Kirkland Advises Bayou City Energy in STACK Play Drilling Joint Development Agreement

Kirkland & Ellis LLP represents Bayou City Energy, which announced that its affiliate, BCE-STACK Development LLC, has entered into a joint development agreement with Oklahoma Energy Acquisitions, LP, a wholly owned subsidiary of Alta Mesa Holdings, LP, to jointly develop AMH’s STACK play acreage located in Kingfisher County, Oklahoma.
 
Under the terms of the agreement, the parties initially will jointly participate in a drilling program that will develop 40 wells, which are to be developed in two tranches of 20 wells each. The parties may also mutually agree to jointly participate in additional tranches on the same terms as the initial two. BCE-STACK has committed to fund 100 percent of AMH’s working interest share of the well costs in the initial 40 wells, up to a maximum of an average $3.2 million per well for each tranche, and will receive 80 percent of AMH’s working interest in each well. After achieving a 15 percent internal rate of return in a tranche, BCE-STACK’s working interest in the wells included therein will be reduced to 20 percent of AMH’s original working interest, and further reduced to 7.5 percent of AMH’s original working interest upon BCE-STACK achieving a 25 percent internal rate of return in such tranche.
 
More details on the transaction are available here.
 
The Kirkland & Ellis team was led by corporate partners Anthony Speier and Cody Carper, and included corporate associates Ryan Martin and Charles Nixon, debt finance partners Will Bos and Andy Veit, and tax partner Thomas Evans and associate Polina Liberman.