Matador Resources Company has announced the closing of its wholly-owned subsidiary’s previously-announced acquisition of Advance Energy Partners Holdings from EnCap Investments, including Advance’s oil and natural gas producing properties, undeveloped acreage and midstream assets located in Lea County, New Mexico and Ward County, Texas.
The consideration paid upon the closing of the Advance Transaction consisted of an initial as-adjusted cash purchase price of approx. $1.6 billion, which amount is subject to customary post-closing adjustments. As previously announced, the Advance Transaction may also include potential additional cash consideration of $7.5 million for each month of 2023 in which the average oil price, as defined in the securities purchase agreement, exceeds $85 per barrel.
The Advance Transaction includes approx. 18,500 net acres (99% held by production) in the core of the northern Delaware Basin, most of which is adjacent to or very close to some of Matador’s best acreage where wells with an estimated ultimate recovery of over one million barrels of oil equivalent have been drilled. It also provides a significant increase to Matador’s inventory in primary development zones, with 206 gross (174 net) operated locations in core target formations and an additional 38 gross (35 net) upside operated locations in the Wolfcamp D formation. This new acreage also provides further expansion opportunities for Pronto Midstream, LLC, Matador’s wholly-owned midstream subsidiary.
Joseph Wm. Foran, Matador’s Founder, Chairman and CEO, commented:
'On behalf of the Board and management, I would like to congratulate and thank everyone at Matador and EnCap for their professionalism and for everyone’s efforts to close this transaction. These properties are a unique, value-creating opportunity for Matador and all of its stakeholders. Closing this transaction sets Matador up nicely for a great 2023 and an even better 2024.
'The Advance Transaction was funded with a combination of cash on hand and borrowings under our credit agreement. On March 31, 2023, we successfully increased the elected commitment under our credit agreement from $775 million to $1.25 billion. We express our appreciation to each of our banks for their continued support. Importantly, this acquisition does not significantly impact Matador’s leverage profile, and we remain committed to maintaining a strong balance sheet, growing our assets at a measured pace and paying down our debt with free cash flow going forward from here as well as increasing the value of the company and increasing the amount of our shareholder returns over time.
'We look forward to further discussing the Advance acquisition and our plans for 2023 during our first quarter 2023 earnings release update call.'
Source: Matador Resources
