Contango Oil & Gas has agreed to acquire low decline, conventional gas assets in the Wind River Basin of Wyoming, US, from ConocoPhillips in a $67m cash deal.
Under the agreement, Contango will buy around 446 billion cubic feet equivalent (Bcfe) of PDP reserves.
As of 1 July 2021, the net production run rate stood at almost 78 Mmcfe/d (~100% gas).
Contango expects the acquisition to increase its run-rate production by nearly 57% in the third quarter of this year.
The firm will pay for the deal using cash reserves and its existing revolving credit facility.
Planned to be completed in the third quarter of 2021, the transaction is subject to the satisfaction of certain closing conditions.
Contango CEO Wilkie S Colyer said: “The acquisition of these Wind River Basin assets is yet another step in our consolidation strategy and an excellent fit to our asset profile.
“This is a huge, conventional gas field with low decline, purchased at an attractive valuation. We are intimately familiar with the area via assets acquired in the MCEP and Silvertip transactions, and we have the right team to maximise the value of these mature, low decline, and conventional properties.
“Our previously announced merger with Independence was designed to accelerate our acquisition pace rather than slow it down, and this transaction is a perfect example of that.”
Last month, Contango Oil & Gas Company signed an agreement with Independence Energy to merge in an all-stock deal to create a new oil and gas company with $5.7bn enterprise value.
The combined company is estimated to have a daily production of 108,000-114,000 barrels of oil equivalent per day in 2022.
Managed by KKR’s energy real assets team, Independence Energy is a diversified upstream oil and gas business with a scaled portfolio of low-decline, producing assets.
Contango Oil & Gas operates a portfolio of low-decline, producing assets, located mainly in the mid-continent, Rockies, and Permian areas.