Linus Unah - Fourth Estate Contributor
Denver, CO, United States (4E) - U.S. independent oil producer Centennial Resource Development has announced that it would acquire certain undeveloped acreage and producing oil and gas properties in the core of the northern Delaware Basin from Denver-based GMT Exploration Co. for about $350 million in cash.
The deal, which is subject to customary closing conditions, includes 11,860 net acres in Lea County of southern New Mexico.
Located in southern New Mexico directly north of the prolific Red Hills area, the assets have a net production of about 2,100 barrels equivalent per day during the first quarter of 2017, according to the news release posted on the website of Centennial.
Denver-headquartered Centennial said it would now raise its 2020 production target to 60,000 barrels of oil per day, up from the previous target of 50,000 barrels of oil per day.
This represents a four-year annual oil growth rate of about 80 percent from 2016 to 2020, Centennial said.
Mark G. Papa, Centennial chairman and chief executive officer, said in a statement: "Consistent with our strategy, this acquisition fits our high rate-of-return threshold and increases our overall oil-weighting.
"We expect well results in this Northern area to provide rates of return that are competitive with our existing portfolio. We can achieve this goal while still maintaining some of the lowest debt metrics relative to our peers."
With this deal, Centennial said its Delaware Basin position would grow to 88,000 net acres from 76,000 net acres in 2016.
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