Concho To Acquire Northern Delaware Basin Assets For $430M
Zacks Investment Research | Nov 21, 2016 08:55PM ET
Concho Resources Inc. (NYSE:CXO) announced that it has inked a definitive agreement to purchase about 24,000 gross (16,400 net) acres in the northern Delaware Basin for about $430 million.
The acquired acreage complements the company’s leasehold position in the northern Delaware Basin, with about 12,000 gross (10,000 net) acres located in the Red Hills area in Lea County, NM. The asset has about 2.5 thousand barrels of oil equivalent per day of current production, of which oil is 69%.
The Red Hills area, an oil-prone fairway producing excellent returns at the current commodity prices, has bright prospects for multi-zone development. It offers over 5,000 feet of resource-rich hydrocarbon column which will more than double the company’s long-lateral drilling inventory in the region. The purchase expands Concho’s position in the area by over 25% to about 47,000 net acres. It also boosts Concho’s ability to drill long laterals on the existing leasehold.
Concho is expected to make a payment of about $150 million in cash and 2.18 million in shares of its common stock. Subject to customary closing conditions, the deal is expected to close in Jan 2017. The transaction will be accretive to cash flow and leverage neutral.
As a result of the acquisition, Concho intends to increase its operated rig count to an average of eight rigs in the northern Delaware Basin during 2017. On a year-over-year basis, Concho expects to boost oil production volumes by over 20% in 2017 and total production by 18–21%, up from its previous guidance of 17% to 20%. The company has maintained its capital expenditure guidance in the range of $1.4 billion to $1.6 billion for 2017.
CONCHO RESOURCS Price
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.