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Oil and gas firm Colgate Energy Partners III has agreed to acquire approximately 22,000 net acres in New Mexico, US, from an undisclosed seller for $190m.

The assets are located in Eddy and Lea Counties and have an estimated average net daily production of approximately 750 barrels of oil equivalent per day (boepd).

The majority of this acreage is expected to directly offset the firm’s Parkway operating area, the firm said.

The acquired acreage is more than 95% operated with around 78% average working interest.

Colgate expects to finance the acquisition through a combination of cash on hand, borrowings on its revolver and/or other potential debt financings.

Colgate co-CEO James Walter said: “Building on the transformative transactions completed earlier this year in Texas, this New Mexico acquisition adds to Colgate’s position as one of the premier private operators in the Permian Basin.

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“Our focus when making acquisitions continues to be adding highly economic inventory that will drive enhanced returns and free cash flow while maintaining low leverage.”

Colgate expects to have 108,000 net acres primarily in Reeves, Ward and Eddy Counties with an estimated net daily production of around 62,000boepd.

Colgate co-CEO Will Hickey said: “The acquisition of this high-quality asset base adds to our existing inventory in the Northern Delaware Basin where we have recently drilled some of the best wells in the Company’s history.

“We are excited to allocate rig activity to these properties next year.”

Subject to customary closing adjustments, the transaction is planned to be completed in Q1 of 2022.

Earlier this year, Colgate Energy Partners IIInagreed to acquire Occidental Petroleum’s non-strategic acreage in the Permian Basin in Texas, US, for $508m through its affiliate.