$1.2 billion in Permian Basin oil and gas assets sold to Vital Energy as region leads US
An Oklahoma-based oil and gas company increased its Permian Basin presence through three buyouts valued at a total of about $1.2 billion, including assets in the both the western Delaware and eastern Midland sub-basins.
The three sales will total in 53,000 acres, with about 248 million barrels of oil reserves, producing about 35,000 barrels of oil equivalent per day (boepd), from about 150 working locations.
The deal, a combination of stock and cash transactions, was expected to increase to an average of 55,000 boepd by the end of 2024 and will grow Vital Energy’s Permian Basin position to about 250,000 acres, read a company announcement.
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The sellers are Henry Energy selling Vital all of its Midland and Delaware Basin assets for about 8 million stock shares, Maple Energy Holdings selling its Delaware Basin assets for about 3 million shares and Tall City Property Holdings selling its Delaware Basin assets for about $285 million and about one and a half million shares.
The Delaware Basin assets were on about 45,000 acres, with 27,500 boepd of production in Reeves County, Texas along the New Mexico state line.
About 7,600 acres and 7,500 boepd were included in the Midland Basin.
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Together, the production in both basins was about 50 percent oil, according to an investor presentation.
Chief Executive Officer Jason Pigott said the sales were part of the company’s strategy of consolidating oil and gas assets in the Permian to drive up revenue and shareholder returns.
"These transactions increase our scale in the Permian and fit with our proven strategy of creating value through disciplined acquisitions,” Pigott said. “We have demonstrated our ability to effectively consolidate Permian assets and identify sustainable synergies to lower costs, improve margins and enhance free cash flow.”
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Vital’s acquisitions followed the Sept. 13 closing of an about $455 million sale of mostly Permian Basin assets to Kimbell Royalties first announced Aug. 2.
That sale saw Kimbell buy assets including 4,000 producing wells on more than a million acres, with about 64 percent in the Permian.
In the Permian, within the western Delaware sub-basin along the Texas-New Mexico State Line, Kimbell will acquire 13,477 acres in the sale, mostly in Loving County, Texas, with 57 percent of the acreage undeveloped.
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Assets also included 300 drilled but uncompleted wells and 11 active drilling rigs.
Kimbell estimated as of June 1, the assets produced about 4,840 boepd, and about 12 million cubic feet of natural gas per day (cf/d), upped to about 5,000 boepd of oil and about 12.3 million cf/d by the end of 2024.
“The Acquisition represents the largest transaction in company history and is expected to significantly enhance Kimbell's positions in the best-performing, highest-growth oil and gas basins in the Lower 48,” said Kimbell CEO Bob Ravnass.
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Also in the Permian Basin, Evolution Petroleum Corporation and PEDEVCO Corp. announced a joint venture to develop assets in an oilfield on the northern edge of the Permian in southeast New Mexico known as the Chaveroo oilfield in Chaves and Roosevelt counties.
PEDEVCO already drilled 10 wells on the property covering about 16,000 acres.
Evolution CEO Kelly Loyd said the deal will mark the company’s entry in the Permian Basin, which Loyd said will drive the company’s revenue from the highly productive, yet cost-effective region.
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“Executing on this strategic partnership allows us to add a crucial component to our asset base, the ability to add to production and reserves via drilling of highly attractive yet cost effective wells that we anticipate will be supportive of our dividend for many years to come,” Loyd said.
The Permian Basin continued to lead the U.S. in oil and gas operations, with New Mexico and Texas posting the second- and first-highest drilling rig counts in the U.S.
The Permian Basin added two rigs in the last week as of Friday, according to the latest data from Baker Hughes, for a total of 322 rigs, down 21 from a year ago.
New Mexico dropped two rigs for its total of 102 rigs, records show, down six from the same date a year ago and Texas added seven rigs for a total of 317.
Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on X, formerly known as Twitter.
This article originally appeared on Carlsbad Current-Argus: $1.2 billion in Permian Basin oil and gas assets sold to Vital Energy
