Earthstone buys Midland basin assets for $950 MM

Earthstone Energy, Inc. will acquire assets in the Midland Basin through two agreements for a cash and stock purchase price of $950 million ($650 million cash plus $300 million stock). Earthstone Energy has entered into an agreement with Sabalo Holdings to buy producing and non-producing oil and gas assets in the northern Midland basin.

In one deal, Woodlands, Texas-based Earthstone will acquire producing and non-producing oil and gas assets in the northern Midland Basin from Sabalo Energy. In a separate deal announced Oct. 17, Sabalo agreed to acquire well-bore interests by Shad Permian – part of a drilling joint venture between the two companies. Sabalo’s and Shad’s combined average production in Sept. 2018 was approximately 11,200 boed with approximately 83% being oil. The Sabalo Acquisition adds strong cash flow generation and increases our footprint in the Midland basin by 69% and includes substantial operated acreage with high working interests.

As a result of both transactions, referred to as the Sabalo Acquisition, Earthstone will acquire 20,800 net acres in the Midland Basin as well as 488 gross operated horizontal drilling locations and 349 gross non-operated horizontal drilling locations. The Sabalo Acquisition is expected to close in late 2018 or in the first quarter of 2019. The larger scale of operations combined with being a much bigger company should drive a number of additional benefits as we now have the ability to secure dedicated services and focus on further improving corporate and field-level operating efficiency.” We expect production to continue to increase and our plan is to maintain those two rigs and the single rig we have been operating on our southern Midland basin acreage since May 2017.

“The Sabalo Acquisition adds strong cash flow generation and increases our footprint in the Midland Basin by 69 percent and includes substantial operated acreage with high working interests,” Earthstone president Robert J. Anderson stated in a release. “This larger scale of operations combined with being a much bigger company should drive a number of additional benefits as we now have the ability to secure dedicated services and focus on further improving corporate and field-level operating efficiency.” The Sabalo Acquisition represents a large, contiguous acreage position with a deep inventory of favorable economic drilling locations and significantly expands Earthstone’s footprint in the Midland basin.

The Sabalo Acquisition is expected to close in late 2018 or in the first quarter of 2019.

Facebook Comments