Callon Petroleum to acquire Primexx's Delaware Basin assets
Published by Nicholas Woodroof,
Primexx is a private oil and gas operator in the Delaware Basin with a contiguous footprint of 35 000 net acres in Reeves County and 2Q21 net production of approximately 18 000 boe/d (61% oil). The cash and stock transaction is valued at approximately US$788 million, representing a headline purchase price multiple of approximately US$43 800 per boe/d, based on 2Q21 production.
With approximately 300 identified core net locations, approximately two-thirds of which are two-mile laterals, the acquired assets will support Callon's continued shift to larger, more capital efficient development projects in the Delaware Basin.
Kimmeridge, an investor in both the public and private oil and gas space, has agreed to convert their remaining portion of the Callon second lien senior notes that were issued in 2020 into common shares after the close of the Primexx transaction. This equitisation further advances the company's deleveraging timetable and saves nearly US$20 million per year in interest costs.
Callon President and CEO Joe Gatto commented: "The Primexx transaction checks every operational and financial box on the list of compelling attributes of consolidation. The asset base adds substantial current oil production and a top-tier inventory to our Delaware portfolio, and fits squarely into our model of scaled, co-development of a multi-zone resource base. Our integrated, future development plans will benefit greatly from the combined Delaware scale and we expect to generate approximately 30% more adjusted free cash flow from the third quarter of 2021 through year-end 2023 under our conservative planning price assumptions. The infusion of over US$550 million of equity from the acquisition and Kimmeridge's exchange further heightens the overall benefits, immediately reducing leverage metrics and creating a visible path to net debt to adjusted EBITDA of below 2.0x next year."
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Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/04082021/callon-petroleum-to-acquire-primexxs-delaware-basin-assets/
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