Concho to Acquire $175M in Petroleum Development Corp. Assets
Concho Resources announced Thursday it has entered into a definitive agreement to acquire operated interests in certain producing and non-producing assets in the Wolfberry trend in the Permian Basin from Petroleum Development Corporation for approximately $175 million, subject to customary purchase price adjustments.
The Acquisition adds approximately 10,800 gross (10,200 net) acres located in Andrews, Ector and Midland Counties, Texas.
Highlights of the Acquisition:
- Adds over 170 identified Wolfberry drilling locations through 40-acre spacing
- Estimated proved reserves of approximately 13 million barrels of oil equivalent as of November 1, 2011
- Current net production of approximately 1,100 barrels of oil equivalent per day
- Increases the Company’s net acreage in the Wolfberry by 20% and raises the Company’s average working interest in the Wolfberry to 54% from 50%
In connection with the Acquisition, the Company will increase its 2012 capital budget from $1.30 billion to $1.37 billion to develop the newly acquired assets.
In addition, the Company currently estimates that its 2012 production will total between 27.5 MMBoe and 28.5 MMBoe, an increase of approximately 0.5 MMBoe due to the Acquisition.
The Company estimates that its updated 2012 capital budget can be substantially funded out of its after-tax cash flow assuming (i) a NYMEX crude oil price of $85 per barrel and a NYMEX natural gas price of $4 per thousand cubic feet of natural gas for the Company's unhedged production and (ii) that the Company achieves the mid-point of its 2012 production guidance.
The Acquisition, which is expected to close in the first quarter of 2012, will be funded with borrowings under the Company’s credit facility.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Concho Expands Midland Footprint with $1.6B Acquisition (Aug 16)
- Baker Hughes: US Oil Drillers Add Rigs for Fifth Week in Six (Jul 08)
- Baker Hughes: US Oil Drillers Cut Rigs for 7th Week to Oct 2009 Lows (May 06)