U.S. Energy acquires Midland basin assets for $225 million

(WO) – U.S. Energy Development Corporation (U.S. Energy), an exploration and production (E&P) company focused on the development of energy projects throughout North America, recently acquired a 25% working interest in the Mascot Project, a stacked pay asset in core Midland Basin for $225 million cash and other consideration. U.S. Energy anticipates full development of the project to comprise another $130 million in capital expenditures over the next two years, bringing the total transaction value to well over $300 million.

Located in Midland County, Texas, the Mascot Project includes multiple producing properties, associated midstream assets, and upwards of 50 undeveloped locations expected to produce  roughly 6,500 boed during 2023. The Mascot Project is majority-owned by Midland Petro D.C. Partners, LLC (MPDC), a David H. Arrington owned business, and operated by an affiliate of MPDC, Permian Deep Rock Oil Company.

Inclusive of the Mascot Project, U.S. Energy has overseen the investment of $575 million over the past 24 months, focusing primarily on near term drilling opportunities and actively producing assets. In late 2022, U.S. Energy announced a planned allocation of up to two-thirds of its operating budget for projects in the Permian basin over the next two to three years, totaling $200-$300 million annually. This will build upon the firm’s sizable footprint in the basin, expanding upon recent investments of over $400 million during the past 12 months.

The firm anticipates operating a one to two rig program in the basin during the second half of 2023 and carrying this program into 2024. By 2025, the company anticipates directing the investment of an additional $400-$600 million in the Permian, Powder River, Midland, and Haynesville basins.