Independent oil and gas producer Matador Resources said it’s acquired 8,400 acres for roughly $387 million, or a weighted average cost of approximately $46,000 per net acre, in New Mexico’s Lea and Eddy counties.
The acquisition was part of the U.S. Bureau of Land Management’s New Mexico oil and gas lease sale on Sept. 5 and 6, Kallanish Energy reports.
Matador estimates these properties should immediately add an incremental 16.3 million barrels of oil-equivalent, or 10%, in proved undeveloped reserves (PUDs).
The acquired leases are federal leases and provide an 87.5% net revenue interest as compared to roughly 75% NRI on most fee leases today. As a result, Matador will retain an additional 17% of the net production from each well drilled and completed on these properties, which should improve the economics of wells drilled on this acreage.
“Over the past several years, Matador has followed a strategy of primarily building its Delaware Basin land position on a ‘brick by brick’ basis, but we have always believed it is also important to capture unique value-creating opportunities on a select basis, like the recent BLM lease sale, which was the largest BLM New Mexico oil and gas lease sale in the last 10 years,” said Joseph Wm. Foran, Matador’s chairman and CEO.
The acquired acreage includes roughly 2,800 gross/net acres in the Stateline area, 4,800 gross/net acres in the Antelope Ridge asset area, 400 gross/net acres in the Arrowhead asset area and 400 gross/net acres in the Twin Lakes asset area, bringing Matador’s total leasehold and mineral position in the Delaware Basin to approximately 217,400 gross (123,800 net) acres.
Matador expects to finance these acreage acquisitions using cash on hand and borrowings under its revolving credit facility, which had no borrowings outstanding at Sept. 12.