Resolute Energy (REN) Snaps Up Permian Assets For $135M
Zacks Investment Research | Oct 07, 2016 04:16AM ET
Shares of Denver, CO-based domestic oil and gas finder Resolute Energy Corp. (NYSE:REN) surged to a 52-week high after the company agreed to acquire certain properties in the highly productive Delaware basin region from privately-owned Firewheel Energy for $135 million. Of the total consideration, $90 million will be paid in cash, while the remaining $45 million will be settled through the issuance of 2,114,523 Resolute Energy common stock.
The to-be-acquired assets include 3,293 net acres of operating area with estimated proved reserves of 6.2 million barrels of oil equivalent, plus interest in wells (13 horizontal and 15 vertical) that churn out around 1,200 barrels of oil equivalent daily.
The transaction – effective Sep 1 and expected to close Oct 7 – would expand Resolute Energy’s footprint in Permian’s Delaware Basin, a region that continues to be profitable even at the current low prices. Importantly, almost the entire portion of the acreage (95% to be precise) and bulk of the production/proved reserves are positioned within the Mustang project area in Reeves County, where Resolute Energy holds the operatorship.
To finance the cash component of the deal, Resolute Energy announced a private offering of 55,000 shares of a newly-created preferred class of stock at $1,000 apiece that pays an 8.125% dividend yield and can be converted to common stock at a conversion price of $29.53 per share.
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