
Canada-based Freehold Royalties has agreed to acquire US Midland Basin and Eagle Ford Basin assets from two undisclosed sellers for a combined consideration of C$155m ($120m).
Freehold Royalties is buying the assets located in the Midland basin, primarily in Howard County, Texas for C$123m ($95m) and those in the Eagle Ford basin in Texas for C$32m ($25m).
The Canadian oil and gas company has recently closed its acquisition of certain diversified assets located in the Midland basin for $19m.
Freehold expects the US acquisitions to add around 1,100boe/d in production volumes, and generate C$31m in returns from their operations in 2023.
In addition, the company said that the US acquisitions will expand its US land holdings by about 147,000 gross acres and 8,000 net royalty acres (NRA).
The company intends to fund the US acquisitions through its existing credit facility.
Freehold Royalties, in its statement, said: “The US acquisitions enhance the quality of Freehold’s North American royalty portfolio through further strengthening of our peer leading realized commodity pricing.
“The execution of our business strategy is focused on continuously improving both the near-term and long-term sustainability of Freehold’s dividend, maintaining balance sheet strength and flexibility, and retaining the ability to return capital to our shareholders.
The Howard County Midland basin assets will add 51,000 gross acres, totalling nearly 4,400NRA, with an average royalty rate of around 1.1%
They are estimated to produce 550boe/d for Q4 2022 and 750boe/d for 2023 and are anticipated to generate around C$23m from operations in 2023.
The Eagle Ford basin assets are located across 41,000 gross acres, which account for nearly 2,500 NRA, with an average royalty rate of about 0.8%.
They are estimated to produce 210boe/d for Q4 2022 and 250boe/d for 2023 and are expected to generate nearly $5m from operations in 2023.
Freehold is expected to close its acquisition of the Midland basin assets in late August this year, and Eagle Ford basin assets in mid-September, subject to customary due diligence and adjustments.