Midland, TX-based independent Ring Energy Inc. said Monday that it has acquired 33,000 undeveloped acres in Gaines County, TX, with an eye toward growing its horizontal drilling footprint in the Central Basin Platform (CBP) in the Permian Basin.
Ring said it has agreed to pay $16.6 million for the acreage, or $500/acre -- a fraction of the price commanded in recent transactions in the Permian’s Midland and Delaware sub-basins. The deal will be financed using surplus capital from a December stock offering.
Ring is a long-time vertical driller in the CBP that has more recently turned its attention to a horizontal drilling program it started in the play last year. The early results from an initial three-well pilot were encouraging enough for Ring to drill another seven horizontal wells in the CBP during the first quarter.
"Since announcing our interest in implementing a horizontal drilling program in April 2016, our staff has been extremely active in identifying and securing assets in an area we now call our 'horizontal footprint.' This project alone has taken over six months to complete," CEO Kelly Hoffman said. "In the past twelve months we have grown our footprint from 8,000 net acres to over 63,000 net (87,000 gross) acres, representing over 600 net (825 gross) potential horizontal drilling locations.
"Our drilling inventory is such that we can stay very busy for a number of years even if we choose to accelerate the program by adding additional rigs."
The newly acquired acreage is located entirely within an area Ring has identified for horizontal drilling in the CBP, management for the exploration and production company (E&P) said. Over half of the 33,000 acres are contiguous to the E&P's existing CBP leases.
The company will have a 100% working interest in the acreage and a 75% net revenue interest, management said.