Just one week after Concho Resources Inc. added considerably to its oil and gas acreage in the Permian Basin of New Mexico through its completed acquisition of Marbob Energy Corp. assets, the Midland, TX-based producer said Friday that it has acquired additional oil and gas assets, predominately located on the New Mexico Shelf of the basin, for approximately $285 million.
In connection with the acquisition, Concho said it and Marbob have resolved their litigation with BP America Production Co. and Apache Corp. related to certain preferential purchase rights. As a result of the acquisition, Concho and Apache will be partners in substantially all of the properties acquired Friday, with Apache serving as the operator.
The acquisition includes 12 MMBoe estimated proved reserves (66% oil, 50% proved developed) and 26 MMBoe estimated unproved reserves. The deal involves current production of approximately 1,600 Boe/d with more than 500 additional Yeso drilling locations on the New Mexico Shelf. Concho said it funded the acquisition with borrowings under its credit facility.
"We are excited to add over 500 additional drilling locations to our Yeso inventory, our highest rate of return drilling area," said Concho CEO Tim Leach. "If you combine today's deal with the assets we acquired from Marbob last Thursday, the result of the two is a transaction with aggregate consideration, production and reserves very similar to the Marbob acquisition that we originally announced in July [see Daily GPI, July 21]. In addition, we are pleased to resolve our dispute with Apache and look forward to partnering with them in these assets."
In announcing the completion of the Marbob asset buy last week (see Daily GPI, Oct. 11), which included 12,000 Boe/d and 63 MMBoe (42% gas), Concho also reported that it is looking to divest "certain Permian Basin properties" because they are mostly not in the company's core areas of operation and because they have a higher per-unit cost than Concho's existing portfolio of assets. The properties on the block currently produce approximately 1,500 Boe/d, consisting of 48% oil and 52% natural gas. As of June 30, estimated proved reserves associated with these properties totaled approximately 6.5 MMBoe. Concho said it anticipates closing the sale prior to year-end, as long as a suitable bid is received.
©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.