US Energy Development has acquired a 25% working interest in the Mascot project, a stacked pay asset located in core Midland Basin, Texas, for $225m in cash and other consideration.
The Mascot project contains multiple producing properties, related midstream assets, and more than 50 undeveloped locations that are expected to produce about 6,500 barrels of oil equivalent (BOE) per day this year.
It is majority-owned by Midland Petro D.C. Partners (MPDC), and operated by Permian Deep Rock Oil Company, an affiliate of MPDC.
According to US Energy, full development of the project would require an additional $130m in capital over the coming two years, which brings the total deal value to more than $300m.
US Energy CEO Jordan Jayson said: “Midland Petro D.C. Partners have spent five years assembling a world-class project in Midland County, and we are excited to have the opportunity to be a part of it.
“Our investment in the Mascot Project deepens our ties in the Permian Basin and highlights our continued strategy to acquire high-quality assets with proven operators in the basin.
“Mr Arrington has decades of experience operating quality projects in the basin, and we are pleased to partner with him in bringing this asset to full development.”
Established in 1980, US Energy is a privately held exploration and production (E&P) company that manages assets on behalf of itself and its partners.
Including the Mascot project, the company has managed $575m of investment in the past two years, primarily focused on near-term drilling opportunities and actively producing assets.
Last year, it allocated up to two-thirds of its operating budget for projects in the Permian Basin, totalling $200 to $300m per annum for the coming two to three years.
The move builds upon the company’s extensive footprint in the basin, expanding upon its more than $400m investments during the past 12 months.
US Energy plans to carry out a one- to two-rig programme in the basin during the second half of this year through 2024.
Furthermore, the E&P company aims to direct an additional $400 to $600m investment in the Permian, Powder River, Midland, and Haynesville Basins, by 2025.
