Private equity-backed Logos Resources II has made a deal to buy the legacy natural gas acreage in the San Juan Basin that WPX Energy Inc. has been working to unload.
In addition to gas properties, the transaction includes undeveloped Mancos Shale, said the portfolio company of ArcLight Capital Partners. The transaction, for an undisclosed amount, is expected to close by year’s end.
"This acquisition enhances Logos' position as a leading San Juan Basin operator, and the consolidated lease position adds a deep inventory of extended lateral horizontal Mancos gas opportunities to complement our existing position in the Gallup oil window,” said President Jay Paul Williams.
“As substantially all acquired acreage is held by production, we will transition the assets into our existing base while further optimizing operating efficiencies prior to deploying additional capital.”
Tulsa-based WPX, long a gas-focused producer, has of late trained its eyes on oil-rich targets in the Permian Basin and Bakken Shale. San Juan properties have been sold off, although the company had a $150 million capital budget in 2017 for the region.
The assets being sold to Logos include close to 900 producing wells and more than 200 potential horizontal Mancos gas drilling locations across 134,000 net acres in New Mexico’s Rio Arriba and San Juan counties in and Colorado’s La Plata and Archuleta counties.
The acreage, nearly 100% held by production, currently is producing about 73 MMcfe/d.
Proforma for the acquisition, Logos would own one of the largest positions in the San Juan, with about 283,000 net acres, and total current production of around 112 MMcfe/d.
ArcLight founder Dan Revers noted that Logos “has successfully integrated multiple assets since early 2016, and we believe the acquisition will offer similar operating cost reduction and production optimization opportunities. In addition, the undeveloped Mancos acreage position provides a significant resource base capable of substantial productivity improvements…”
Logos was formed in 2016 with an initial capital commitment of $150 million. It now controls 138,000 net acres with current production of 6,500 boe/d. A predecessor company, Logos Resources, also was backed by ArcLight with a capital commitment of $100 million; most of its assets were sold in 2014.