Acacia Research Announces Benchmark Energy’s Transformative Acquisition

Source: 2/20/2024, Location: North America

Acacia Research Corporation (Nasdaq: ACTG) (“Acacia”) today announced that its majority owned subsidiary, Benchmark Energy II, LLC (together with its subsidiaries, “Benchmark”), has entered into a Purchase and Sale Agreement (“PSA”) to acquire certain upstream assets and related facilities (the “Assets”) in Texas and Oklahoma from a private seller (such transaction, the “Acquisition”). The Acquisition is anticipated to expand the Benchmark portfolio, adding approximately 140,000 net acres and approximately 470 operated producing wells in the prolific Western Anadarko Basin throughout the Texas Panhandle and Western Oklahoma.

Acquisition Highlights

- Expanded operated position throughout the core of the Western Anadarko Basin with over 110,000 net acres, 100% of which is held-by-production, with an additional 27,000 net acres in the emerging Cherokee play

- Liquids-rich, low-decline, mature production base of approximately 6,000 barrels of oil equivalent per day across approximately 470 operated wells

- Significant opportunity set of field enhancement opportunities including artificial lift optimization, workovers and return-to-production projects

- Material exposure to the emerging Cherokee development play via operated acreage and non-operated arrangements with best-in-class operators

- Benchmark anticipates hedging a significant amount of production

The Acquisition expands upon Acacia’s strategy within its Benchmark subsidiary of driving returns through a focus on cash flow. This is accomplished through acquiring predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.

Kirk Goehring, Benchmark’s Chief Executive Officer, commented: “The acquisition of these assets represents a transformative moment in Benchmark Energy’s history and an important next step in our partnership with Acacia and McArron. This unique asset is expected to deliver attractive, mature production with multiple drivers to enhance value. After closing this acquisition, Benchmark will have a large, contiguous acreage position in the heart of the Mid-Continent, and incremental scale to continue driving meaningful operational enhancements to create attractive returns for our stakeholders for many years to come.”

MJ McNulty, Jr., Acacia’s Chief Executive Officer, added, “We have always envisioned the Benchmark subsidiary as a platform, partnering with its highly talented leadership team, to acquire high-quality, cashflow-generating oil and gas assets. The Benchmark team has an established track record for acquiring excellent assets that possess attractive return profiles. This transaction is an example of that strategy in action and a meaningful first step of what we expect to be multiple acquisitions within the Benchmark platform. We continue to believe there is an opportunity to acquire outstanding assets at attractive valuations.”

Jonny Jones, McArron’s Chief Executive Officer, added, “This transaction further expands the exciting partnership between Acacia and McArron in our support of Benchmark. Kirk and his team have a deep familiarity with these high-quality assets, and they will bring Benchmark the required scale to drive meaningful value within the combined enterprise.”

Enhancing Scale in the Anadarko Basin

The Acquisition includes an interest in approximately 470 operated wells producing approximately 6,000 net mboe/d in the core of the Western Anadarko Basin, as well as a non-operated interest in the undeveloped Cherokee play. The wells are mature, low-decline production and will add significant diversification to Benchmark’s production, with a balanced pro-forma portfolio of approximately 60% liquids and 40% natural gas. Further, the Assets’ proximity to Benchmark’s existing operations in Texas creates further potential to develop operational synergies of scale in the basin.

Additional Information

The transaction is expected to be funded utilizing cash from Benchmark’s existing owners, Acacia and McArron Partners, as well as committed debt financing from a group of local, regional banks. Acacia’s share of the consideration is expected to be approximately $57.5 million. Closing of the transaction, which is expected in the second quarter of 2024, is subject to customary closing conditions and termination rights.

Additional details about the acquisition are included in a Form 8-K filed by Acacia today with the Securities and Exchange Commission.

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