Page 10 - NorthAmOil Week 04 2023

NorthAmOil INVESTMENT NorthAmOil

Matador to buy Advance

Energy in $1.6bn deal

PERMIAN BASIN MATADOR Resources has agreed to buy near the company’s existing properties.
Advance Energy Partners. The bolt-on acqui- The assets included 406 gross – or 203 net –
sition, in the Permian Basin’s Delaware sub-ba- horizontal locations identified for future drilling,
sin, will cost $1.6bn plus $7.5mn cash for each including prospective targets throughout the
month in 2023 in which the average price of oil Wolfcamp, Bone Spring and Avalon formations.
exceeds $85 per barrel. Of that, 21 gross – or 20 net – drilled but uncom-
The deal includes certain oil- and natural pleted (DUC) wells are expected to be turned to
gas-producing properties and undeveloped sales in the second half of 2023.
acreage in Lea County, New Mexico and Ward The acreage also includes 206 gross – or 174
County, Texas. The transaction is expected to net – operated locations with an 84% working
close early in the second quarter of 2023. interest and 200 gross – or 29 net – non-operated
“We evaluated this transaction based on locations with a 15% working interest.
rock quality, the strong existing production Also included in the deal are 38 gross – or 35
and cash flow profile, the potential reserves net – additional upside locations in the Wolf-
additions, the high-quality inventory, the avail- camp D formation. The deal also
able midstream opportunities and the strategic The locations are conducive to drilling longer
fit within our existing portfolio of properties,” laterals with an expected average lateral length provides potential
said Matador’s founder, chairman and CEO, for operated locations of around 9,400 feet (2,865
Joseph Foran. metres). midstream
The transaction is projected to generate for- Advance is currently using one rig to drill
ward one-year adjusted earnings before interest, 21 gross – or 19 net – wells in the northern por- opportunities
taxes, depreciation, and amortisation (EBITDA) tion of Matador’s Antelope Ridge asset area in for Pronto
of $475-525mn, which represents a purchase Lea County. However, these wells are not antic-
price multiple of 3.2, said Matador. ipated to be turned to sales until early 2024, said Midstream,
The deal also provides potential midstream Matador.
opportunities for Pronto Midstream, Matador’s The estimated drilling, completion and Matador’s wholly
wholly owned midstream subsidiary, which equipping capital expenditures for the acreage,
operates in Lea County. totalling $300-350mn in 2023, are based on one owned midstream
The 18,500 net acres (74.9 square km) being rig operating on the Advance properties, includ- subsidiary.
purchased had an estimated production of ing anticipated completion costs for the 21 gross
24,500-25,500 barrels of oil equivalent per day DUCs. Around $225-275mn is expected to be
(boepd) in the first quarter of 2023, with oil incurred between the anticipated closing date
accounting for 74% of this. and the end of 2023, said Matador.
The acreage is roughly 99% held by produc- The buyer estimates that total proven oil
tion and is located in the core of the northern and gas reserves associated with the properties
Delaware Basin. Most of it is strategically located amounted to 106.4mn boe, with oil accounting
in Matador’s Ranger asset area in Lea County for 73%, as of the end of 2022.™

P10 www. NEWSBASE .com Week 04 26•January•2023