QEP Energy to acquire oil and gas properties in Permian Basin for $600m

QEP Energy has signed an agreement to acquire oil and gas properties in the Permian Basin within the US, from the initial sellers and other associated individuals and entities for approximately $600m.

The properties to be acquired are located in Martin County, Texas, and are set to further expand the company’s exploration and production footprint in the core of the northern Midland Basin.

With this acquisition, QEP will be able to advance its strategy of acquiring, developing and producing oil and gas from resource plays in its core operating areas.

QEP chairman and president CEO Chuck Stanley said: "The acquisition adds significant drilling inventory in the core of the northern Midland Basin and broadens our footprint in a world-class crude oil basin.

"We believe this acquisition, combined with our existing crude oil assets, will enhance our crude oil production growth and improve our operating efficiency."

Under the agreement, the initial sellers have until 13 July this year to obtain executed joinders to the agreement from the associated owners.

In case the aggregate allocated value of all assets owned by non-participating associated owners is more than 10% of the acquisition price, QEP can opt to terminate the agreement.

As part of the deal, QEP will acquire about 9,400 net acres in Martin County.

QEP said 98% of acreage is held by production to base of Wolfcamp Formation or deeper.

Out of the current net production of an estimated 1,400 barrels of oil equivalent per day, about 83% is crude oil, from 96 vertical wells.

There is also scope for more than 430 horizontal drilling locations over four horizons including Wolfcamp A, Wolfcamp B, Middle Spraberry and Spraberry Shale.

The transaction is subject to customary closing conditions and expected to close in September this year.