Matador Resources Company (NYSE: MTDR) has just closed a strategic bolt-on acquisition of a subsidiary of Ameredev II Parent, LLC from affiliates of Encap Investments L.P. for a cash consideration of $1.832 billion. This acquisition includes approximately 33,500 contiguous net acres in the core of the Delaware Basin, with over 99% operated and 82% held by production.
The production from this acquisition is expected to average between 25,500 and 26,500 barrels of oil and natural gas equivalent per day during the remainder of the third quarter of 2024. It is anticipated to decline in the fourth quarter of 2024 due to natural declines and temporary shutting-in of wells for offset completion operations before increasing again in the first half of 2025.
The acquisition also adds 431 gross (371 net) operated locations, including prospective targets throughout the Wolfcamp and Bone Spring formations, and brings the total proved oil and natural gas reserves of Matador to approximately 118 million barrels of oil equivalent, with 60% being oil.
Additionally, Matador now holds an approximate 19% equity interest in the parent company of Piñon Midstream, LLC. The parent company of Piñon, Enterprise Products Partners L.P., announced its acquisition for $950 million in enterprise value, and Matador expects to receive its proportionate share of the proceeds following the closing of the acquisition, expected to occur in the fourth quarter of 2024.
After the Ameredev acquisition, Matador will have collectively over 190,000 net acres in the core of the Delaware Basin, production exceeding 180,000 barrels of oil equivalent per day, and proved oil and natural gas reserves of over 600 million barrels of oil equivalent. The company will also have approximately 2,000 net locations, providing inventory of 10 to 15 years with wells exceeding a 50% average rate of return.
Furthermore, the acquisition will result in synergies of approximately $160 million over the next five years, as Matador's operations team expects to implement operational efficiencies on the Ameredev assets, such as 'simul-frac' and 'trimul-frac' completion operations, dual fuel technologies, and other operational efficiencies that have worked well on other properties.
The Ameredev acquisition was funded through borrowings under Matador's credit facility after the company took significant strides early in 2024 to strengthen its balance sheet and increased the commitments under its credit facility from $1.5 billion to $2.5 billion, including a $250 million term loan.
Matador's founder, chairman, and CEO, Joseph Wm. Foran, expressed confidence in the successful integration of the Ameredev assets and the company's positive outlook for the remainder of 2024 and 2025. He highlighted the professionalism and cooperation of Ameredev in the transition process, both with its management team and its field and office staff.
This acquisition marks a significant expansion for Matador, an independent energy company engaged in the exploration, development, production, and acquisition of oil and natural gas resources in the United States. The company's current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin, in addition to operations in other shale plays and midstream activities. Today the company's shares have moved 1.2% to a price of $52.34. If you want to know more, read the company's complete 8-K report here.
