Concho Resources recently announced that it is acquiring Marbob Energy Corp. for $1.65 billion. The acquired assets are in the Southeastern New Mexico part of the Permian basin and include a large contiguous position in the Yeso play and a substantial position in the up-and-coming Bone Spring play. The deal includes estimated proved reserves of 76 MMBoe, 58% of which is oil, which is added to Concho’s existing 211.5 MMBoe of proved reserves which is 67% oil. Marbob Energy averaged 14 MBoe/d in the first quarter of 2010 from the acquired assets with approximately 2,300 drilling locations which breaks down to roughly 1,300 in Yeso and 1,000 in Bone Spring. Concho has now added an additional 5 rigs, 1 in Yeso and 4 in Bone Spring.
Timothy A. Leach, President and CEO of Concho, had this to say about the acquisition, “We are pleased to announce the largest and most strategic acquisition in our Company’s history. This acquisition has been one of our highest priorities for the last three years. These assets are a perfect complement to our New Mexico Shelf position, and they double our Yeso drilling inventory. In addition, Marbob’s Bone Spring acreage, when coupled with our existing acreage, gives the Company over 100,000 net acres in one of the most exciting emerging plays in the industry today and adds a significant new area of growth to the Company’s portfolio. After closing, we plan to increase the activity level and rig count on these acquired properties, which should result in significant production growth over the next several years. Going forward Concho will be a bigger version of today’s company, with a large, high rate of return, high margin drilling inventory that will be complemented by the Bone Spring play.”
Concho will use a combination of equity and debt to pay for the acquisition paying Marbob $1.45 billion in cash and the remainder in common stock and a $150 million 8% senior note.
Coming soon: DI Energy Strategy Partners will be releasing the Acquisition and Divestiture Pipeline which will include these types of deals and links to information regarding each deal.
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