Concho in $925MM Deal to Sell New Mexico Shelf Assets
Permian shale producer Concho Resources Inc. has entered into a definitive agreement to sell its assets in the New Mexico Shelf to an affiliate of Spur Energy Partners LLC for $925 million, the company announced Tuesday.
The sale includes 100,000 gross acres in New Mexico’s Shelf in which current production from the assets are about 25,000 barrels of oil equivalent per day (boepd).
Concho’s board of directors also gave a green light to the initiation of a share repurchase program of up to $1.5 billion of the company’s common stock.
“Proactively managing our asset portfolio has long been a key part of our strategy. Divesting our New Mexico Shelf position enables us to accelerate the value of these legacy assets, while focusing our portfolio on opportunities with the highest potential for strong returns,” Concho CEO Tim Leach said in a company statement. “Further, the transaction reduces our cost structure and allows us to achieve the leverage target we communicated earlier this year, while delivering additional returns to shareholders under an initial $1.5 billion share repurchase program. The share repurchase program demonstrates our continued confidence in our strategy to generate sustainable oil growth and strong cash flow, and reflects our commitment to delivering long-term value to our shareholders.”
In early August, Concho saw its biggest one-day drop since 2008, falling to 22 percent to close at $75.97.
Concho will use proceeds from the Shelf sale to pay down debt and initiate the share repurchase program.
The transaction is expected to close in November 2019.
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