Oil and gas producer Matador Resources Co said it would buy Advance Energy Partners Holdings LLC for $1.6 billion, which includes certain oil and natural gas-producing properties and undeveloped acreage in Lea County, New Mexico and Ward County, Texas.
Matador would have to pay an additional $7.5 million of cash per month during 2023 if the average oil price exceeds $85 per barrel.
U.S. crude prices hit a near 14-year peak of $130.50 a barrel last year following the conflict in Ukraine and though prices have retreated they remain elevated, prompting energy producers to buy assets and take advantage of high prices.
The Dallas, Texas-based Matador expects the acquired assets to generate forward one-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $475 million to $525 million at strip prices as of mid-January 2023.
“This acquisition also provides us with increased operational scale in the Delaware Basin, which we expect will improve our overall rates of return and unit-of-production cost,” Joseph Foran, Matador’s Chief Executive Officer said in a statement.
The deal is expected to close early in the second quarter of 2023, Matador said.
Energy-focused investment firm EnCap Investments LP had merged Advance Energy Partners and Ameredev II LLC in December 2021. Both companies operate in the Delaware portion of the Permian basin – the region in Texas and New Mexico considered the heart of the U.S. shale industry.
Last year Reuters reported that EnCap was exploring a sale of Ameredev, seeking more than $4 billion including debt for the Delaware Basin operator, citing people familiar with the matter said.
Source: Reuters.com