McClendon’s West Texas venture plans Wall Street debut

Shareholders have criticized Chesapeake’s board for failing to rein in what they’ve seen as Chief Executive Officer Aubrey McClendon’s risk-taking and overspending at the company. (F. Carter Smith/Bloomberg )

HOUSTON – Wildcatter Aubrey McClendon’s oil and gas startup in West Texas may be the latest venture in the Permian Basin to beckon for Wall Street investors, sitting astride one of the most lucrative U.S. shale plays.

American Energy’s Permian unit, one piece of the former Chesapeake Energy CEO’s new firm, said earlier this week it may pursue an initial public offering in the next 12 months, but didn’t expand on the potential IPO. American Energy spokesman Charlie Rexford declined to comment further on Friday.

It would be the latest in a series of small West Texas oil companies to seek out public markets for boosters, as hydraulic fracturing and horizontal drilling surge in the region.

Dallas-based RSP Permian and Austin-based Parsley Energy, both West Texas oil companies worth about $2 billion on the stock market, went public this year, and Fort Worth’s Athlon Energy, another producer in the Permian, agreed to sell itself to Encana Corp. for $5.9 billion in September.

Energy & Exploration Partners, which has holdings in West Texas and in East Texas, filed for a $400 million IPO last month.

Oklahoma City-based American Energy also said earlier this week it bought acreage and producing wells from other players in the Wolfcamp Shale and the Midland Basin for a combined $726 million. It said it snapped up 27,000 net acres, bringing its foothold there to 90,000 net acres.

The company said it plans to drill 2,300 net horizontal wells on land that currently produces 1,400 barrels of oil equivalent a day. The deals are expected to close by the end of the year, and the company said it will boost its horizontal drilling rigs there from five to 12 by the end of 2015.

Like other oil producers in the Permian, McClendon’s venture is trying to tap multiple layers of oil-soaked shale formations stacked one on another by clustering oil wells closer together.

American Energy said it is targeting three stacked formations in the Wolfcamp, almost all in Reagan County, Texas. The company said it believes it can reach shale-rock formations called the lower Spraberry, Cline and Atoka intervals. From two of the bands of earth crust, the company said it expects to extract 527,000 barrels of oil for $22 million in costs over the next three years.

It said it would be sitting on 158 million barrels of oil equivalent in proved reserves after the deals close.