US-based oil and gas company Legacy Reserves has acquired Permian Basin oil and natural gas properties from Concho Resources for $520m in cash.
Permian basin holds nearly 25.6 million barrels of oil equivalent proved reserves, of which 71% are proved developed producing (PDP), while 14% are proved developed non-producing and 15% are proved undeveloped.
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Proved reserves are approximately 90.5% operational. It is estimated that these proved reserves contain 62% of oil and 38% of natural gas.
The company said that 100% of the acquired reserves are located near its current operations, while 99.8% of these reserves are in the Permian Basin.
Land linked with the acquisition will help in long-term development of which 236 has been identified as potential development locations.
It is estimated that cash flow of around $80m will come from operations in 2013.
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By GlobalDataFor the three months ending 31 March, 2013, estimated PDP production from the current 1,584 producing wells is 5,238 barrels of oil equivalent per day, yielding a total proved reserves-to-production ratio of 13.4 years.
Legacy Reserves president, Cary Brown, said Permian Basin contains proved reserves which are largely PDP and are compatible with the company’s MLP model.
"We have identified a significant number of attractive development projects, and believe we will find additional opportunities to improve production as we have consistently done in the past. Because the assets are essentially in our backyard, we expect to benefit from our operational expertise and existing field-level infrastructure," said Brown.
Legacy Reserves expects to close the acquisition process in December 2012, as it has to finance the transaction with the proceeds from a public equity offering and borrowings under its revolving credit facility.
Image: Patterson rig number 79 in the Permian Basin. Photo: Allan D. Hasty.
