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Ohio Utica Shale

McClendon firms close on added Utica, Marcellus acreage

By Bob Downing Published: August 5, 2014

From American Energy Partners today:

 

AMERICAN ENERGY – UTICA, LLC AND AMERICAN ENERGY – MARCELLUS, LLC ANNOUNCE CLOSING OF UTICA AND MARCELLUS ACQUISITIONS,

$250 MILLION OF CONVERTIBLE SUBORDINATED NOTES

AND $1.2 BILLION OF TERM LOANS

OKLAHOMA CITY, AUGUST 5, 2014: American Energy – Utica, LLC (AEU), an affiliate of American Energy Partners, LP (AELP), announced today that it has closed on its acquisition of approximately 27,000 net acres of leasehold in Monroe County, Ohio from East Resources, Inc. and an unnamed private company (together, the Sellers) for $475 million. The acquisition was partially financed by issuing $250 million of convertible subordinated notes to the Sellers, with the balance paid using available cash.

AEU has raised $1.206 billion in private equity capital since its inception in September 2013, of which approximately 71% was provided by lead investor The Energy & Minerals Group (EMG), which also holds a majority of the AEU Board seats. Additional equity capital was provided by First Reserve, AEU’s management team and others. The transactions completed today bring the total capital raised by AEU to approximately $3.156 billion.

In addition, a separate AELP platform company, American Energy – Marcellus, LLC (AEM), announced today that it has closed on its acquisition of approximately 48,000 net acres of leasehold in Doddridge, Harrison, Marion, Tyler and Wetzel Counties, West Virginia, also from the Sellers, for $1.275 billion.

Concurrently, AEM closed its offering of $750 million and $450 million of senior secured first and second lien term loans due 2020 and 2021, respectively. A portion of the net proceeds from the term loans was used to consummate the acquisition, while the remaining net proceeds will be used to fund capital expenditures to develop the acreage and for general corporate purposes. The acquisition was also partially financed by funding $425 million of private equity commitments totaling approximately $600 million, of which approximately 72% was provided by lead investor EMG, which also holds a majority of the AEM Board seats. Additional equity capital was provided by First Reserve, AEM’s management team and others. The transactions completed today bring the total capital raised by AEM to $1.8 billion.

Citigroup Global Markets Inc. and Goldman, Sachs & Co. acted as financial advisors to AEU and AEM on the acquisitions. Sullivan & Cromwell LLP, Commercial Law Group, P.C. and Porter Hedges LLP acted as legal advisors to AEU and AEM on the acquisitions. Jefferies LLC acted as exclusive financial advisor to the Sellers and Baker Botts L.L.P. and Kirkland & Ellis LLP acted as legal advisors to the Sellers.

Citigroup Global Markets Inc., Credit Suisse, and Jefferies Finance were joint lead arrangers for the AEM term loans. Sullivan & Cromwell LLP acted as legal advisor to AEM in connection with the term loans and Latham & Watkins LLP acted as legal advisor to the term loan underwriters.

About American Energy – Utica, LLC:

American Energy – Utica, LLC is an independent oil and natural gas company affiliated with American Energy Partners, LP that is focused on the acquisition, development and production of unconventional oil, natural gas liquids and natural gas resources in the Utica Shale play in eastern Ohio.

About American Energy – Marcellus, LLC:

American Energy – Marcellus, LLC is an independent oil and natural gas company affiliated with American Energy Partners, LP that is focused on the acquisition, development and production of unconventional oil, natural gas liquids and natural gas resources in the Southern Marcellus Shale play in northern West Virginia.

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 onshore in the U.S. 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 $15.4 billion of regulatory assets under management (RAUM) and approximately $7.1 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 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 $26 billion of aggregate capital since inception. Its portfolio companies operate in approximately 50 countries and span the energy spectrum from upstream oil and gas to midstream and downstream, including resources

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