US-based oil and gas firm Callon Petroleum has agreed to acquire Primexx Energy Partners and its affiliates in a cash-cum-stock deal worth around $788m.
The consideration is made up of $440m in cash and 9.19 million shares of Callon Petroleum.
Primexx Energy Partners is an oil and gas operator in the Delaware Basin in the US. The privately-held company has a contiguous footprint of 35,000 net acres in Reeves County.
In the second quarter of this year, the company reported net production of nearly 18,000 barrels of oil equivalent per day (Boe/d), of which 61% is oil.
The acquisition includes Primexx Energy Partners and its affiliates’ leasehold interests and associated oil, gas, and infrastructure assets.
Callon Petroleum, which is active in the oil plays of South and West Texas, said that the acquisition will help in providing long-term value to shareholders with a scaled, life-of-field development model, besides consolidating its financial position.
The deal will grow the company’s Delaware Basin position to more than 110,000 net acres.
The assets to be acquired include nearly 300 identified core net locations, of which nearly two-thirds are two-mile laterals. The assets are expected to help the continued transition of Callon Petroleum to larger, more capital efficient development projects in the Delaware Basin.
Besides, the deal is expected to boost the oil cut of Callon Petroleum’s Delaware business.
Callon Petroleum president and CEO Joe Gatto said: “The Primexx transaction checks every operational and financial box on the list of compelling attributes of consolidation.
“The asset base adds substantial current oil production and a top-tier inventory to our Delaware portfolio, and fits squarely into our model of scaled, co-development of a multi-zone resource base.
“Our integrated, future development plans will benefit greatly from the combined Delaware scale and we expect to generate approximately 30% more adjusted free cash flow from the third quarter of 2021 through year-end 2023 under our conservative planning price assumptions.”
The deal, which is subject to regulatory approvals and other customary closing conditions, is expected to close in the fourth quarter of 2021.
