Sanchez Energy, Blackstone line up debt for $2.3 billion acquisition

New York, Jan. 12 – Sanchez Energy Corp. and Blackstone said they have debt commitments in place to help finance the $2.3 billion acquisition of Anadarko Petroleum Corp.’s working interest in 318,000 acres in the Western Eagle Ford formation.

Funds managed by Blackstone Energy Partners LP will enter into a strategic 50:50 partnership with Sanchez Energy, according to news releases.

JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley are providing committed debt financing to back Blackstone’s working interest purchase. Blackstone will also make an equity investment to bring its total to $1,137,000,000.

Sanchez Energy said it will use $394 million of cash on hand and also, via an unrestricted subsidiary, $744 million of commitments from commercial banks and preferred equity commitments to finance its share of the acquisition.

The preferred equity will be issued to GSO Capital Partners LP. It will pay a 10% dividend and a 14% return on redemption. It will not be convertible.

Sanchez will also obtain a new revolving credit facility at the subsidiary level that will be non-recourse to Sanchez.

JPMorgan Chase & Co. and Citigroup Global Markets Inc. will be joint lead arrangers and joint bookrunners on the new secured facility.

Closing of the acquisition is expected in the first quarter.

Blackstone is a New York-based investment firm and Blackstone Energy Partners is its energy-focused private equity business.

Sanchez is an independent exploration and production company headquartered in Houston.

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