Matador Sources Co. stated Thursday it had closed the acquisition of Advance Power Companions Holdings LLC from EnCap Investments LP for about $1.6 billion, including 18,500 internet acres to its belongings across the Delaware Basin.
The transaction involving a wholly-owned subsidiary of Matador as the client contains oil- and pure gas-producing properties of Advance. Situated on the coronary heart of the northern Delaware Basin, many of the acquisitions are “strategically positioned in Matador’s Ranger asset space in Lea County, New Mexico close to Matador’s present properties”, Matador stated January 24 saying the deal.
The belongings present “a major enhance to Matador’s stock in major growth zones, with 206 gross (174 internet) operated places in core goal formations and an extra 38 gross (35 internet) upside operated places within the Wolfcamp D formation”, Matador stated in Thursday’s announcement.
Matador projected the stock additions from Advance would produce 24,500 to 25,500 barrels of oil and pure fuel equal with 74 p.c oil within the first quarter of this yr. They embody 21 drilled however uncompleted wells which can be anticipated to start gross sales within the second half of 2023 and “406 gross (203 internet) horizontal places recognized for future drilling”, Matador stated within the January press launch.
Its new properties had an estimated proved oil and pure fuel reserves of 106.4 million barrels of oil equal with 73 p.c oil as of the top of 2022, in accordance with the disclosure.
On prime of the $1.6 billion in money cost, Matador is to pay EnCap a “potential more money consideration of $7.5 million for every month of 2023 wherein the typical oil value, as outlined within the securities buy settlement, exceeds $85 per barrel”, the press launch acknowledged.
To fund the acquisition, the corporate has raised its elected dedication with lenders to $1.25 billion as of March 31, stated Joseph Wm Foran, Matador’s founder, chair and chief government.
He stated, “this acquisition doesn’t considerably impression Matador’s leverage profile, and we stay dedicated to sustaining a robust steadiness sheet, rising our belongings at a measured tempo and paying down our debt with free money move going ahead from right here in addition to growing the worth of the corporate and growing the quantity of our shareholder returns over time”.
Matador collected $1.98 billion in internet money from working actions, a brand new firm excessive, final yr with additionally a document free money move of $1.22 billion. It produced 105,500 barrels of oil equal a day in 2022, its highest annual common, in accordance with the corporate’s earnings report February 21.
It estimated that drilling, completion and equipping for the Advance acquisitions would entail $300 to $350 million in capital expenditure this yr.
Matador introduced April 3 it had put ahead a personal provide of 6.875% senior unsecured notes due 2028 price $500 million in complete. The location was anticipated to shut April 11, 2023.
“Matador intends to make use of the online proceeds from the providing for basic company functions”, the corporate stated in a launch.
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