Matador Resources is expanding its presence in Lea County in a big way. The independent energy giant, through its wholly-owned subsidiary Pronto Midstream, “…has entered into a definitive agreement to acquire Advance Energy Partners Holdings, LLC, including certain oil and natural gas producing properties and undeveloped acreage located in Lea County, New Mexico and Ward County, Texas,” states a news release posted on Matador’s website. 

The acquisition’s price tag consists of “…an initial cash payment of $1.6 billion, subject to customary closing adjustments, plus additional cash consideration of $7.5 million for each month during 2023 in which the average oil price as defined in the securities purchase agreement exceeds $85 per barrel.” According to Market Watch, the settlement price of oil is lower than the $85/barrel benchmark.

Matador’s founder/CEO/Chairman of the Board/Secretary Joseph Wm. Foran is quoted in an article posted at NaturalGasIntel.com as saying about the deal, “‘We have carefully managed and strengthened our balance sheet over time in order to be in a position for a special opportunity like this.’” Foran called the acquisition a “happy coincidence”, explaining that Advance Energy told Matador that Matador was the “logical buyer”. Advance also told Matador that Advance needed to sell to “fulfil other objectives”.

Transaction 

The press release states that Matador will acquire:

• “Estimated production in the first quarter of 2023 of 24,500 to 25,500 barrels of oil and natural gas equivalent (“BOE”) per day (74% oil).”

• 18,500 net acres (99% held by production) in the northern section of the Delaware Basin. Most of these acres are in Lea County. 

• 203 net “…horizontal locations identified for future drilling, including prospective targets throughout the Wolfcamp, Bone Spring and Avalon formations.” Twenty drilled but uncompleted wells are also included.

• An additional approximate “…35 miles of infield gas and water gathering lines.” These lines will allow Pronto, with operations mainly in Lea County, additional natural gas takeaway capacity to the Permian Basin Waha Hub.

• Three compressor stations.

Summarizing the transaction CEO Foran said, “This acquisition also provides [Matador] with increased operational scale in the Delaware Basin, which we expect will improve our overall rates of return and unit-of-production costs.”

Foran noted that among the highlights that attracted Matador to Advance’s acreage were the “cost savings associated with developing these assets via longer laterals on multi-well pads with centralized facilities, the midstream synergies with Pronto and the held-by-production status of the acreage.”