(IBTimes) - Concho Resources Inc. (
) has agreed to acquire all the crude-oil and natural-gas assets
of the Three Rivers Operating Co. and certain affiliated entities
for $1 billion in cash,
Concho announced Sunday
Three Rivers is a portfolio company of private-equity firm
Riverstone Holdings LLC,
according to Reuters
. It owns about 310,000 gross (200,000 net) acres in the Permian
Basin, which is located mostly in Texas.
Concho anticipates the acquisition will close in July, subject
to regulatory approval and other customary closing
Concho noted the Three Rivers acquisition would encompass the
-- Estimated proved reserves of about 58 million barrels
of oil equivalent (50 percent oil, and 55 percent proved
developed), as of April 1.
-- Estimated current net production of 7,000 barrels of
oil equivalent per day.
-- About 380 identified horizontal drilling locations in the
Delaware Basin, almost all of which are unproved, and more than
1,100 vertical drilling locations in the Midland Basin, of which
over 740 are unproved
"We are pleased to announce our largest and most strategic
transaction since the Marbob acquisition nearly two years ago,"
Concho Chairman, CEO, and President Timothy A. Leach said in a
"Combined with our existing portfolio," Leach noted, "these
assets give the company nearly 750,000 net acres across the
Permian Basin, with exposure to some of the most exciting oil
plays in the U.S."
Likely most important to Concho shareholders, Leach said,
"This acquisition is expected to be immediately accretive to
earnings, discretionary cash flow, production, and reserves on a
According to Concho, the company plans to finance the
acquisition with borrowings under its $2.0 billion credit
facility, which had about $1.8 billion available as of March 31.
In addition, the company plans to divest $200 million to $400
million worth of certain noncore assets from the acquisition and
its existing assets over the next nine months.
In connection with the deal, Concho reported it has entered
into crude-oil swaps on 2.4 million barrels of oil at a weighted
average price of $92.90 per barrel for the period from now
Concho said JPMorgan Chase & Co. acted as the company's
lead financial adviser, BMO Capital Markets acted as a financial
adviser, and Vinson & Elkins LLP represented it in connection
with the transaction.
Based in Midland, Texas, Concho will host a conference call to
discuss the acquisition with analysts, investors, and other
interested parties on Monday at 10 a.m. CDT (11 a.m. EDT).
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