Callon Petroleum has signed agreements to acquire certain assets operated by Big Star Oil and Gas in the US from three private companies for $220m.
Big Star operates about 17,298 gross surface acres in Howard County, Texas, with additional acreage in Martin, Borden and Dawson counties, Texas.
Additional assets of Big Star include 178 gross identified horizontal drilling locations, five currently producing horizontal wells, 124 gross additional potential horizontal drilling locations and about 4.1 million barrel of oil equivalent (BOE) of net proved developed producing reserves.
Under the terms of the deal, Callon will acquire over 80% of operatorship of the acquired acreage, in addition to owning an estimated 81% average working interest.
Callon also signed agreements for the formation of an area of mutual interest with TRP Energy in western Reagan County, Texas.
The deal involves joint acquisition of 4,745 net acres north of the Garrison Draw field from a private party. It also includes sale of Callon’s 27.5% interest in the Garrison Draw field to TRP.
Callon expects the deal to increase acreage in western Reagan by 1,759 net acres.
Callon Petroleum chairman and CEO Fred Callon said: "While we expect any near-term increase in operational activity following the acquisitions to be limited in 2016, we anticipate the horizontal development of the Big Star properties to be an important part of an expanded 2017 operational program incorporating a total of two to three horizontal drilling rigs.
"Importantly, the transactions not only deliver high-quality, de-risked asset bases that compete favorably for capital in our combined portfolio, but also present the opportunity to add to our management team with Mr. Bradley Cross, a founding partner of Big Star, who has been offered a senior role in operations with Callon."
Planned to be completed in the second quarter of 2016, the two transactions are subject to the completion of customary due diligence.