Concho Resources Inc. has agreed to spend US$ 1 billion on purchasing all of the oil and gas assets in the Permian Basin owned by Three Rivers Operating Company.
The deal would see 200 000 acres of Permian Basin territory spreading out both across Texas and New Mexico transferred over to Concho. The area is currently involved in “an exploration boom” as high oil prices and new technologies allow companies to extract hydrocarbons from previously uneconomic zones.
Concho is to pay for the deal with a credit facility worth US$ 2 billion (of which, US$ 1.8 billion available in late March) as well as the sale of up to US$ 400 million worth of assets.
The CEO of Concho, Timothy Leach, said, “This acquisition is expected to be immediately accretive to earnings, discretionary cash flow, production and reserves on a per share basis and provides an additional platform to significantly grow our production in the Permian Basin.” In more specific terms, the deal would provide Concho with approximately 58 million bbls of oil in reserves and a net production increase of 7000 bpd. Additionally, the purchase provides Concho with 380 horizontal drilling locations in the Delaware Basin and a further 1100 in the Midland Basin.
The purchase is expected to complete some time in July.
Once the purchase is complete, Concho will own 750 000 acres of territory covering the Permian Basin.
Edited from various sources by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/exploration/14052012/concho_to_buy_usd_1_billion_worth_of_permian_assets/