US-based independent energy company Evolution Petroleum has agreed to acquire certain non-operated oil and natural gas assets in central Oklahoma, US for $43.5m.
Evolution Petroleum will purchase the oil and natural gas assets, in the SCOOP and STACK plays, from Red Sky Resources III, Red Sky Resources IV, and Coriolis Energy Partners I.
The assets comprise 230 producing wells in the Anadarko Basin in Blaine, Canadian, Carter, Custer, Dewey, Garvin, Grady, Kingfisher, McClain, and Stephens counties, Oklahoma.
Under the terms of the agreement, the energy company will acquire the assets for a combined purchase price of $43.5m in cash, subject to adjustments, effective 1 November 2023.
The acquisition is expected to be completed in mid-February, during the company’s third quarter of fiscal year 2024.
Evolution Petroleum expects to fund the transactions from cash on hand and borrowings from the company’s senior credit facility with MidFirst Bank.
Evolution Petroleum president and CEO Kelly Loyd said: “This is a significant achievement for our Company and demonstrates our ability to successfully procure high-quality assets in a core basin with best-in-class operating parties.
“The strategic addition of these non-operated assets to our increasingly diversified portfolio is a testament to our prudence in growing our business for the long-term benefit of our shareholders.
“The asset’s high-quality, proven developed producing base (PDP) and long-dated inventory have the potential to generate significant free cash flow, contribute to higher per-share profits, and extend and potentially enhance our dividend capacity.”
Evolution Petroleum said the acquisition of around 3,700 net acres in the SCOOP and STACK plays, with more than 300 gross undeveloped locations, will offer a significant upside.
It is anticipated to add around 1,550 barrels of oil equivalent per day (boepd) production and a commodity mix of 42% oil, 15% natural gas liquids, and 43% natural gas.
Evolution Petroleum expects the acquisition and related development drilling works to be self-funding and generate incremental cash flow to further support its quarterly dividend.
In addition, the company estimates that net debt post-closing will be within its targeted leverage ratio of pro forma adjusted EBITDA.
Loyd added: “These Acquisitions continue our strategy to diversify our asset base within targeted areas and give us exposure to another world-class producing basin with ample takeaway and processing infrastructure and well-established end sales markets.
“They also greatly diversify our portfolio classification by adding not just PDP wells but also low working interest exposure to more than 300 gross, high-quality undeveloped locations.”
