Earthstone Energy Inc. has agreed to acquire the New Mexico assets of Titus Oil & Gas Production LLC, Titus Oil & Gas Production II LLC, and their affiliates in the Permian basin’s northern Delaware basin.
The aggregate purchase price of the deal is about $627 million consisting of $575 million in cash and some 3.9 million shares of Earthstone's Class A common stock, the companies said.
Titus is privately held with sponsorship by investment funds managed by NGP Energy Capital Management LLC.
With the deal, Earthstone's Delaware basin acreage position increases to about 44,000 net acres, while its broader Permian basin acreage position increases to about 256,000 net acres. Titus’s assets include about 7,900 net acres (65% operated, 78% WI, 93% HBP) in the Delaware basin in Lea and Eddy Counties, NM.
In June 2022, net production from Titus assets has averaged about 31,800 boe/d (65% oil, 83% liquids) from 44 gross/37 net operated wells and is inclusive of about 1,200 boe/d from non-operated interests. Earthstone said it expects the deal to increase its net production by 18,000-23,000 boe/d (65% oil) in fourth-quarter 2022.
Titus is currently using three rigs to drill six wells (93% WI) in Lea County, with completions due late in third-quarter 2022. Earthstone said it plans to maintain two rigs in the Delaware basin and two rigs in the Midland basin, with an additional rig being considered for the Delaware basin after closing.
Acquired asset inventory includes de-risked drilling inventory with 114 gross/86 net locations comprised of 61 gross/46 net operated high-graded locations focused on second and third Bone Spring and Wolfcamp A /XY formations, with an additional 53 gross/40 net operated locations from secondary targets, Earthstone said.
In relation to the deal, Earthstone expects to increase capital expenditures in fourth-quarter 2022 by $25-50 million.
The transaction is scheduled to close in this year’s third quarter.