© 2015 The Texas Lawbook.
By Natalie Posgate
(Sept. 28) – Houston-based Sanchez Energy Corporation and its limited partnership, Sanchez Production Partners, announced Monday a divestiture of assets agreement in which SPP will acquire $345 million worth of assets from Sanchez Energy.
The divestiture involves certain pipeline, gathering and compression assets located in the Western Catarina portion of the Eagle Ford Shale.
Sanchez Energy turned to a Houston–based Akin Gump Strauss Hauer & Feld team led by oil and gas partner David Elder to handle its end of the deal. Elder received assistance from oil and gas partners Shubi Arora, counsel Jhett Nelson and associates Rahul Vashi and Stephen Harrington; tax partners Tom Weir and Alison Chen; and antitrust attorneys from the firm’s Washington, D.C. office.
SPP turned to Houston Latham & Watkins partners Tim Fenn, Brett Braden and Jeffrey Muñoz for advice on the transaction. They received assistance from Houston associates Jesse Myers, Bryant Lee and Brock Naeve.
The divestiture was approved by Sanchez Energy’s board of directors, following review and approval by the board’s audit committee, which was comprised of independent directors. Delaware law firm Richards, Layton & Finger provided legal advice to the audit committee and Evercore Group provided financial advice.
On SPP’s end, approval was received by its conflicts committee of the board of directors of SPP’s general partner. Stifel provided financial advice to the conflicts committee and Delaware firm Potter Anderson & Corroon provided legal advice.
To pay for the transaction, SPP executed a $350 million private placement offering (PIPE) with New York private equity firm Stonepeak Infrastructure Partners. In the PIPE, SPP offered approximately 19 million newly created Class B preferred units at $18 per share.
Stonepeak hired a Houston-based team from Sidley Austin to handle its end of the PIPE transaction. Partners Cliff Vrielink, Tim Langenkamp and Tim Devetski and associate Julie Gremillion led the deal team.
Other Sidley lawyers involved in the PIPE included M&A associates Chris Bloom and Katy Lukaszewski, energy partner Joe Flack, restructuring partner Duston McFaul and finance partners Herschel Hamner and Chris Folmsbee. Environmental and antitrust attorneys from the firm’s Chicago office were also involved.
SPP turned to Houston corporate partner Scott Olson of Andrews Kurth to lead the legal matters for the PIPE. Olson received assistance from Houston partners Meredith Mouer, Courtney Butler, Angela Richards and Allison Mantor as well as Dallas partner Kay Lynn Brumbaugh.
Pursuant to the completion of the PIPE and regulatory approvals, the Western Catarina assets divestiture is expected to close in October.
SPP also announced that as a result of the assets acquisition, the partnership will recommend to its board of directors to approve a plan to begin distributions to shareholders at an initial annualized rate of $1.60 per unit. SPP anticipates payment for the third quarter will occur in November.
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