Kimmeridge Energy Management and Desert Royalty have signed definitive agreements to combine their Delaware Basin oil and gas royalty assets.
The combined entity will be known as Desert Peak Minerals (Desert Peak) and headquartered in Denver, Colorado, US.
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It will be represented as the largest pure-play mineral and royalty company in the Delaware Basin with nearly 70,000 net royalty acres on a one-eighth royalty-adjusted basis across eight counties in west Texas and south-east New Mexico.
The strategic merging of the two companies highlights the net production capacity of more than 8,000boe/d, upon the consummation of the transaction.
Subject to certain conditions agreed upon by the two companies, the transaction includes significant resource potential provided by the stacked, oil-weighted pay in the core of the Delaware Basin, resulting in a well-represented inventory.
It enables Desert Peak to be positioned as a consolidator of additional Delaware Basin mineral and royalty assets.
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By GlobalDataDesert Royalty founder and CEO Kyle Stallings said: “The creation of a large mineral company with a singular focus on the Delaware Basin is the most interesting development I have observed in 33 years in the mineral business.”
Kimmeridge managing partner Ben Dell said: “Against the backdrop of a challenging environment for E&P, minerals provide a compelling mix of organic growth and free cash flow generation.
“Desert Peak will have our full support as they execute on their strategic growth plans.”
Sidley Austin has been appointed as the legal adviser to Kimmeridge and Tudor, Pickering, Holt & Co. is serving as the exclusive financial adviser to Desert Royalty for the transaction.
