Concho Resources Inc. CXO-2.35% ("Concho" or the "Company") today announced that it has entered into a definitive agreement to acquire all the oil and natural gas assets of Three Rivers Operating Company and certain affiliated entities (collectively, "Three Rivers") for $1.0 billion in cash. Three Rivers is a privately-held exploration and production company with approximately 310,000 gross (200,000 net) acres in the Permian Basin, including large positions in the Company's core northern Delaware Basin play, the Midland Basin Wolfberry play, and the emerging southern Midland Basin horizontal Wolfcamp and Cline shale plays.
Highlights of the Three Rivers Acquisition:
-- Estimated proved reserves of approximately 58 million barrels of oil equivalent (50% oil and 55% proved developed) as of April 1, 2012
-- Estimated current net production of 7,000 barrels of oil equivalent per day
-- Adds approximately 380 identified horizontal drilling locations in the Delaware Basin, almost all of which are unproved, and over 1,100 vertical drilling locations in the Midland Basin, of which over 740 are unproved
-- Represents a 42% increase to net acreage in the Midland Basin and a 23% increase to net acreage in the northern Delaware Basin
-- Approximately 65% of the acreage is held by production
"We are pleased to announce our largest and most strategic transaction since the Marbob acquisition nearly two years ago," commented Timothy A. Leach, Concho's Chairman, CEO and President. "Three Rivers represents a material consolidation opportunity within the proven core of the Delaware Basin, a continued expansion into the horizontal Wolfcamp and Cline shale plays in the southern Midland Basin, and a complementary addition to our core Yeso play. Combined with our existing portfolio, these assets give the Company nearly 750,000 net acres across the Permian Basin, with exposure to some of the most exciting oil plays in the U.S. This acquisition is expected to be immediately accretive to earnings, discretionary cash flow, production and reserves on a per share basis and provides an additional platform to significantly grow our production in the Permian Basin. We look forward to accelerating development on these assets and executing the same strategy of delivering return-driven, high-margin growth to our shareholders over the next several years."