Callon Petroleum Co., already on a tear to expand its Permian Basin inventory, has agreed to pay $615 million to gain entry into the Southern Delaware formation, a 30% boost in acreage to complement the Midland oil and natural gas operations.

The 16,098-net acre (27,552 gross) purchase by subsidiary Callon Petroleum Operating Co. is from a trio of Austin, TX-based entities formed in 2015 by EnCap Investments LP: American Resource Development LLC, American Resource Development Upstream LLC and American Resource Development Midstream LLC, collectively, Ameredev. Net production in October was estimated at 1,945 boe/d, 71% weighted to oil.

“Our initial entry into the Delaware Basin caps a transformative year for Callon,” CEO Fred Callon said Wednesday during a conference call with his management team.

The operator’s pro forma Permian position once the Ameredev deal is completed, would include 55,500 net surface acres concentrated in four core operating areas within the Midland and Delaware sub-basins. The Permian is Callon’s only focus, a point made clear through key acquisitions in West Texas this year.

In September, Callon paid $327 million to buy 5,667 net acres primarily in Howard County, TX, within the Midland sub-basin. That deal built on av $334 million purchase of 16,000 net acres last April, also in the Midland.

The Ameredev acquisition followed months of investigation to find the perfect bolt-on, weighted to oil, the CEO told investors. The new addition in is expected to be only one of others to come, he added. The transaction “is the result of a patient, concentrated effort to identify the appropriate derisked, oily acreage position in the Delaware Basin that provides the opportunity to leverage our Permian Basin technical expertise, while complementing our deep inventory of high-return well locations and capital efficient operations in the Midland Basin.”

Most of the new leasehold — 12,000 net acres — is in Ward County, an attractive fit primarily because of the deep proved developed producing (PDP) acreage within the Wolfcamp and Bone Spring formations, COO Gary Newberry said during the conference call. Using enhanced completions in the deep acreage offers “an even better opportunity for a better uplift,” he added.

“We’ve got 20 operated horizontal wells on it, two in the process of being completed in the Wolfcamp, with one drilled in Wolfcamp A and one drilled in Wolfcamp B, along with 12 nonoperated horizontal wells,” Newberry said. “It’s a nice, very well established PDP production base that comes along with the acreage position,” with overlap into Pecos and Reeves counties.

Ameredev’s leasehold, the CEO said, “is well-suited for long lateral development and offers the potential for the development of multiple shale and sand intervals in the core of the Southern Delaware Basin’s over-pressured oil window.”

The Natchez, MS-based independent plans to deploy an operated horizontal rig to the Southern Delaware by mid-2017, augmenting plans to add four horizontals to the Midland position by the end of next year.

“Overall, we believe that this position is an excellent fit with our broader Permian portfolio and organizational capabilities, and, importantly, accretive to the value proposition for our shareholders,” the CEO said.

The estimated delineated base inventory for the new leasehold identified 206 net (481 gross) horizontal drilling locations targeting the Wolfcamp A and B zones with an average lateral length of 7,500 feet, including 36% comprised of 10,000-foot laterals. Potential locations also have been identified in other prospective Wolfcamp and Bone Spring formations.

Included in the purchase are five saltwater disposal wells and more than 13 miles of natural gas gathering lines and gas lift return lines. In addition, Callon secured an agreement to acquire up to another 1,006 net acres in Ward County, mutually identified by Callon and Ameredev, if they can complete the purchases before the sale announced this week. Ameredev currently operates 80% of the net surface acreage and has an average working interest in the operated properties of 82%.

The pending acquisition is expected to close by mid-February. Callon plans to use net proceeds from an equity offering, cash on hand and a revolving credit facility to pay for the purchase. Effective Nov. 21, Callon’s borrowing base was increased to $500 million from $385 million.