Houston-based Midstates Petroleum sold its stake in the Dequincy portion of its Louisiana Gulf Coast assets to an unnamed private buyer for $90 million Monday.
The unnamed buyer will pay $80 million in cash plus a ten percent overriding royalty interest in new wells drilled on the acreage, capped at $8 million, and future payments based on increased throughput on the El Grande pipeline to be capped at $2 million.
The deal includes Midstates’ ownership interest in developed and undeveloped acreage totaling 12,816 gross, 12,676 net, acres in the Dequincy area in Beauregard and Calcasieu Parishes, Louisiana.
The sale also includes the 20 mile El Grande pipeline that Midstates constructed in the area and owns a 100 percent stake in.
During the third quarter 2014, the properties produced approximately 1,500 barrels of oil equivalent per day.
The deal does not include Midstates’ acreage and interests in the Fleetwood area of Louisiana.
The net proceeds from the sale will be used to pay down outstanding borrowings under the company’s revolving credit facility.
The transaction is expected to close in November 2014.
The sale completes Midstates’ divestment from its legacy Louisiana producing assets.