Civitas Resources (NYSE:CIVI) has agreed to buy a $2.1 billion package of oil assets in Texas in a deal with Vencer Energy, a vehicle backed by top-tier commodities trader Vitol.
The deal will add 44,000 net acres in the Midland Basin representing some 62,000 barrels of oil equivalent per day (of which half is oil) and it is expected to lift Civitas’ output from the Permian basin to around 170,000 boepd.
Overall group production rises to 325,000 – 345,000 boped, in 2024.
Civitas described the asset package as “premium, low breakeven oil inventory”.
Significantly, it includes 400 development locations for new wells which Civitas says will present an internal rate of return in excess of 40% (based on a $70 per barrel oil price forecast).
Altogether Civitas said it will have over 1,200 development locations and it is budgeting for 2024 capex in the range of $1.95 to $2.25 million.
“This was a unique opportunity to capture high-quality oil assets at a very attractive price,” said Civitas chief executive Chris Doyle.
He added: “In recent months, we have created a quality, scaled position in the heart of the Permian Basin.
“We continue to advance our strategic pillars by adding premium inventory, increasing Free Cash Flow, and delivering the industry’s best cash returns to shareholders.
“Upon closing, our portfolio will be balanced between the Permian and DJ basins, which reduces operational risk and makes us a stronger and more sustainable enterprise.”