Willkie Represents Bayou City Energy in STACK DrillCo Transaction

September 26, 2017

Houston office advises on joint development transaction between Bayou City affiliate BCE Roadrunner and Chaparral Energy to jointly develop Chaparral’s STACK acreage in Canadian and Garfield Counties, Oklahoma.

On September 25, Willkie client Bayou City Energy announced that its affiliate, BCE Roadrunner LLC, has entered into a joint development agreement with Chaparral Energy L.L.C., an affiliate of Chaparral Energy, Inc., to jointly develop Chaparral’s STACK acreage in Canadian and Garfield Counties, Oklahoma.

Under the terms of the agreement, the parties will jointly participate in an initial development tranche consisting of 30 wells, whereby Bayou City has committed to fund 100 percent of Chaparral’s working interest share of drilling, completing and equipping costs, subject to average well cost caps that vary by well-type across location and target formations. In exchange, Bayou City will receive 85 percent of Chaparral’s working interest in the wellbore of each well, which will be reduced to 25 percent of Chaparral’s initial working interest upon Bayou City achieving a 14% internal rate of return in the tranche. The parties may also mutually agree to additional well tranches on the same terms and conditions as the initial tranche.

More details on the transaction are available here.

The Willkie deal team in Houston was led by partners Cody Carper and Michael De Voe Piazza, and included partners Michael Niebruegge and Robert Jacobson, and associates David Aaronson, Ryan Cicero, Lynn Abell and Yaniv Maman.