Riley Exploration Permian Inc., Oklahoma City, has agreed to acquire Yeso Trend oil and gas assets in New Mexico from Pecos Oil & Gas LLC, an affiliate of Cibolo Energy Partners LLC, for $330 million.
Riley would acquire 11,700 total contiguous net acres in Eddy County (99% held by production), over 100 gross horizontal development drilling locations, and current production of 7,200 boe/d and 4,200 b/d of oil (58% oil, 81% liquids). Primary geologic targets within the trend include the Blinebry, Glorieta, and Paddock formations.
The deal includes 100% ownership of water gathering and disposal infrastructure including nearly 70 miles of water gathering pipelines, multiple saltwater disposal wells, and frac ponds.
The drilling economics compete with Riley Permian's existing core asset focused on the San Andres formation in the northwest shelf of the Permian basin, with overall lower drilling and completion costs for shallower, conventional source rock as compared to deeper shale wells, the company said in a release Feb. 28.
Concurrent with purchase agreement, Riley Exploration entered into a commitment letter with EOC Partners Advisors LP for the issuance of $200 million of senior unsecured notes upon closing of the acquisition and subject to the terms and conditions. The acquisition is expected to close early in second-quarter 2023.