Mississippi-based Callon Petroleum has agreed to acquire certain producing oil and gas assets, and undeveloped acreage in the Delaware Basin in the US for $570m from Cimarex Energy in an all-cash deal.
Image: Onshore drilling. Photo: courtesy of Stuart Miles/Freedigitalphotos.net.
The assets to be acquired through its subsidiary Callon Petroleum Operating are mainly located in Ward County, Texas.
Production from the assets involved in the transaction is nearly 6,831 barrels of oil equivalent per day. Out of this, 73% is oil and is primarily from the Bone Spring formation.
The undeveloped acreage in the deal comprises 18,925 net Wolfcamp acres, out of which 11,500 net acres have rights to the base of the Wolfcamp, said the Colorado-based Cimarex Energy.
Cimarex chairman, president and CEO Tom Jorden said that the sale of the assets in Ward County is part of the company’s continuous streamlining of portfolio and high-grading of investment opportunities.
Jorden added: “Cimarex was among the first horizontal operators in the Bone Spring formation in Ward County and it’s been a great area for us over the years. However, the remaining Wolfcamp opportunities have not competed for capital versus other Cimarex projects.”
Following the completion of the deal, Callon Petroleum will increase its position in the Spur operating area to about 47,500 net acres and to more than 86,000 net acres in the broader Permian Basin.
Callon Petroleum expects the newly added acreage to its portfolio to contribute a total fourth quarter 2018 exit rate of over 40,000boepd.
Callon Petroleum president and CEO Joe Gatto said: “Importantly, this acquisition includes a substantial amount of mature, oil-weighted production that provides a solid, current return on capital employed and drives immediate accretion on several key operational and financial metrics.
“Minimal drilling obligations, multiple target zones and a highly contiguous operated position all contribute to operational flexibility which will enhance our developmental efficiency while also affording organic inventory growth opportunities in emerging zones within our expanded Spur footprint.”
The acquisition is anticipated to be completed by early September depending on meeting of customary closing conditions.