US independent oil and natural gas company Concho Resources Inc today said that it would buy the oil and natural gas assets of Three Rivers Operating Company, a portfolio company of private equity firm Riverstone Holdings, for $1 billion in cash.
Three Rivers is a privately-held exploration and production company with approximately 200,000 net acres in the Permian Basin, including large positions in the northern Delaware Basin play, the Midland Basin Wolfberry play, and the emerging southern Midland Basin horizontal Wolfcamp and Cline shale plays.
The Permian Basin area covers Texas and New Mexico and almost all energy companies are using the latest horizontal drilling technology to extract oil.
The assets have estimated proved reserves of approx 58 million barrels of oil equivalent (50 per cent oil and 55 per cent proved developed) as of 1 April 2012.
Estimated current net production is 7,000 barrels of oil equivalent per day. The acquisition will increase Concho Resources net acreage in the Midland Basin by 42 per cent and 23 per cent net acreage in the northern Delaware Basin.
Three Rivers had obtained these assets through the acquisition of oil and natural gas properties from Chesapeake Energy Corp in 2010 for $202.8 million and from Samson Resources Company for $343.5 million in 2011.
Together, the two deals represented more than 700 operated and 800 non-operated wells in the Permian Basin.
Texas-based Concho intends to finance the acquisition with borrowings under its $2 billion credit facility, and plans to divest $200 million to $400 million of certain non-core assets from the acquisition and its existing assets over the next nine months.
Concho Resources acquires, develops and explores for oil and natural gas mainly in the Permian Basin of Southeast New Mexico and West Texas.
"Timothy Leach, Concho's chairman, CEO and president, said, "Three Rivers represents a material consolidation opportunity within the proven core of the Delaware Basin, a continued expansion into the horizontal Wolfcamp and Cline shale plays in the southern Midland Basin, and a complementary addition to our core Yeso play.''
''Combined with our existing portfolio, 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 US.''
New York-based Riverstone Holdings focuses on leveraged buyout and growth capital investments in the oil and gas exploration, midstream pipeline, electric generation, energy and power services as well as energy and power technology.
The firm is a leading investor in renewable energy infrastructure and technology.
Riverstone operates primarily through a joint venture with the Carlyle Group. The firm manages a family of six funds through its joint venture with Carlyle and has raised approximately $17 billion since inception.