Tulsa-based Alliance Resource Partners, L.P. announced that it has completed the previously announced acquisition of oil and gas mineral interests from Wing Resources, LLC and Wing Resources II, LLC for a cash purchase price of $145.0 million.
Known for its coal production in the eastern U.S., the Oklahoma company expanded its oil and gas holdings.
The transaction increases ARLP’s presence in the Permian Basin through the addition of approximately 9,000 net royalty acres in the Midland Basin with exposure to more than 400,000 gross acres. The effective date of the transaction is May 1, 2019.
There are 827 gross horizontal wells currently producing on the newly acquired acreage delivering estimated net production of over 500 BOE per day (71% oil, 14% NGLs). With an additional 405 drilled but uncompleted wells and 298 permits, these assets are under active development by well-capitalized operators bringing visible and near-term growth to current production.
“Today’s announcement reflects ARLP’s commitment to build its oil and gas minerals segment as a strategic growth platform,” said Joseph W. Craft III, Chairman, President and Chief Executive Officer. “The Wing acquisition enhances our already significant ownership position in the prolific, liquids-rich Permian Basin. Combined with our other minerals assets, we expect the organic growth of our minerals segment to provide meaningful EBITDA and cash flow contributions within the next two years. Continued disciplined acquisitions will further enhance the long-term cash flow growth for ARLP and create value for our unitholders.”
ARLP now directly owns approximately 51,000 net royalty acres concentrated in the Permian Basin (47.0%), SCOOP/STACK (40.0%), Bakken (8.0%) and Appalachian Basin (5.0%). ARLP also indirectly owns approximately 4,000 net royalty acres through its limited partner interest in AllDale Minerals III, LP. With the acquisition of these mineral interests from Wing and changes to our previous guidance to include liquids volumes, ARLP expects 2019 Segment Adjusted EBITDA contribution in the range of $48.0-$54.0 million with production net to ARLP of 4,500-4,700 BOE per day.
ARLP currently produces coal from eight mining complexes it operates in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States.
ARLP generates royalty income from mineral interests it owns in premier oil and gas producing regions in the US, primarily the Anadarko, Permian, Williston and Appalachian basins.