (Nasdaq: FANG) for $900m in cash and 2.58m shares of stock (worth about $340m). That amounts to a valuation of around $49,000/acre or $100,000 per flowing BOE. Further details, advisors and related links are below.]
AJAX RESOURCES | KELSO
Ajax Resources Announces Execution of Definitive Agreement to Sell Midland Basin Assets to Diamondback Energy
HOUSTON–August 09, 2018–(BUSINESS WIRE)–On July 22, 2018, Ajax Resources, LLC (“Ajax”) entered into a purchase and sale agreement with Diamondback Energy, Inc. (NASDAQ “FANG”) for the sale of its northern Midland Basin assets for $900 million in cash and 2.58 million shares of Diamondback common stock, subject to certain closing adjustments. Execution of the PSA comes less than three years after acquiring the Yellow Rose field from W&T Offshore. The sale to Diamondback is expected to close on October 31, 2018, and includes:
>>25,493 net leasehold acres
>>Current average net production of ~12,000 boe/d (88% oil)
>>367 net identified potential horizontal drilling locations with an average lateral length of over 9,500 feet
>>Meaningful saltwater disposal and fresh water access infrastructure
Rich Little, Ajax CEO commented: “This transaction represents a logical transition for the Ajax asset base, as it complements Diamondback’s acreage position very well and further consolidates the Northern Midland Basin. With the strong sponsorship and support of our private equity partner, Kelso, we were able to deploy the necessary resources and capital to delineate and strategically develop an underexploited asset base. We look forward to partnering with Kelso again on our next acquisition opportunity.”
Forrest Wylie, Executive Chairman of Ajax, noted: “Ajax Resources acquired the asset in 2015 at a time when our acreage was viewed by the industry as the northernmost edge of the basin and only the Lower Spraberry was considered prospective. I am proud of Ajax’s ability to prove up and execute on a very successful multi-zone program delivering repeatable, highly economic well results that compete favorably anywhere in the basin.”
Frank Loverro, Kelso co-CEO added: “I would like to thank our exceptional management team and staff. Their strategic vision and operational execution delivered outstanding returns for all shareholders.”
Jefferies LLC acted as sole financial advisor to Ajax and Thompson & Knight LLP served as legal advisor to Ajax.
Ajax is an exploration and production company focused on oil and gas development in the Permian Basin. The Company was formed in 2015 specifically to acquire certain Permian assets from W&T Offshore. Upon closing of the Diamondback transaction, Ajax intends to continue to pursue new acquisition and development opportunities.
Kelso is one of the oldest and most established firms specializing in private equity investing. Since 1980, Kelso has invested over $13 billion of equity capital in 124 transactions. Kelso was founded by the inventor of the Employee Stock Ownership Plan (“ESOP”) and, as a result, the principles of partnership and alignment of interest serve as the foundation of the firm’s investment philosophy. Kelso benefits from a successful investment track record, deep sector expertise, a long-tenured investing team, and a reputation as a preferred partner to management teams and corporates. The firm is based in New York, New York.