Texas-based Ring Power, Inc. is buying the Central Basin Platform (CBP) belongings of Lime Rock Sources IV, LP for $100 million, topic to customary closing changes.
The acquisition value of the acquisition is $100 million, topic to customary closing changes. Consideration consists of money and as much as 7.4 million shares of Ring widespread inventory primarily based on Ring’s 10-day quantity weighted common inventory value of $1.3534 per widespread share as of February 24, the corporate stated in a information launch. The upfront money consideration is predicted to be funded with money readily available and borrowings beneath Ring’s present credit score facility.
The belongings cowl roughly 17,700 web acres close to the corporate’s present footprint, and are estimated to have 2,300 barrels of oil equal per day (boepd) of low-decline common third-quarter-2024 web manufacturing from round 101 gross wells.
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Lime Rock’s CBP acreage is in Andrews County, Texas, the place a lot of the acreage immediately offsets Ring’s core Shafter Lake operations, and the “remaining acreage is potential for a number of horizontal targets and exposes the corporate to new energetic performs,” the corporate stated.
The transaction has an efficient date of October 1, 2024, and is predicted to shut by the tip of the primary quarter, in keeping with the discharge.
Ring Chairman and CEO Paul McKinney stated, “It is a distinctive alternative to seize high-quality, oil-weighted belongings that generate important free money stream in a privately negotiated transaction. Right this moment’s announcement is one other instance of our confirmed technique to create worth for our shareholders by accretive M&A. This acquisition not solely will increase our scale, however it additionally enhances our portfolio of high-return drilling places and accelerates the corporate’s means to pay down debt. We stay up for shortly integrating the belongings into our present operations and making use of our intensive experience to optimally develop the stock of horizontal targets afforded by the transaction”.
“For the Lime Rock transaction, we count on to run the identical playbook as our extremely profitable Founders’ acquisition introduced in 2023, which has outperformed almost all our preliminary underwriting assumptions. Since closing, Ring has elevated the Founders’ manufacturing base by higher than 40%, lowered the Founders’ per Boe lifting prices by roughly 20 p.c, and decreased our Firm’s debt stability by free money stream technology to greater than cowl the money buy value. We plan to realize comparable success on the Lime Rock belongings. Our staff has a confirmed M&A observe file as Lime Rock will mark Ring’s fourth acquisition since 2019, totaling roughly $940 million of belongings. We imagine the advantages of consolidation are compelling when structured appropriately, and we strongly view this as a value-enhancing transaction for Ring shareholders that can higher place the Firm for future alternatives and long-term success,” McKinney stated.
Ring Power describes itself as an oil and fuel exploration, improvement, and manufacturing firm with present operations targeted on the event of its Permian Basin belongings.
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