Vital Energy adds Permian asin scale with deal trio worth $1.165 billion

Oct. 2, 2023
Vital Energy Inc., Tulsa, Okla., agreed to three deals with private companies worth about $1.1653 billion to scale up its Permian basin portfolio.

Vital Energy Inc., Tulsa, Okla., agreed to three deals with private companies worth about $1.1653 billion to scale up its Permian basin portfolio.

Upon closing, all three expected in this year’s fourth quarter subject to customary terms and conditions, Vital Energy plans to operate one drilling rig on the acquired acreage and utilize a spot completions crew for about 1 month to complete four “in-process” wells.

In 2024, Vital expects to invest $100-125 million in the newly acquired assets, representing less than half of the previous operators’ activity levels, the company said.

Combined, the deals add nearly 53,000 net acres and proved reserves of about 248 MMboe (44% oil), estimated as of year-end 2022, and will increase Vital Energy’s production by about 35,000 boe/d (50% oil), the company said in a Sept. 13 release.

Pro forma, Vital Energy will have about 250,000 net acres and an estimated average full-year 2024 total production of about 112,000 boe/d, an increase of more than 25% versus standalone expectations.

Estimated average full-year 2024 oil production is expected to increase about 30% to 55,000 b/d.

The deals add about 150 gross high-value locations. Pro forma, Vital Energy expects to maintain more than 8 years of oil-weighted inventory at its planned four-rig development pace.

Permian basin deal breakdown

Vital Energy agreed to purchase substantially all the Midland and Delaware basin assets of Henry Energy LP and Henry Resources LLC, Midland, Tex., in an all-equity transaction consisting of 3.72 million common shares and 4.54 million shares of perpetual mandatorily convertible preferred securities, net of customary closing price adjustments.

Tall City Property Holdings III LLC, a Warburg Pincus-backed exploration and production company also headquartered in Midland, Tex., will sell Delaware basin assets to Vital Energy for $285 million in cash and 1.58 million common shares, net of customary closing price adjustments.

And adding to the Delaware basin buy, Vital Energy will acquire all of Maple Energy Holdings LLC’s assets in the play through an all-equity transaction consisting of 3.31 million common shares, net of customary closing price adjustments.

The deals follow one Vital Energy made jointly in May with Northern Oil and Gas Inc. to acquire Forge Energy II Delaware LLC and another in February with Driftwood Energy Operating LLC (OGJ Online, May 12, 2023; Feb. 14, 2023).