US-based oil and natural gas company Callon Petroleum Company (Callon) has signed two deals to boost focus on the Permian by selling its Eagle Ford to support expansion in the Delaware basin.

Callon has signed a definitive agreement to buy Permian basin-based Percussion Petroleum Operating II in a cash and stock deal valued at $475m.

With the addition of Percussion, Callon hopes to gain about 70 ‘high-return’ well locations and almost 18,000 net additional acres in the Permian.

Callon estimates that in April 2023, Percussion’s assets produced an average of around 14,100 barrels of oil equivalent per day (boed), of which about 70% was oil.

The deal also includes contingent payments of up to $62.5m.

Separately, Callon reached an agreement with Ridgemar Energy Operating (Ridgemar) to sell its assets in the Eagle Ford Shale for a cash consideration of $655m.

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By GlobalData

The deal with Ridgemar too includes contingent payments of up to $45m.

The Eagle Ford assets comprise over 52,000 net acres, with an estimated average production of 16,300 boed in April 2023, of which 71% was oil.

Callon President and CEO Joe Gatto said: “The combined transactions strengthen our capital structure, improve our margins, and lengthen our top-tier Permian inventory.

“In addition to improving our net asset value proposition, we will achieve our near-term total debt milestone and intend to initiate a capital return program for shareholders at closing. Our strategic Eagle Ford exit funds our Delaware expansion and focuses our people, capital and operations on our premium Permian position.”  

The transactions are anticipated to close simultaneously in July 2023 and are subject to the usual terms and conditions.