The Pioneer acquisition expands Laredo Petroleum’s core development area in western Glasscock County, Texas, to about 22,200 net acres. (Source: Hart Energy)
Laredo Petroleum Inc. agreed to acquire oil-weighted acreage in Glasscock County, Texas, for $230 million in cash and stock, marking Laredo’s second significant acquisition in the Midland Basin in 2021.
“Upon closing this transaction, we will have acquired more than 55,000 net acres of highly productive, oil-weighted inventory in Howard and western Glasscock counties in just two years, fundamentally transforming Laredo,” Jason Pigott, president and CEO of Laredo Petroleum, commented in a company release on Sept. 19.
In its latest transaction, Laredo will acquire approximately 20,000 net acres from Pioneer Natural Resources Co. that directly offsets Laredo’s existing leasehold in western Glasscock County. Current production is roughly 4,400 boe/d (59% oil, 82% liquids).
Laredo already added to its Midland Basin position earlier this year through the acquisition of the assets of Sabalo Energy LLC, a portfolio company of EnCap Investments LP, and a nonoperating partner for approximately $715 million. The transaction included roughly 21,000 contiguous net acres directly offsetting Laredo’s existing Howard County leasehold in West Texas.
The Pioneer acquisition, according to Laredo, continues its “transformational” strategy with the addition of 135 gross operated oil-weighted locations, which Laredo said doubles its high-margin, oil-weighted inventory. The acquired locations have an average lateral length of 9,700 ft.
“Seven years of inventory across these core areas will enhance our ability to deliver sustainable, long-term free cash flow generation and to rapidly deleverage,” Pigott added.
The transaction is expected to close in October. The purchase price is comprised of $160 million in cash plus the issuance of 959,691 shares of Laredo common equity to Pioneer.
Following closing, Laredo plans to maintain its current expected activity levels for 2022 of two drilling rigs and one completions crew.
The company also remains on track to achieve the previously stated year-end 2022 leverage target of 1.5x net debt/TTM adjusted EBITDA, according to the release.
Bracewell LLP is advising Pioneer Natural Resources on the acreage sale to Laredo Petroleum.
Recommended Reading
Hunting Giants: Hamm Reflects on 50 Years of American Energy
2023-08-03 - Harold Hamm reflects on his life, career and ongoing plans in his newly released book, “Game Changer: Our 50-Year Mission to Secure American Energy Independence.” In a conversation with Oil and Gas Investor, he reflects on exploration, shedding the shackles of a public listing, oil politics, the role of American energy and why he wrote the book.
The Financial Tightrope: Balancing Buybacks and Debt
2023-08-23 - Despite blowback, particularly from politicians, companies continue to balance debt repayment with rewarding shareholders.
S&P 500: Energy Sector Shows Resilience Despite Rough First Half
2023-07-28 - The energy sector led the S&P in 2022, but macroeconomic factors have weighed down its performance this year.
Private Equity Touts E&P Investments, Acknowledges Fundraising Woes
2023-07-10 - ESG pressures and declining returns in the past have hindered plans by private equity firms such as Quantum Energy Partners to raise billions of dollars.
Linde Sees Opportunity as E&Ps Enter Hydrogen Game
2023-07-30 - With more than 1,000 km of hydrogen pipeline in place and nearly 200 hydrogen refueling stations globally, Linde CEO says the company can scale up, even as big oil companies begin to enter the market.