Concho to sell Permian Basin assets to Spur Energy for $925m

US shale gas exploration company Concho Resources has signed an agreement to sell its mature Permian Basin assets in New Mexico to an affiliate of Spur Energy Partners in a $925m deal.

The company’s board has also initiated a repurchase programme of up to $1.5bn of Concho’s shares of common stock.

The asset divestment includes approximately 100,000 gross acres. The current production from the company’s New Mexico Shelf assets stands at approximately 25 thousand barrels of oil equivalent per day (Mboe/d).

Concho Resources chairman and CEO Tim Leach said: “Divesting our New Mexico Shelf position enables us to accelerate the value of these legacy assets while focusing our portfolio on opportunities with the highest potential for strong returns.

“Further, the transaction reduces our cost structure and allows us to achieve the leverage target we communicated earlier this year while delivering additional returns to shareholders under an initial $1.5bn share repurchase programme.

“The share repurchase programme demonstrates our continued confidence in our strategy to generate sustainable oil growth and strong cash flow, and reflects our commitment to delivering long-term value to our shareholders.”

Following the sale of these assets, Concho will continue to support the local communities and plans to increase its footprint in southeastern New Mexico.

The company will use the funds from the transaction to clear debts on its revolving credit facility and start the share repurchase programme.

Leach added: “Over the past decade, our Shelf team has done an excellent job of working safely and maximising the value of these assets, and we are grateful for their hard work.”

The transaction is subject to customary closing conditions and expected to close in November.