Flywheel Energy Closes on Fayetteville Shale Acquisition

by Lance Turner  on Tuesday, Dec. 4, 2018 11:07 am   2 min read

Southwestern Energy Co.'s office in Conway. (Wil Chandler)

Flywheel Energy LLC said Tuesday that it has closed on its $1.9 billion cash acquisition of Southwestern Energy Co.'s Fayetteville Shale holdings.

Flywheel, a private company backed by Kayne Private Energy Income Funds, announced the deal in September. The move comes as publicly traded Southwestern of Houston moves its focus to higher-margin assets in West Virginia.

Acquired assets in the central Arkansas play include natural gas production from 4,033 producing wells across 900,000 net acres, a midstream gathering system with more than 2,000 miles of pipelines and more than 50 compressor stations.

As part of the deal, Flywheel will take on about $438 million in future contractual liabilities. 

The Kayne Private Energy Income Funds is controlled by Kayne Anderson Capital Advisors L.P., an investment management firm founded in 1984 with holdings in upstream oil and gas companies, energy infrastructure, specialized real estate, middle market credit and growth private equity.

"Flywheel Energy is pleased to announce the closing of our second acquisition since the Company's inception in 2017," CEO Justin Cope said in a news release. "I am proud of our team's accomplishments and we are excited to join the remarkably talented team in the Fayetteville Shale.

"We believe this is a great step forward as we work to deliver reliable, affordable and plentiful energy while generating attractive risk-adjusted returns for our investors."

Cope told Arkansas Business in September that the company does not have an operations team coming in from elsewhere, so it "will largely need everyone in Conway for the asset to continue performing at a high level."

"The Southwestern Energy workforce in Conway has an outstanding reputation in the industry," he said in an email. "We are excited about all they have accomplished. They have set the bar incredibly high, and we’re thrilled to come in and keep this asset going."

Flywheel began as Valorem Energy in early 2017. That year, Valorem acquired interests in the Williston Basin for $285 million. With the Fayetteville Shale acquisition, Flywheel entities will have made more than $2.1 billion in acquisitions since 2017.



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