Concho Resources to buy Reliance Energy's US assets for $1.625 bn

US oil and gas company Concho Resources Inc today struck a deal to acquire 40,000 net acres in the core of the Midland Basin from the Reliance Anil Dhirubhai Ambani Group's privately-held Reliance Energy for $1.625 billion in cash and stock.

Concho will pay about $1.1 billion in cash and about $500 million in stock for about 40,000 net acres in Andrews, Martin and Ector counties in Texas.

Estimated proven reserves attributable to the acquisition total approximately 43 million Boe. Proved developed reserves is around 69 per cent of the total proved reserves.

Concho intends to fund the cash portion of the acquisition through proceeds from a potential equity market transaction, and the deal is expected to close in October 2016.

The acquisition includes 10 mboepd from 326 vertical wells and 44 horizontal wells, only one of which was completed in 2016.

The acquired acreage is located in Andrews, Martin and Ector counties in Texas with minimal leasehold obligations. The acquisition adds more than 530 long-lateral drilling locations to Concho's inventory.

The deal will expands Concho Resources core Midland Basin position to more than 150,000 net acres and production of 30 thousand barrels of oil equivalent per day.

Tim Leach, chairman, president, and CEO of Concho said, ''This transaction demonstrates Concho's commitment to the Midland Basin as a core operating area and highlights our continued efforts to consolidate complementary leasehold. In line with the objectives of our southern Delaware Basin acquisition in the first quarter of 2016, these assets not only build scale, but more importantly high-grade our inventory with additional long-lateral locations that compete with the best projects in the Permian Basin.''