Private-equity backed Colgate Energy Partners III LLC is adding to its arsenal in the Permian Basin of New Mexico in a $190 million deal with an undisclosed seller.
The 22,000 net acres “directly offset” the Midland, TX-based producer’s position in the Parkway area of New Mexico’s Eddy and Lea counties, the management team.
“Building on the transformative transactions completed earlier this year in Texas, this New Mexico acquisition adds to Colgate’s position as one of the premier private operators in the Permian Basin,” Co-CEO James Walter said.
Occidental Petroleum Corp. in June sold Colgate 25,000 net acres of Permian West Texas acreage, along with the production, for $500 million. The purchase included 25,000 net acres in Reeves and Ward counties, along with about 360 active wells and production of 10,000 boe/d.
Also in June Colgate acquired most of the assets owned by Luxe Energy LLC in an all-stock transaction. The deal included 22,000 net acres also in Reeves and Ward counties with production of about 17,000 boe/d net.
Co-CEO Will Hickey said the latest acquisition builds on Colgate’s existing inventory in the Delaware sub-basin, “where we have recently drilled some of the best wells in the company’s history. Given the depth of our current inventory, we have a very high bar for acquisitions and this one was just too good to pass up. We are excited to allocate rig activity to these properties next year.”
According to Colgate, the newly acquired acreage is 95% operated with a 78% average working interest. Estimated production currently is 750 boe/d net. The leasehold is expected to add more than 200 locations.
Pro forma, Colgate expects to control around 108,000 net acres across the Permian, mostly in Eddy, Reeves and Ward counties. It plans to keep operating five rigs across the holdings.
In related news, Colgate said its 11 offset wells, now completed, have averaged 30-day initial production rates of 3,600 boe/d. The average “cash-on-cash well level payout” has been four months.
Colgate expects to finance the latest acquisition, set to be completed in early 2022, with cash and debt.
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