Oklahoma City’s Flywheel Energy LLC, a firm once known as Valorem Energy and founded in 2017 has pulled off a nearly $2 billion purchase of shale operations in Arkansas.
The company paid $1.865 billion in acquiring Southwestern Energy Company’s natural gas properties and affiliated midstream business in the Fayetteville Shale. The deal is to close in the fourth quarter of the year.
The assets include 716 mmcf/d of net production from 4,033 producing wells across more than 900,000 net acres and an integrated midstream gathering system. The system has more than 2,000 miles of gathering pipelines and more than 50 compressor stations, all located in central Arkansas.
Flywheel also announced the closing of a $700 million equity commitment by the Kayne Private Energy Income Funds platform. It is the platform’s second partnership with the Flywheel management team following the original investment in 2017.
“Flywheel Energy is proud to join the Arkansas community as an operator in the historic Fayetteville Shale,” commented Justin Cope, Chief Executive Officer of Flywheel. “We believe this is another great step as we work to execute our long term strategy and achieve superior risk-adjusted returns for our investors.”
“We are thrilled to be partnering with the Flywheel team once again to acquire these long-life natural gas assets in the Fayetteville Shale,” commented Danny Weingeist, Managing Partner of the Kayne Private Energy Income Funds. “Southwestern’s Fayetteville assets are an ideal fit for our Funds’ strategy, generating significant free cash flow through low-risk, legacy natural gas production.”
Wells Fargo Bank, N.A, along with Citibank, N.A. provided an underwritten debt commitment for debt financing as part of the acquisition. Wells Fargo Securities, LLC served as financial and technical advisor to Flywheel.
Flywheel Energy began as Valorem Energy in early 2017 with backing from the Kayne Anderson Private Energy Income Fund. In 2017, Valorem acquired interests in the Williston Basin for $285 million, which the Flywheel organization continues to retain.
Flywheel Energy is a private exploration and production company formed to acquire and operate large, producing onshore U.S. oil and gas assets with an emphasis on the Rockies and Mid-Continent. With this acquisition, Flywheel entities will have made over $2.1 billion of acquisitions since 2017.