Dallas-based independent Matador Resources Co. is acquiring privately held Permian Basin producer Ameredev II Parent LLC for $1.9 billion.
The assets of Ameredev, a portfolio company of EnCap Investments LP, include oil and natural gas acreage in the Permian’s Delaware sub-basin, as well as a roughly 19% stake in Piñon Midstream LLC. Piñon offers natural gas gathering, compression and treating, as well as carbon capture, utilization and storage services in the Delaware.
The Ameredev upstream assets are in Lea County, NM, and in the West Texas counties of Loving and Winkler. Piñon, meanwhile, has midstream assets in Lea County. The upstream properties are estimated to have produced up to 26,000 boe/d (65% weighted to oil) in the third quarter. Estimated total proved oil and natural gas reserves are 118 million boe (60% oil).
“We evaluated this opportunity based on the high rock quality, the strong existing production and cash flow profile, the significant reserves additions, the high-quality inventory, the strategic fit within our existing portfolio of properties and the expansion of our midstream footprint with an ownership interest in Piñon,” said Matador CEO Joseph Foran.
“The equity and debt securities offerings and the revolving credit facility amendment we completed earlier this year, together with our historical balance sheet conservatism, have provided Matador with the opportunity to acquire these high quality assets and continue Matador’s consistent history of profitable growth at a measured pace.”
The transaction, slated to close by the end of September, would lift Matador to the seventh largest oil and gas producer in New Mexico, management said.
“The specific location and quality of the Ameredev assets, the strong existing cash flow, the multi-pay potential and the cost savings associated with developing these assets via longer laterals on multi-well pads on blocky acreage were key features that attracted us to this unique opportunity and significantly enhance our already strong Delaware Basin portfolio and prospect inventory,” Foran said.
“This acquisition also positions Matador for continued success and growth throughout 2024, 2025 and into the future as one of the top 10 producers in the Delaware Basin…”
The Ameredev deal follows Matador’s acquisition in 2023 of another Permian-focused EnCap portfolio company, Advance Energy Partners Holdings LLC.
The latest acquisition “continues a second land grab in the Permian Basin following an initial buying frenzy in 2016-2019 as public companies race against one another to secure remaining inventory,” said Enverus Intelligence Research’s Andrew Dittmar, principal analyst. “That has proven a gold mine for private equity firms that had built sizable positions in the Delaware and Midland basins including EnCap.
“These private firms have seen the value of their assets soar as a dwindling set of opportunities to acquire deals drives prices higher.”
Dittmar added, “Building a position of scale is key for achieving operational synergies including longer lateral development and optimizing midstream infrastructure. Matador should be able to optimize development of the position and coordinate with its existing midstream footprint including handling any issues from sour gas issues on the asset.”
