Concho Acquires Permian Basin Properties for $225MM
Concho Resources has entered into a definitive agreement with multiple private sellers to acquire interests in certain producing and non-producing assets in the Wolfberry trend in the Permian Basin for $225 million in cash, subject to usual and customary closing adjustments.
The acquisition of these interests is subject to certain participation rights of third parties; therefore, the Company’s final ownership level in these acquired assets will be between approximately 20% and 100%. This transaction is scheduled to close in December 2009 and the Company will update 2010 guidance when its final ownership is determined.
Transaction Highlights (based on 100% working interest and 75% net revenue interest):
- Over 300 identified Wolfberry drilling locations
- Proved reserves of approximately 16 million barrels of oil equivalents ("MMBoe")
- 22 MMBoe of identified unproven reserves
- 2010 estimated production of 0.7 - 0.8 MMBoe and 2011 estimated production of 1.5 - 2.0 MMBoe, based on assumed capital spending of approximately $110 million in 2010 and approximately $125 million in 2011
Tim Leach, Concho's Chairman, CEO and President commented, "These Wolfberry assets lie in the core of the Wolfberry trend and in the middle of our active drilling area in the play. At closing, we will be able to communicate more clearly the impact of this transaction on our capital budget and guidance for 2010 and beyond, after our final ownership has been determined. This style of acquisition fits the Concho model very well with an existing production base and a multi-year drilling inventory. We expect to commence an aggressive drilling program on these assets in 2010 that should result in significant production growth over the next several years."