Permian Expands with $817.5 M Shale Assets Acquisition from Occidental

Permian Resources Corporation (“Permian Resources”) has announced a definitive agreement with Occidental to acquire approximately 29,500 net acres, 9,900 net royalty acres, and 15,000 Boe/d, primarily located adjacent to its existing holdings in Reeves County, Texas. The transaction is valued at $817.5 million, subject to standard post-closing adjustments. The effective date of the acquisition is July 1, 2024, with the closing anticipated by the end of the third quarter of 2024. This strategic purchase aims to enhance Permian Resources' operational footprint and resource base in the region.

Will Hickey, Co-CEO of Permian Resources, highlighted that the acquisition aligns seamlessly with the company’s strategic goals due to the high-return potential of the inventory and its close proximity to existing operations. As the low-cost leader in the Delaware Basin, Permian Resources is well-positioned to utilize its operational expertise to enhance efficiency, reduce costs, and achieve significant synergies from the asset. This approach is expected to generate substantial value for shareholders by optimizing performance and leveraging existing infrastructure.

James Walter, Co-CEO of Permian Resources, emphasized that the acquisition aligns perfectly with the company's primary objective of maximizing value for investors. By integrating high-quality assets adjacent to its current operations, Permian Resources enhances its core inventory, which is poised to attract capital and improve key financial metrics in both the short and long term. Additionally, the acquisition brings substantial midstream infrastructure and surface acreage, offering significant strategic flexibility and adding considerable value to the company’s operations. This move underscores Permian Resources’ commitment to leveraging strategic M&A opportunities to drive growth and efficiency.

The acquired assets comprise approximately 29,500 net acres and 9,900 net royalty acres, predominantly located in Reeves County, Texas (27,500 net acres), with the remainder in Eddy County, New Mexico (2,000 net acres), for a total consideration of $817.5 million. The operated acreage holds an average working interest of about 65% and a net revenue interest of approximately 80%, and is contiguous to Permian Resources' existing holdings in Texas and New Mexico.

The acreage is nearly 99% held by production with minimal future drilling needs. Additionally, Permian Resources has identified over 200 gross operated, two-mile drilling locations with high net revenue interests, which will compete for capital. Development on these properties is expected to commence in the fourth quarter of 2024, with total production projected to be around 15 MBoe/d, approximately 55% of which will be oil.

The acquired assets in Reeves County also encompass a fully integrated midstream system, which offers superior economic benefits and increased operational flexibility. This infrastructure includes over 100 miles of operated oil and gas gathering systems and more than 10,000 surface acres, along with supporting water infrastructure such as saltwater disposal wells, a recycling facility, frac ponds, and water wells.