The assets that are part of the deal are located in the core of the northern Delaware Basin, spanning nearly 18,500 net acres
Advance Energy Partners to be acquired by Matador Resources. (Credit: Anita starzycka from Pixabay)
US-based oil and gas company Matador Resources has signed a definitive agreement to acquire Delaware Basin operator Advance Energy Partners for an initial cash payment of $1.6bn.
The acquisition will give certain oil and natural gas producing properties as well as undeveloped acreage located in Lea County, New Mexico, and Ward County, Texas to Matador Resources.
The properties are located in the core of the northern Delaware Basin, spanning nearly 18,500 net acres. They are strategically situated in Matador Resources’ Ranger asset area in Lea County near its existing properties.
Advance Energy Partners is a portfolio company of US-based private equity firm EnCap Investments.
As per the terms of the agreement, Matador Resources will pay an additional $7.5m in cash for each month during 2023 if the average oil price as defined in the securities purchase agreement is more than $85 per barrel.
Matador Resources expects the acquired assets to generate forward one-year adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of nearly $475m to $525m at strip prices as of mid-January 2023.
The assets to be acquired are expected to have an estimated production of 24,500 to 25,500 barrels of oil and natural gas equivalent (boe) per day in Q1 2023, of which 74% is oil.
The total proved oil and natural gas reserves associated with the properties are estimated to be about 106.4 million boe with 73% being oil as of 31 December 2022.
Matador Resources founder, chairman, and CEO Joseph Foran said: “We evaluated this transaction based on rock quality, the strong existing production and cash flow profile, the potential reserves additions, the high-quality inventory, the available midstream opportunities and the strategic fit within our existing portfolio of properties.
“We intend to fund the Advance Transaction with a combination of cash on hand, free cash flow prior to closing and borrowings under our credit agreement, under which we expect to increase our elected commitment in connection with this transaction.”
The transaction is expected to close early in Q2 2023, subject to customary conditions.