Houston-based Oil Producer Announces $946 Million Purchase in Delaware Basin

SEATTLE (Oil Monster): Houston-based Oasis Petroleum, Inc. has reached an agreement to purchase nearly 20,300 acres of land in Delaware Basin at a price of nearly $946 million, out of which $483 million will be in cash and the remaining through issue of shares. The land will be purchased from San Antonio-based Forge Energy LLC. The cash and stock deal will be effective December 1, 2017 and is expected to close in end-February 2018. The transaction is subject to customary closing conditions.

The acquired land in the West Texas oil patch covers areas of oil-rich Delaware Basin covering areas across Loving, Ward, Winkler and Reeves Counties, Texas. Oasis expects to drill a total of 16 to 20 gross wells, out of which 6 to 8 gross wells would be completed in the next year with a capital investment of approximately $100 million. The company plans to sell off its Williston Basin acreage to garner around $500 million, which in turn will be utilized for further development of the Delaware Basin acreage.

Additionally, it plans to add a second rig in the second half of 2018. As per estimates, the region had pumped approximately 3,500 barrels of oil equivalent per day in November this year. The purchase of the highly complementary asset consisting of deepest and oiliest part of the Delaware Basin fits with the company’s existing strengths and is expected to lift the company’s daily oil production to over 5,000 barrels, hoped Tommy Nus, CEO and Chairman of Oasis. The continuous formation targets will allow long lateral development, he added.

The purchase transaction is expected to nearly double the company’s core inventory.