Houston-baed Vanguard Natural Resources LLC (NYSE: VNR) has entered into a definitive agreement to acquire natural gas, oil and natural gas liquids assets in the Permian Basin located in southeast New Mexico and West Texas for a purchase price of $275 million from Range Resources Corp. The properties being sold consist of approximately 7,000 net acres that are currently producing approximately 17 Mmcfe per day with approximately 41% being natural gas and 59% oil and NGLs. Based on internal reserve estimates, proved developed reserves account for 78% of the total 137 Bcfe. Mark S. Carnes, director of acquisitions, commented, “These properties are a nice complement to one of Vanguard’s core operating areas and have some excellent behind pipe and development drilling opportunities that will enhance our cash flow as they are developed over the next four to six years.” The effective date of the acquisition is January 1, 2013 and the company anticipates closing this acquisition on or before April 1, 2013.
Scott W. Smith, president and chief executive officer, commented, “After recent successful bond and equity offerings we are very pleased to sign another acquisition agreement that will put our liquidity to work. These assets will be an excellent addition to our portfolio in the Permian Basin as they have a reserve to production ratio of approximately 20 years.”
The company intends to fund this acquisition with borrowings under its existing reserve-based credit facility.
RSP intends to commence a horizontal drilling program in Glasscock in 2015 once the necessary infrastructure to support horizontal operations is constructed and operational.
Upon closing, the acquisition is expected to add 13,136 net acres to Diamondback's total position in the Midland Basin, increasing it to more than 85,000 net acres.