RSP Permian to acquire Silver Hill for $2.4 billion

US-based oil and natural gas company RSP Permian has signed agreements to acquire Silver Hill Energy Partners (SHEP I) and Silver Hill E&P II (SHEP II) for approximately $2.4 billion.   

Silver Hill consists of two entities controlled by affiliates of Kayne Anderson Capital Advisors and Ridgemont Equity Partners that together own 68,000 gross / 41,000 net acres in north-east Loving and north-west Winkler counties, Texas.

The assets currently have a joint net production of ~15 million barrels of oil equivalent a day (mboe/d) from 58 wells and 3,200 gross / 1,950 net total undeveloped locations.

Acquisition of SHEP I is expected to close by the end of this year, while SHEP II acquisition is slated for completion in the first quarter of next year. 

RSP Permian CEO Steve Gray said: "This transaction creates a compelling growth platform with the highest quality assets in the core of both the Midland and Delaware Basins that each exhibit strong returns and have substantial combined upside. 

“We believe the assets of Silver Hill are located in the best part of the Delaware Basin and will be a perfect complement to our existing asset base." 

Both transactions are subject to certain closing conditions, customary purchase price adjustments, as well as regulatory and third party approvals.

Once the acquisition of SHEP II concludes, Kayne Anderson, Ridgemont and other Silver Hill shareholders will collectively own about 20% of RSP's outstanding shares.

The acquisition is set to create substantial scale with a combined current production of about 50mboe/d, more than 100,000 net surface acres, more than 500,000 net horizontal acres and more than 3,600 net drilling locations.

Silver Hill CEO Kyle Miller said: "This transaction provides our owners with near-term liquidity and continued upside exposure to these premier assets through our significant equity ownership in RSP.”