OKLAHOMA CITY–(BUSINESS WIRE)-BCE-Mach LLC, BCE-Mach II LLC and BCE-Mach III LLC (collectively “BCE-Mach”) have executed purchase and sale agreements for two acquisitions totaling $66.5 million with both expected to close in the first quarter of 2022. These acquisitions are expected to add $26.4 million of 2022 cash flow at recent prices.
Representing its fourth acquisition in the STACK, BCE-Mach is acquiring additional working interest across 61 wells it operates in Kingfisher County, Oklahoma. BCE-Mach continues its strategy of consolidation within its STACK midstream and upstream operations with this bolt-on acquisition.
Separately, BCE-Mach is closing its fourth acquisition in the Mississippi Lime. Expanding its operating footprint in Kansas, these assets add ~66,000 net acres and 193 operated wells primarily located in Barber County. BCE-Mach’s significant midstream infrastructure is also growing with the addition of 16 disposal wells and corresponding gathering systems.
Additionally, BCE-Mach provides the following financial and operational results for the quarter ended Sept. 30, 2021:
Third Quarter Highlights
• Free Cash Flow (Adjusted EBITDA – CAPEX) of $111 million;
• Adjusted EBITDA of $128 million;
• Average net daily production of approximately 52 MBoe/d (45 percent liquids); and
• As of September 30, BCE-Mach had net debt / LQA EBITDA of 0.2x.
BCE-Mach will maintain a highly disciplined approach to its drilling program and will continue only undertaking projects that will deliver excellent well-level IRRs with short payback periods. With two rigs running currently, BCE-Mach is consistently identifying drilling opportunities meeting its criteria of 100+% IRRs across its STACK and Mississippi Lime assets. As the operator of a substantial portion of its acreage, BCE-Mach can direct its development program, including the timing, location and well completion design, which provides nearly complete control over its capital expenditures. On a program basis, BCE-Mach continues to be committed to spending less than 30 percent of its discretionary free cashflow on capital expenditures.
“Our strategy since forming BCE-Mach in 2018 hasn’t changed,” said CEO Tom Ward. “Despite changing commodity prices and investor interest in our industry, we have consistently been able to deploy capital and acquire assets at approximately 2.5 times cashflow. Additionally, our acquisitions have delivered significant value through adding targeted drilling locations and pre-existing midstream infrastructure while purchasing at discounts to PV10.”
“Our strategy is working,” said Bayou City Energy Founder & Managing Partner Will McMullen. “Investors want free cash flow, and we are on track to deliver about half a billion dollars of free cash flow on an annualized basis and growing.”
As of Sept. 30, 2021, BCE-Mach has accumulated an acreage position consisting of approximately 678,000 net acres, of which 97 percent is held by production. BCE-Mach’s assets consist of 3,096 gross operated wells with ~63 percent average working interest and ~52 percent average net revenue interest and proved reserves of ~211 MMBoe with a product mix of approximately 55 percent natural gas and 45 percent liquids. Approximately 88 percent of BCE-Mach’s reserves are PDP, which boast a five-year projected average annual decline rate of ~12 percent.
BCE-Mach’s production benefits from an extensive midstream portfolio. BCE-Mach owns and operates 330 MMcf/d of processing capacity across 3 processing plants, 820 miles of high and low pressure gas gathering lines and 825 miles of water disposal pipelines with 70 disposal wells.