Oklahoma based Petroleum company announced a purchase and sale agreement to acquire the assets of Sabalo Energy which is a portfolio company of EnCap Investments, and a non-operating partner for about $715 million. The deal is subject to customary closing price adjustments which include $625 million in cash and approximately 2.5 million shares of Laredo common equity.
The Oklahoma based Petroleum company announced the sale of 37.5% of its operated proved developed producing reserves in its legacy leasehold in Reagan and Glasscock counties to an affiliate of Sixth Street Partners for proceeds of $405 million. The additional cash flow was based on earn-out payments over the next six years. There are no proven developed production reserves in Howard or Western Glasscock counties. The transactions are expected to close July 1.
Jason Pigott, President and Chief Executive Officer of Laredo petroleum said that the transformational impact for Laredo of the combined transactions is significant. Upon closing the company will be positioned for sustainable free cash flow generation and significant deleveraging, have more than 30,000 highly productive, contiguous net acres in Howard County and a near-term pathway to increasing our oil cut to more than 50% from the current 30%.
Citigroup and Houlihan Lokey gave advisory services on the Sabalo acquisition and Houlihan Lokey acted as financial advisor on the proved developed producing reserves sale to Sixth Street. Akin Gump and Willkie Farr & Gallagher served as Laredo’s legal advisors. Jefferies acted as exclusive financial advisor to Sabalo and Bracewell served as Sabalo’s legal advisor. White & Case acted as legal advisor to Sixth Street.