US-based Earthstone Energy has agreed to acquire oil and gas assets in New Mexico, the US, from Titus Oil & Gas, which is backed by funds managed by NGP Energy Capital Management, for approximately $627m.
The New Mexico assets will be purchased from Titus Oil & Gas Production and Titus Oil & Gas Production II, and their affiliates, located in the Permian basin’s northern Delaware basin.
The purchase price comprises $575m in cash and approximately 3.9 million shares of Earthstone’s Class A common stock.
Titus’s assets include nearly 7,900 net acres in the Delaware basin in the Lea and Eddy Counties, in New Mexico.
In June 2022, these assets reported an average net production of approximately 31,800 barrels of oil equivalent per day (boepd) from 44 gross/37 net operated wells. It includes nearly 1,200boepd from non-operated interests.
Earthstone expects the deal to increase its net production by 18,000boepd to 23,000boepd (65% oil) in the fourth quarter of 2022.
The firm plans to maintain two rigs in the Delaware basin and two rigs in the Midland basin. It is also considering an additional rig for the Delaware basin upon completion of the deal.
Earthstone president and CEO Robert Anderson said: “The Titus Acquisition continues our path of building scale in the Permian basin, increasing our daily production to around 100,000boepd upon closing.
“We continue to pursue synergies from the two acquisitions completed since the beginning of 2022. We are also obtaining six wells in progress and 86 potentially highly economic net locations, which will be incorporated into our drilling plans as quickly as possible.
“The combination of the attractive price being paid, the current high level of commodity prices, and production of the acquired assets will allow us to acquire the assets utilising primarily debt funding while having only a minimal impact on leverage.”
The transaction is expected to close in the third quarter of 2022.
In February this year, Earthstone announced that it had agreed to acquire privately held oil and gas producer Bighorn Permian Resources in a cash stock deal worth $860m.