Vital Energy has signed three definitive agreements worth about $1.165bn to materially add scale in the Permian Basin and increase the company’s current production by nearly 35,000 barrels of oil equivalent per day (BOE/d).
The company forged agreements with affiliates of Henry Energy and Henry Resources, Tall City Property Holdings III and Maple Energy.
Under the terms of the combined transactions, Vital Energy will add approximately 53,000 net acres and proved reserves of about 248 million BOE.
The company said it will have nearly 250,000 net acres and an estimated average full-year 2024 total production of about 112,000BOE/d.
Vital Energy’s estimated average full-year 2024 oil production will see a nearly 30% increase to 55,000BOE/d.
The transaction is also expected to increase free cash flow, improve capital efficiency and significantly reduce leverage for Vital Energy.
Vital Energy president and CEO Jason Pigott said: “These transactions increase our scale in the Permian and fit with our proven strategy of creating value through disciplined acquisitions.
“We have demonstrated our ability to effectively consolidate Permian assets and identify sustainable synergies to lower costs, improve margins and enhance Free Cash Flow. These acquisitions will significantly strengthen our Free Cash Flow outlook and enable us to rapidly delever our balance sheet.”
Upon the closing of the transaction, Vital Energy plans to operate one drilling rig on the acquired acreage and leverage a spot completions crew for about one month to complete four in-process wells.
Vital Energy plans to finance the deals by issuing nearly 8.61 million shares of common stock, 4.54 million shares of perpetual mandatorily convertible preferred securities, about $285m in borrowings and approximately $100m of estimated purchase price adjustments.
Subject to customary terms and conditions, the deals are expected to be completed in the fourth quarter of this year.
In May this year, Vital Energy agreed to acquire the assets of Forge Energy II Delaware, an EnCap portfolio company, for a total consideration of $540m.
