Energy Prospectus

http://finance.yahoo.com/m/c28fc568-d43 ... quire.html

PR out this evening.

Should keep the pot bubbling for Permian Basin shares tomorrow.

RSP Permian, Inc. RSPP recently announced its decision to acquire Silver Hill Energy Partners. The transaction value has been estimated at roughly $2.4 billion that includes both cash and stocks. The move reflects RSP Permian’s intention to expand its resources in the Permian Basin in Texas.

Silver Hill Energy has controlling interest in 68,000 gross (41,000 net) acres within the Delaware basin that contributes to about 15,000 net barrels of oil equivalent every day (BOE/D). RSP Permian already operates huge acreages in the Midland Basin that cover almost 63,000 net acres of land. The acquisition will now give the company access to 3,200 gross undeveloped acres in the Delaware. Silver Hill Energy also owns 58 producing wells, of which 49 are horizontal.

Details below. I am updating my forecast model for RSPP. This is definitely a MAJOR STEP CHANGE for the company. - Dan

Transaction highlights
The acquisition creates substantial scale with combined current production of approximately 50 MBOEPD, over 100,000 net surface acres, over 500,000 net effective horizontal acres and over 3,600 net drilling locations with substantial additional upside from tighter spacing assumptions
Unique acquisition of a highly contiguous acreage position in the core of the Delaware Basin that has approximately 68,000 gross / 41,000 net surface acres located in Loving and Winkler counties Acreage located in the thickest, deepest part of the Delaware Basin, which is significantly over-pressured
Blocked up acreage configuration conducive for longer laterals and efficient development
Located in an oil-weighted area of the Delaware Basin
~250,000 net effective horizontal acres across 7 horizontal pay zones
Significant operational control with over 80% of acreage operated
Average working interest in operated properties of approximately 83%
One operated rig holds acreage position
Offset operators include EOG, Anadarko, Shell, Matador and Devon
Meaningful and growing production base with current net production of approximately 15.0 MBOEPD (69% oil, 86% liquids) and two operated horizontal rigs currently drilling on acreage position

Deep inventory of attractive horizontal drilling locations across multiple horizontal stacked pay zones, including the Wolfcamp B, upper and lower Wolfcamp A, 3rd Bone Spring, 2nd Bone Spring, Avalon, and Brushy Canyon
EURs of ~1.0 MMBOE common across acreage position based on management’s estimates
~3,200 gross / ~1,950 net locations with average lateral length of approximately 6,300′ Acreage trades on-going for longer lateral development


Financing

In order to pay the cash portion of the acquisition, RSP also announced that it will be offering 22,000,000 shares of common stock, upsized from 20,000,000. The company has granted the underwriters a 30-day option to purchase up to an additional 3,300,000 shares of common stock as well. RSP Permian expects total gross proceeds of $874.5 million.