Concho to acquire Midland Basin assets in US from Reliance Energy for $1.625bn

Concho Resources has signed an agreement to acquire approximately 40,000 net acres in the core of the Midland Basin, US, from Reliance Energy in a deal valued at $1.625bn.

The acquisition will enable Concho to expand its core Midland Basin position to more than 150,000 net acres and production of 30,000 barrels of oil equivalent per day (boepd).

Furthermore, it will add about 40,000 net acres with an average 99% working interest to the company’s core Midland Basin position and improves its drilling inventory with more than 530 long-lateral drilling locations.

Concho Resources chairman, CEO and president Tim Leach said: “This transaction demonstrates Concho’s commitment to the Midland Basin as a core operating area and highlights our continued efforts to consolidate complementary leasehold.

“In line with the objectives of our southern Delaware Basin acquisition in the first quarter of 2016, these assets not only build scale, but more importantly high-grade our inventory with additional long-lateral locations that compete with the best projects in the Permian Basin."

As part of the deal, Concho acquired about 10boepd of existing production from 326 vertical wells and 44 horizontal wells.

Estimated proved reserves attributable to the acquisition total approximately 43 million boem, and proved developed reserves represent about 69% of the total reserves.

The company proposes to fund the cash portion of the acquisition with the help of proceeds from a potential equity market transaction.

Subject to customary closing conditions, the acquisition is expected to close in October this year.