RSP Permian Inc. (RSPP) said Oct. 7 it has signed a letter of intent with Wolfberry Partners Resources LLC to acquire core Midland Basin assets for about $137 million in cash.
Wolfberry is an entity owned in part by affiliates of the Dallas-based company.
The potential acquisition includes about 4,100 net surface acres and 15,000 net effective horizontal acres. This consists of 86 net horizontal drilling locations in the Middle Spraberry, Lower Spraberry and Wolfcamp A, B and D.
Net production in August average about 1.9 thousand barrels of oil equivalent per day (Mboe/d) form 25 producing wells—four horizontal and 21 vertical.
The acreage will be 100% operated and is largely contiguous. This allows for drilling longer laterals and is conducive for efficient infrastructure development, the release said.
If the potential acquisition closes, the company will have increased its horizontal development inventory in the core of the Midland Basin by more than 25% in the past few months, said Steve Gray, RSP CEO.
"We expect these assets will generate returns that rival any asset that we currently own and we intend to begin drilling on these properties soon after we close on them," Gray said in a statement.
If a definitive purchase and sale agreement is ultimately reached, the transaction is expected to close in the first half of the fourth quarter. RSP would have to fund $60 million at closing and the remainder within nine months.
RSP also launched a public offering of 6 million shares of its common stock, which includes an underwriters' option for up to 900,000 additional shares.
Proceeds will be used to fund a portion of the potential acquisition. The remainder will be used for general corporate purposes, which may include funding its drilling and development program.
Goldman, Sachs & Co. is the company's sole underwriter for the offering.
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