US shale gas exploration company Concho Resources has signed an agreement to acquire RSP Permian for around $9.5bn.
Concho has offered 0.320 common stock shares for each share of RSP common stock. The transaction is said will add complementary acreage to allow Concho to expand its position in the Permian Basin to around 640,000 net acres.
Following the merger, the companies will operate 27 rigs in the basin.
The prospect of development optimisation, shared infrastructure and capital efficiencies are expected to result in operational synergies of more than $2bn.
Concho Resources chairman and CEO Tim Leach said: “This transaction provides a compelling opportunity for both Concho and RSP shareholders to benefit from the strength of our combined company.
“The RSP team built an exceptional high-margin asset portfolio consistent with our playbook, large, contiguous positions in the core of the Permian Basin.
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By GlobalData“This combination allows us to consolidate premier assets that seamlessly fold into our drilling programme, enhance our scale advantage and reinforce our leadership position in the Permian Basin, all while strengthening our platform for delivering predictable growth and returns.”
In Q4 2017, RSP’s assets produced a total of 55.5 thousand barrels of oil equivalent (boe) a day. Through the deal, Concho can increase its resource potential by 2.2 billion boe.
Once the merger is completed, Concho shareholders will hold around 74.5% of the combined entity, while the remaining shares will be held by RSP shareholders.
Subject to shareholder approval and assessment by regulatory authorities, the completion of the transaction is anticipated to take place in Q3 2018.
