Matador Resources completes $1.83bn Delaware Basin oil and gas acquisition

In a monumental move for the energy sector, Matador Resources has completed a significant $1.83 billion acquisition, expanding its foothold in the Delaware Basin. This acquisition, one of the largest in the company’s history, adds 33,500 acres of prime oil and gas-producing land in Lea County, New Mexico, and Loving and Winkler counties in Texas. The deal marks a transformative moment for Matador Resources, cementing its position in one of the most coveted oil-producing regions of the United States.

The assets were acquired from Ameredev II Parent, a subsidiary of EnCap Investments, known for its prolific oil and gas properties. Matador Resources also secured a 19% equity stake in Piñon Midstream, which operates critical midstream assets, further strengthening its infrastructure in the region. The Piñon Midstream stake includes 135 miles of pipelines used for the gathering, transportation, and treatment of oil and natural gas.

Matador Resources expects to see production from these newly acquired assets average between 25,500 and 26,500 barrels of oil and gas equivalent (BOE) per day through the third quarter of 2024. However, a temporary decline in production is forecasted in the fourth quarter, driven by natural declines and the shutting-in of wells for operational adjustments. Production is projected to ramp up again by the first half of 2025.

The acquisition also includes a remarkable 431 gross operated locations, primarily targeting the Wolfcamp and Bone Spring formations, boosting Matador’s already significant portfolio. These reserves, totalling approximately 118 million BOE, are expected to fuel the company’s growth for at least a decade, providing a long-term inventory of drilling opportunities.

Expert opinion: A major leap forward in oil and gas

Energy analysts believe this acquisition positions Matador Resources as a formidable player in the Delaware Basin, with industry experts highlighting the strategic importance of the acquired contiguous acreage. The addition of midstream capabilities via Piñon Midstream also improves Matador’s operational efficiency, allowing the company to manage the transportation and processing of its products directly. This move not only expands its asset base but also secures future cash flow through the anticipated sale of its Piñon Midstream interest in late 2024.

Matador Resources has demonstrated a consistent ability to integrate new acquisitions effectively. CEO Joseph Foran noted that operational efficiencies introduced from past acquisitions, like the 2023 Advance Energy Partners deal, will be applied to the newly acquired Ameredev assets. The company estimates it could achieve $160 million in synergies from these operational upgrades over the next five years, positioning it for sustained growth.