Sunday, January 16, 2022
54.6 F
Fort Worth

Dallas oil and gas group acquires Delaware Basin acres for $387M

🕐 2 min read

Dallas-based Matador Resources Co. (NYSE: MTDR) announced today the acquisition of 8,400 net acres for approximately $387 million, or a weighted average cost of approximately $46,000 per net acre, in Lea and Eddy Counties, New Mexico in the Bureau of Land Management New Mexico Oil and Gas Lease Sale on Sept. 5 and 6, 2018.

“Matador is very excited by these purchases,” said Joseph Wm. Foran, chairman and CEO. “Over the past several years, Matador has followed a strategy of primarily building its Delaware Basin land position on a ‘brick by brick’ basis, but we have always believed it is also important to capture unique value-creating opportunities on a select basis, like the recent BLM lease sale, which was the largest BLM New Mexico Oil and Gas Lease Sale in the last 10 years.”

Matador estimates these properties should immediately add an incremental 16.3 million barrels of oil equivalent (BOE), or 10 percent, in proved undeveloped reserves (PUDs) with a PV-10 (a non-GAAP financial measure) of approximately $135 million to its total proved reserves base. This amount equates to a weighted average value of approximately $16,000 per net acre acquired. The total estimated value of these PUDs is additive to Matador’s previously reported proved oil and natural gas reserves of 170.2 million BOE at June 30, 2018, consisting of 95.4 million barrels of oil and 448.2 billion cubic feet of natural gas with a PV-10 (a non-GAAP financial measure) of $1.8 billion.

The acquired leases are federal leases and provide an 87.5 percent net revenue interest (“NRI”) as compared to approximately 75 percent NRI on most fee leases today. As a result, Matador will retain an additional 17 percent of the net production from each well drilled and completed on these properties, which should significantly improve the economics of wells drilled on this acreage. Matador said it believes this increased NRI substantially enhances the value of the acquired properties, especially given the company’s expectation of multiple zones of development, including as many as seven to nine potentially productive zones in certain tracts.

The large majority of the acquired acreage is believed to be conducive to drilling longer laterals of up to two miles or more, utilizing central facilities and multi-well pad development, which should reduce well costs and further improve well returns and economics. The positive effects of this acquisition on Matador’s production and on potential additional midstream opportunities should begin to be realized in late 2019, 2020 and beyond as Matador expects to initiate production from these properties with higher NRIs and lower costs per lateral foot.

The acquired acreage blends well with Matador’s existing properties, expanding and bolting on acreage in the Antelope Ridge asset area in Lea County, New Mexico and establishing a foothold for the company in the prolific Stateline area in Eddy County, New Mexico, while maintaining Matador’s weighted average all-in Delaware Basin acreage cost at approximately $11,000 per net acre, according to a company news release.

Related Articles

Our Digital Sponsors

Latest Articles

Get our email updates

Stay up-to-date with the issues, companies and people that matter most to business in the Fort Worth.

  • Restaurants
  • Technology
  • and more!

FWBP Morning Brief

FWBP 5@5

Weekend Newsletter

  • Banking & Finance
  • Culture
  • Real Estate

Not ready to subscribe?

Try a few articles on us.

Enter your email address and we will give you access to three articles a month, to give us a try. You also get an opportunity to receive our newsletter with stories of the day.

This field is for validation purposes and should be left unchanged.