MIDLAND, Texas — Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today announced that it has entered into a definitive agreement to acquire operated interests in certain producing and non-producing assets in the Wolfberry trend in the Permian Basin (the “Acquisition”) from Petroleum Development Corporation (NASDAQ: PETD) for approximately $175 million, subject to customary purchase price adjustments. The Acquisition adds approximately 10,800 gross (10,200 net) acres located in Andrews, Ector and Midland Counties, Texas.
Highlights of the Acquisition:
- Adds over 170 identified Wolfberry drilling locations through 40-acre spacing
- Estimated proved reserves of approximately 13 million barrels of oil equivalent (“MMBoe”) as of November 1, 2011
- Current net production of approximately 1,100 barrels of oil equivalent per day (“Boepd”)
- Increases the Company’s net acreage in the Wolfberry by 20% and raises the Company’s average working interest in the Wolfberry to 54% from 50%
In connection with the Acquisition, the Company will increase its 2012 capital budget from $1.30 billion to $1.37 billion to develop the newly acquired assets. In addition, the Company currently estimates that its 2012 production will total between 27.5 MMBoe and 28.5 MMBoe, an increase of approximately 0.5 MMBoe due to the Acquisition. The Company estimates that its updated 2012 capital budget can be substantially funded out of its after-tax cash flow assuming (i) a NYMEX crude oil price of $85 per barrel and a NYMEX natural gas price of $4 per thousand cubic feet of natural gas for the Company’s unhedged production and (ii) that the Company achieves the mid-point of its 2012 production guidance.
The Acquisition, which is expected to close in the first quarter of 2012, will be funded with borrowings under the Company’s credit facility.
About Concho Resources Inc.
Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company’s operations are focused in the Permian Basin of Southeast New Mexico and West Texas. For more information, visit Concho’s website at www.concho.com.