Matador Resources, through its wholly-owned subsidiary, has agreed to acquire Advance Energy Partners Holdings, a portfolio company of EnCap Investments, in a deal worth $1.6bn.
The transaction covers certain oil and natural gas-producing properties and undeveloped acreage in Lea County, New Mexico, and Ward County, Texas.
These include approximately 18,500 net acres in the core of the northern Delaware basin. Most of the assets are strategically located in Matador’s Ranger asset area in Lea County.
As part of the agreement, Matador will make an additional payment of $7.5m in cash each month during 2023, in case the average oil price exceeds $85 per barrel.
Matador founder, chairman and CEO Joseph Wm Foran said: “We evaluated this transaction based on rock quality, the strong existing production and cash flow profile, the potential reserve additions, the high-quality inventory, the available midstream opportunities, and the strategic fit within our existing portfolio of properties.
“Importantly, this acquisition should not significantly impact Matador’s leverage profile, as we expect to maintain a pro forma leverage ratio below 1.0x throughout 2023.”
Matador Resources expects the acquisition to significantly increase its pro forma drilling locations in primary development zones.
In Q1 2023, the assets covered under the transaction are estimated to produce 24,500 to 25,500 barrels of oil and natural gas equivalent per day (74% oil).
Foran added: “This acquisition also provides us with increased operational scale in the Delaware basin, which we expect will improve our overall rates of return and unit-of-production costs.”
Subject to customary closing conditions, the transaction is planned to close early in the second quarter of 2023.
