Permian Basin-focused Callon Petroleum Co. has picked up more West Texas acreage in a $750 million deal with Cimarex Energy Co. that would allow it to drill longer lateral wells.

The transaction by subsidiary Callon Petroleum Operating Co., announced late Thursday, includes producing oil and natural gas properties and undeveloped acreage in Ward County.

On a pro forma basis, Callon's aggregate Permian position when the transaction is complete would cover close to 86,000 net surface acres concentrated in four core operating areas within both the Midland and Delaware sub-basins.

The acquisition "is an important step in continuing to build upon our Delaware Basin entry in late 2016,” Callon CEO Joe Gatto said. “Upon completion, we will own a leasehold position of almost 47,500 net acres in our Spur operating area and over 86,000 net acres in the broader Permian Basin.

“Given the location of the acquired position and associated established infrastructure, we are positioned to benefit from increased lateral lengths on the combined position as well as scale benefits from larger pad development concepts."

Included in the deal are 28,657 net surface acres, more than 90% held by production, that are directly adjacent to Callon’s existing position. Current net production is 6,831 boe/d, 73% oil-weighted.

The estimated delineated base inventory of 212 net identified horizontal drilling locations target the Permian’s Third Bone Spring, Wolfcamp A and B zones, with about 86% to be operated by Callon. More than 60% of the inventory is comprised of well locations with laterals of 7,500 feet or longer.

"Minimal drilling obligations, multiple target zones and a highly contiguous operated position all contribute to operational flexibility which will enhance our developmental efficiency while also affording organic inventory growth opportunities in emerging zones within our expanded Spur footprint,” Gatto said.

“Looking forward, we expect the acquisition to contribute to a total fourth quarter 2018 exit rate of over 40,000 boe/d, assuming only minimal incremental activity above our existing base program, and improved optionality for an increase in our development plans for 2019."

The pending acquisition is expected to close by Sept. 10.

"The sale of the Ward County assets is part of our continuous portfolio optimization and high-grading of our investment opportunities," said Cimarex CEO Tom Jorden. “Cimarex was among the first horizontal operators in the Bone Spring formation in Ward County, and it's been a great area for us over the years. However, the remaining Wolfcamp opportunities have not competed for capital versus other Cimarex projects."

Denver-based Cimarex also develops oil and gas acreage in the Midcontinent.