Matador Resources Company, through its wholly-owned subsidiary, has completed the acquisition of Advance Energy Partners from EnCap Investments for $1.6bn.

The deal, which was announced in January this year, covers Advance’s oil and gas-producing properties, undeveloped acreage, and midstream assets in Texas and New Mexico.

These comprise about 18,500 net acres in the northern Delaware Basin’s central region.

Most of it is close to some of Matador’s ‘best’ assets, where wells have been drilled with an expected ultimate recovery of over one million barrels of oil (mbo).

With 206 gross (174 net) operated locations in key target formations and an additional 38 gross (35 net) upside-operated locations in the Wolfcamp D formation, the deal also expands Matador’s inventory in primary development zones.

In addition, this new property offers Pronto Midstream, Matador’s wholly-owned midstream business, more room for expansion.

Under the terms of the agreement, if the average oil price rises above $85 per barrel, Matador will be required to pay an additional $7.5m in cash each month in 2023.

Matador founder, chairman and CEO Joseph Foran said: “These properties are a unique, value-creating opportunity for Matador and all of its stakeholders. Closing this transaction sets Matador up nicely for a great 2023 and an even better 2024.

“Importantly, this acquisition does not significantly impact Matador’s leverage profile, and we remain committed to maintaining a strong balance sheet, growing our assets at a measured pace and paying down our debt with free cash flow going forward from here, as well as increasing the value of the company and increasing the amount of our shareholder returns over time.”