Matador Resources to buy Advance Energy for $1.6bn

Matador Resources, an oil and gas producer, has agreed to acquire Advance Energy Partners Holdings, a portfolio company of EnCapInvestments, for $1.6bn. The bolt-on acquisition covers certain oil and natural gas-producing properties and undeveloped acreage in Lea County, New Mexico, and Ward County, Texas.

The transaction will consist of an initial cash payment of $1.6bn, plus an additional payment of $7.5m in cash each month during 2023 in which the average oil price exceeds $85 per barrel. Following the war in Ukraine, U.S. oil prices reached a nearly 14-year high of $130.50 per barrel. Although prices have since declined, they remain high, encouraging energy companies to invest in assets and take advantage of high prices.

The assets included in the deal are expected to produce 24,50 to 25,500 barrels of oil and natural gas equivalent per day (74% oil) in Q1 2023. Matador expects the purchased assets to generate forward one-year adjusted EBITDA of about $475m to $525m at strip prices as of mid-Jauary 2023.

Matador Resources’ share price increased by 4% for 2 consecutive days after the announcement. The deal is planned to close early in Q2 2023, subjecting to customary closing conditions.

Written by: Quynh Chi Le

Sources: Offshore Technology, Reuters