Concho shakes up Permian holdings

HOUSTON — Concho Resources announced Monday three deals that will rearrange the company’s acreage in the Permian Basin through a swap, an acquisition and a sale.

Combined, the transactions will bring down the Midland-based producers’ net debt without affecting its 2016 capital budget or production outlook, executives said in an announcement describing the deal.

In the first part of the deal, Concho said it would buy roughly 12,000 net acres near the company’s North Harpoon prospect in Ward and Reeves counties. Concho will pay an unnamed private operator a combination of cash, stock and joint-venture interest in the acreage.

The second deal is an exchange with Clayton Williams Energy that will consolidate 21,000 net acres where Concho doesn’t operate drilling into a concentrated position adjacent to company’s Big Chief prospect in Reeves County, Texas.

The third deal will have Concho sell about 14,000 net acres in Loving County to Silver Hill Energy Partners II for $290 million in cash. Silver Hill is a closely held oil and gas company backed by private equity group Kayne Anderson Capital Advisors, which has raised $4.5 billion in capital.

The assets Concho is selling produced about 2,500 barrels of oil equivalent per day in the third quarter from a total of 5 million barrels of oil equivalent in proved reserves, according to the announcement. Concho said the sale will free it from about $100 million in drilling costs through 2016.

“The combined effect of these transactions not only strengthens our portfolio, but also frees up capital to develop higher returning properties while improving our leverage metrics,” said Tim Leach, Chairman and CEO of Concho in a prepared statement.