Concho acquires Midland Basin assets from Reliance Energy for $1.625 billion

US-based Concho Resources has completed its previously announced acquisition of about 40,000 net acres in the core of the Midland Basin from Reliance Energy in a transaction worth approximately $1.625 billion.

The acquired assets are located in Andrews, Martin and Ector counties in Texas, and include production of ten million barrels of oil equivalent per day (mboepd) consisting of 67% crude oil.

The acquisition was initially announced in August this year and is consistent with the company’s portfolio management strategy as it expands its core Midland Basin position to more than 150,000 net acres.

It will add about 40,000 net acres with an average 99% working interest to the company’s core Midland Basin position.

Furthermore, it improves Concho’s drilling inventory with more than 530 long-lateral drilling locations targeting the Middle Spraberry, Lower Spraberry and Wolfcamp B.

When the acquisition was announced, Concho Resources chairman, CEO and president Tim Leach said the assets will build scale and also enhance the company’s inventory with additional long-lateral locations.

The acquisition includes ten mboepd from 326 vertical wells and 44 horizontal wells. Estimated proved reserves attributable to the acquisition total at about 43 million boe.

At present, Concho is running one rig on the acquired assets and plans to add a second one next year.

As of 30 June this year, the company had a long-term debt of approximately $2.7 billion, representing a $0.9 billion reduction in long-term debt since 30 June last year.

Concho’s pro forma liquidity also totalled approximately $2.5 billion as of 30 June.