Civitas Resources has signed two agreements to acquire oil producing assets in the Midland and Delaware Basins of the Permian Basin in the US for a total consideration of about $4.7bn.

The assets located in West Texas and New Mexico will be acquired from affiliates of Hibernia Energy III and Tap Rock Resources. Both Hibernia Energy III and Tap Rock Resources are portfolio companies of funds managed by NGP Energy Capital Management.

The deals mark the entry of Civitas Resources in the Permian Basin.

Civitas Resources has been engaged in the production of crude oil, natural gas, and natural gas liquids in the Denver-Julesburg Basin (DJ Basin) in Colorado.

From Tap Rock Resources, a portion of its assets in the Delaware Basin will be acquired by Civitas Resources for $2.45bn. The consideration is made up of $1.5bn in cash and around 13.5 million shares of the latter.

The deal excludes the Olympus development area in which Tap Rock Resources will retain its ownership.

Hibernia Energy III has agreed to sell its Midland Basin assets to Civitas Resources for $2.25bn in an all-cash deal.

Through the two deals, Civitas Resources will gain nearly 68,000 net acres in the Midland and Delaware basins, of which 90% is held by production. The company will also add combined proved reserves of around 335 million barrels of oil equivalent (mmboe), as of year-end 2022.

Besides, the deals enable Civitas Resources to increase its current production by 60%. This will be through the addition of nearly 100 thousand barrels of oil equivalent per day (mboe/d), of which 54% is oi.

The assets to be acquired are projected to average around 105mboe/d from the close of the deal through year-end 2023.

Civitas Resources president and CEO Chris Doyle said: “These accretive and transformative transactions will immediately create a stronger, more balanced and sustainable Civitas.

“By acquiring attractively priced, scaled assets in the heart of the Permian Basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns.

“We will soon have nearly a decade of price-resilient, high-return drilling inventory. Our strong capital structure allowed us to capture these transformational assets, and, importantly, behind the strength of the pro forma business, we have a clear path to reduce leverage and maintain long-term balance sheet strength.”

Both the deals, which are subject to customary terms and conditions, are anticipated to close in Q3 2023.