Matador Resources Co. (NYSE: MTDR) completed the previously announced combination of its Delaware Basin assets with HEYCO Energy Group Inc. subsidiary Harvey E. Yates Co. (HEYCO), according to a March 2 statement. As a result of the transaction, Matador will assume operatorship of all of HEYCO’s operated properties in the northern Delaware Basin.
Key attributes of HEYCO’s properties include:
- About 58,600 gross (18,200 net) acres located in Lea and Eddy counties, N.M.;
- About one-third of the acreage is operated, one-third is non-operated and operations on the remaining one-third will be pursued by Matador under various operating, farm-in and other agreements.
- Nearly all of the acreage is held by production from existing wells and production units with high net revenue interests greater than 75%;
- Average net daily production during fourth-quarter 2014 of about 530 barrels of oil equivalent per day (boe/d), about 70% oil, including production from the recently drilled CTA State Com #3H and #4H wells; and
- Net proved developed producing oil and gas reserves of about 1.3 million boe (about 60% oil) as of Sept. 1, 2014, based on an independent reserves analysis prepared by Netherland, Sewell & Associates Inc., excluding any contributions from the CTA State Com #3H and #4H wells. Notably, no proved developed non-producing nor proved undeveloped reserves have been assigned to these properties.
The HEYCO assets link Matador’s existing acreage in its Ranger and Rustler Breaks prospect areas. The acquired acreage increases Matador’s total acreage position in the Permian Basin at to about 152,400 gross (85,400 net) acres, giving Matador an increased operational footprint throughout the northern Delaware Basin.
Pursuant to the final terms of the transaction, Matador paid about $21.6 million in cash, assumed debt obligations of $12 million, issued 3.3 million shares of Matador common stock and issued 150,000 shares of new Series A convertible preferred stock to HEYCO Energy Group Inc. The transaction makes HEYCO Energy Group one of Matador’s largest shareholders with about 6% ownership on an as-converted basis. Matador also paid about $3 million for customary purchase price adjustments, including adjusting for production, revenues and operating and capital expenditures from Sept. 1, 2014, to closing.
Matador is an independent E&P company engaged in the development and acquisition of oil and gas resources, with an emphasis on oil and gas shale and other unconventional plays. Matador’s current focus is on its Eagle Ford operations in South Texas and its Permian Basin operations in southeast New Mexico and West Texas.
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