Upstream energy firm, Midstates Petroleum Company Inc. (MPO) has entered into a purchase and sale agreement for its assets located in the Dequincy area of the Gulf Coast. The net proceeds that would come from a private buyer will likely be used to repay debt under Midstates Petroleum’s revolving credit facility. The company expects the deal to be closed in November.
The properties to be sold include 12,676 net acres of developed and undeveloped resources in the Dequincy area. Midstates Petroleum will also sell its fully owned El Grande pipeline covering 20 miles in this area. The total consideration from the divesture is expected to be $90 million.
Midstates Petroleum added that the assets in the Dequincy area produced roughly 1,500 barrels of oil equivalent every day during the three-month period ended Sep 30.
The Gulf Coast asset divesture reflects Midstates Petroleum’s key intention to focus more on Mid Continent assets − where the company has premier position – and also to improve financial stability by selling non-core assets. Midstates Petroleum added that it foresees significant improvement in liquidity in the near future following the closure of the asset divesture.
Houston, TX-based Midstates Petroleum is primarily involved in upstream operations like exploration, production and development of oil and natural gas assets in the U.S. The company currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Northern Oil and Gas Inc. (NOG), Abraxas Petroleum Corp. (AXAS) and Encana Corporation (ECA). Northern Oil and Gas sports a Zacks Rank #1 (Strong Buy), while Abraxas Petroleum and Encana carry a Zacks Rank #2 (Buy).
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