Concho Resources to acquire US oil and gas properties for $1bn

Concho Resources said it has agreed to acquire all the oil and natural gas assets of Three Rivers Operating Company and certain affiliated entities for $1bn in cash.

Three Rivers, owned by US-based private equity fund Riverstone Holdings, has about 200,000 net acres in the onshore Permian Basin, covering west Texas and south-eastern New Mexico in the US.

The company also holds acreage in Concho’s core northern Delaware Basin prospect, the Midland Basin Wolfberry play, and the prospective southern Midland Basin horizontal Wolfcamp and Cline shale plays.

The acquisition will give access to acreage with estimated proved reserves of about 58 million barrels of oil equivalent.

Concho Resources chairman, CEO and president Timothy Leach said, "This acquisition is expected to be immediately accretive to earnings, discretionary cash flow, production and reserves on a per share basis, and provides an additional platform to significantly grow our production in the Permian Basin," Leach added.

The acquired assets will include about 380 unproved horizontal drilling permits in the Delaware Basin, including 1,100 vertical drilling locations in the Midland Basin, of which 740 are unproved.

Concho plans to fund the deal with its $2bn credit facility and sell $200m to $400m of non-core assets and existing assets over the next nine months.

The company said it is expected to close the acquisition in July 2012, subject to regulatory approval and custom conditions.