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2014

NFR Energy Announces Anadarko Basin and Eagle Ford Asset Acquisitions, First Reserve Purchase of Equity Partner Stake in NFR Holdings, CUSIP Consolidation and Company Name Change

Company Adds 66,300 Net Acres and Approximately 6,500 Boe/d of Production in Two Core Areas

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HOUSTON, Dec. 17, 2012 /PRNewswire/ -- NFR Energy LLC ("NFR" or the "Company") today announced the following:

  • NFR has closed two privately negotiated transactions to acquire producing and undeveloped oil and gas assets in the Anadarko Basin and the Eagle Ford Shale for an aggregate purchase price of approximately $736 million.
  • Pro forma for these transactions, NFR will have three established core operating areas with approximately 197,000 net acres in East Texas (Cotton Valley/Haynesville), 24,300 net acres in the Eagle Ford Shale and 64,000 net acres in the Anadarko Basin (Granite Wash and Cleveland).  These positions are characterized by high return, high liquids content inventory.  Combined pro forma production is approximately 27,200 Boe/d, (26% liquids).
  • First Reserve has consolidated its ownership of NFR through the purchase of its partner's entire equity ownership position in NFR Holdings LLC, the parent company of NFR.
  • NFR has initiated the consolidation of the CUSIP numbers on the two separate offerings of the Company's 2017 Senior Notes with the Company's bond indenture Trustee.
  • The Company is in the process of changing its name to Sabine Oil & Gas LLC.

Asset Acquisitions
In separate transactions, the Company acquired all the assets of TLP Energy LLC and its subsidiaries, (the "Anadarko Basin Assets"), for $655 million and certain Eagle Ford Shale assets from two independent oil & gas companies for $81 million (the "Eagle Ford Shale Assets"), with both purchase prices adjusted for customary closing items. The Anadarko Basin Assets acquisition was effective October 1, 2012 and the Eagle Ford Shale Assets acquisition was effective September 1, 2012.

Financing of the acquisitions was accomplished with additional equity from First Reserve and proceeds from a $500 million Senior Secured 2nd Lien Term Loan, underwritten by BofA Merrill Lynch, Citigroup Global Markets Inc. and Natixis.

The Anadarko Basin Assets are comprised of approximately 64,000 net acres (~95% operated) prospective for the Granite Wash and Cleveland Sand formations primarily located in Ochiltree, Lipscomb, Roberts and Hemphill Counties, Texas. Current net production from these assets is approximately 6,500 barrels of oil equivalent per day (Boe/d) and estimated total proved reserves, prepared by the Company, are over 40 MMboe, which are approximately 55% oil and natural gas liquids ("NGLs"). The Anadarko Basin Assets have approximately 425 drilling locations and are anticipated to offer low-risk development opportunities and excellent project economics.

The Eagle Ford Shale Assets consist of the Sugarkane acreage block, representing approximately 2,300 net acres in the "core of the core" of the Eagle Ford Shale. The acreage offers what the Company believes is low-risk, economically compelling development inventory that is expected to allow NFR to leverage its experience and success in the Haynesville Shale. The Eagle Ford Shale Assets add to the Company's existing Eagle Ford Shale acreage position secured earlier in the year by way of two joint ventures. The Company estimates of proved reserves for the Eagle Ford Shale Assets are over 20 MMboe, which are approximately 55% oil and NGLs.

David Sambrooks, NFR's Chief Executive Officer, stated, "These acquisitions immediately result in a large, well balanced company with three major producing and development basins and exposure to oil, gas and NGLs.  We will focus on high return development drilling directed at our new assets and expect to rapidly de-lever the balance sheet and further increase the Company's liquids production.  Pro forma, the Company is producing approximately 27,200 Boe/d (26% liquids) and has substantial drilling inventory of some of what we believe are the highest return projects in the U.S. onshore, reflected in our new estimated pro forma proved reserve base of 280 MMboe."

Michael France, Managing Director of First Reserve, commented, "NFR has been a strategic investment for our firm since 2007 and we believe the assets acquired are an important and exciting part of the Company's growth strategy moving forward.  The track record of NFR's management team speaks for itself and we are confident they will do a great job of developing these transformational assets. We look forward to continuing to work in close partnership with the NFR team in the future."

Tudor, Pickering, Holt & Co. acted as financial advisor to NFR on the asset acquisitions.

Buyout of Equity Partner

In a separate and unrelated transaction, First Reserve has closed on the purchase of its equity partner's ownership position in NFR Holdings LLC, (the parent company of NFR). First Reserve now owns 99.7% of NFR Holdings LLC and management owns 0.3%.

CUSIP Consolidation

On December 14, 2012 NFR initiated the process of consolidating the existing CUSIP numbers that were a result of the two separate offerings in 2010 of the Company's 2017 Senior Notes. The Company's 2017 Senior Notes will be combined into a single unrestricted CUSIP number effective December 21, 2012.

Company Name Change

The Company is in the process of changing its name to Sabine Oil & Gas LLC.

Conference Call

NFR will host a conference call on December 18, 2012 to discuss the transactions at 2:00 p.m. EST (1:00 p.m. CST). Investors may participate in the conference call via telephone by dialing 1-888-606-5934 using conference passcode NFR2012. Participants may access the slide presentation via the URL: https://e-meetings.verizonbusiness.com/nc/join/, Conference number: PB3413672 and Audience passcode: NFR2012. Additionally, the slide presentation and a link to the live audio webcast will be available on NFR's website at www.nfrenergy.com on the day of the presentation.

About NFR Energy

NFR Energy is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

About First Reserve Corporation

Founded in 1983, First Reserve is a leading global investment firm dedicated to the energy industry with over $23 billion of raised capital since inception. With offices in North America, Europe and Asia, First Reserve is well-positioned to make strategic investments on a global basis across the energy value chain. First Reserve seeks to create value for its investors by applying its deep industry knowledge, decades of investing and operational experience, highly talented management team and powerful network of global relationships to its investments and through active monitoring of its portfolio companies. For additional information, please visit First Reserve's website at www.firstreserve.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934 as amended. Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", "potential", "possible", or "probable" or statements that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved. The forward-looking statements include, but are not limited to, statements about acquisitions, future operations, estimates of reserve and production volumes and the anticipated timing of development activities. Forward-looking statements are based on current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with expectations is subject to a number of risks and uncertainties, including but not limited to: the possibility that NFR may be unable to successfully integrate acquisitions; that acquisitions may involve unexpected costs; the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather such as hurricanes and other natural disasters); uncertainties as to the availability and cost of financing; fluctuations in oil and gas prices; inability to timely integrate and realize expected value from acquisitions; inability of management to execute its plans to meet its goals; shortages of drilling equipment, oil field personnel and services; unavailability of gathering systems, pipelines and processing facilities; and the possibility that government policies may change or governmental approvals may be delayed or withheld. NFR's annual report for the year ended December 31, 2011, subsequent quarterly reports and press releases discuss some of the important risk factors identified that may affect the business, results of operations, and financial condition of NFR. NFR undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

SOURCE NFR Energy LLC



RELATED LINKS
http://www.nfrenergy.com/
http://www.firstreserve.com

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