Matador Resources acquires Delaware basin assets for $1.6 billion

Simon Casey and Mitchell Ferman, Bloomberg January 24, 2023

(Bloomberg) – Consolidation in the Texas oil patch is gaining momentum this week after Matador Resources Co. agreed to acquire Advance Energy Partners Holdings LLC for about $1.6 billion in cash. This is the largest deal in Matador’s 20-year history.

Matador said Advance had an estimated production in the first quarter last year of 24,500 to 25,500 barrels of oil and natural gas equivalent per day. It also has about 18,500 net acres in the northern Delaware Basin, which is part of the larger Permian formation.

The purchase of Advance, which is currently controlled by private equity firm EnCap Investments LP, is expected to be completed early in the second quarter, Dallas-based Matador said. Matador also agreed to pay an additional cash consideration of $7.5 million for each month this year in which the average oil price exceeds $85 a barrel.

The acquisition comes just a day after Texas oil firm HighPeak Energy Inc., which explores in the Permian Basin, said it was considering selling itself. The region — the largest and most productive US oil patch — has long been a focus of consolidation because of its size and scale.

Matador CEO and founder Joseph Foran said in a conference call on Jan. 24 that he is bullish about the quality of acreage his company acquired. There have been concerns about dwindling inventory of top-tier well sites in west Texas.

Matador shares were down 0.8% at 10:04 a.m. in New York trading.

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