Editor's note: This is a developing story. Check back later for more details.
Civitas Resources is acquiring oil producing assets in the Permian’s Midland Basin for approximately $2.15 billion from Vencer Energy, a Vitol investment, the company announced in an Oct. 4 press release.
The acquisition increases Civitas’ Permian Basin scale by adding approximately 44,000 net acres in Midland with a current production of 62 Mboe/d (50% oil). The 400 gross development locations are located primarily in the Spraberry and Wolfcamp formations.
The deal is expected to close in January 2024 and will be effective as of Jan. 1, 2024.
The 44,000 acres were acquired by Vencer in 2021 from Hunt Oil for an undisclosed sum that is estimated to have been some $1.4 billion. Production from the property at the time was approximately 40,000 boe/d. Vencer grew that to 62,000 boe/d and flipped the asset for a roughly $500 million return, net of investment.
Total consideration for the transaction is $2.15 billion, consisting of 7.3 million shares of common stock to be issued to Vencer and $1.55 billion of cash, of which $1 billion will be due at closing. The remaining $550 million will be payable on Jan. 3, 2025. If Civitas chooses to accelerate the deferred cash payment to the closing date of the deal, the total purchase price would be lowered by $50 million to $2.05 billion.
Civitas plans to fund the deal with a combination of debt and equity financings.
Ben Marshall, head of Vitol Americas, in a press release thanked Vencer founder and CEO Don Dotson and the Vencer team for the 3.5-year job, which was to procure an asset, then grow it to sale. "Vitol remains enthusiastic about the upstream sector and we are committed to deploying more capital in this space."
The firm is looking for more opportunities, he added. "We actively continue to look for more assets to add to our portfolio, whether it be through VTX Energy or via a new platform."
Led by build-and-flip veteran Gene Shepherd, Vitol-backed VTX Energy is developing an acreage portfolio in the southern Delaware Basin.
BofA Securities is serving as lead financial adviser for the deal. J.P. Morgan Securities LLC and RBC Capital Markets are also providing financial advice. Kirkland & Ellis is serving as legal adviser, and DrivePath Advisors is serving as communication adviser for Civitas. Vencer was advised by Latham & Watkins LLP.
Recommended Reading
Asia Spot LNG at 3-month Peak on Steady Demand, Supply Disruption
2024-04-12 - Heating demand in Europe and production disruption at the Freeport LNG terminal in the U.S. pushed up prices, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Texas LNG Export Plant Signs Additional Offtake Deal With EQT
2024-04-23 - Glenfarne Group LLC's proposed Texas LNG export plant in Brownsville has signed an additional tolling agreement with EQT Corp. to provide natural gas liquefaction services of an additional 1.5 mtpa over 20 years.
Exclusive: Chevron Balancing Low Carbon Intensity, Global Oil, Gas Needs
2024-03-28 - Colin Parfitt, president of midstream at Chevron, discusses how the company continues to grow its traditional oil and gas business while focusing on growing its new energies production, in this Hart Energy Exclusive interview.
Midstream Builds in a Bearish Market
2024-03-11 - Midstream companies are sticking to long term plans for an expanded customer base, despite low gas prices, high storage levels and an uncertain political LNG future.
Exclusive: Renewables Won't Promise Affordable Security without NatGas
2024-03-25 - Greg Ebel, president and CEO of midstream company Enbridge, says renewables needs backing from natural gas to create a "nice foundation" for affordable and sustainable industrial growth, in this Hart Energy Exclusive interview.