Resolute Energy has signed an agreement with an undisclosed Permian Basin midstream company to sell certain midstream assets in Reeves County, Texas, US, for $110m.
As part of the deal, Resolute and an existing minority interest holder will sell the gas gathering and water handling systems that are operated by the former in its Appaloosa and Mustang project areas.
Resolute will receive $50m for the assets that are currently in place, and up to $60m in earn-out payments tied to field drilling activity through 2020 that will deliver gas and produced water into the system.
The company will receive $32.85m of the initial payment, while its partner in the Mustang area will receive the remaining $17.15m.
Resolute plans to use the proceeds to reduce debt and fund development activity within its properties in the Delaware Basin, west Texas.
The transaction is subject to customary closing conditions, including Hart-Scott-Rodino clearance and is expected to close on or about 1 August this year.
Resolute will receive 100% earn-out payments for Appaloosa area wells. Payments for Mustang area wells will be allocated 60% to Resolute and 40% to its partner.
The company will also receive approximately $2.3m in earn out payments for wells previously completed as part of its drilling programme for this year.
Upon completion of the deal, the purchaser will operate and expand the gathering systems to accommodate all existing and future volumes of gas and water produced by Resolute and its partner within the Appaloosa and Mustang areas.
Additionally, Resolute and its partner will deliver all gas and water produced within these areas to the purchaser for gathering, compression and disposal services for 15 years.
