Callon to buy certain Permian basin assets from Cimarex for $570 million

May 24, 2018
Callon Petroleum, Natchez, Miss., will acquire from Cimarex Energy Co., Denver, certain oil and gas properties principally in Ward County, Tex., for $570 million cash.

Callon Petroleum, Natchez, Miss., will acquire from Cimarex Energy Co., Denver, certain oil and gas properties principally in Ward County, Tex., for $570 million cash.

First-quarter production from the properties is 6,831 boe/d, of which 73% is oil, and is mostly from the Bone Spring formation. The undeveloped acreage includes 18,925 net Wolfcamp acres of which 11,500 net acres have rights to the base of the Wolfcamp.

The sale adds 28,657 net surface acres to Callon’s Spur operating area in the Delaware basin, more than 90% held by production, that is adjacent and complementary to the company’s existing position, Callon said.

The acreage contains an estimated delineated base inventory of 212 net identified horizontal drilling locations targeting the Third Bone Spring, Wolfcamp A and Wolfcamp B zones, with 86% to be operated by Callon. Over 60% of the inventory is comprised of well locations with laterals of 7,500 ft or more, with opportunities for enhanced development efficiencies from increased scale, integration of infrastructure, and multiwell pad development, Callon said. Additionally, there is potential for horizontal drilling locations from emerging prospective zones in the Second Bone Spring and Wolfcamp C formations, the company said.

After the sale closes, which is expected in the third quarter, on a pro forma basis, Callon’s aggregate Permian basin position will include 86,000 net surface acres concentrated in four core operating areas within both the Midland and Delaware basins.