Editor's note: This is a developing story. Check back for updates.
VTX Energy Partners is expanding its footprint in the Permian Basin following a major acquisition earlier this year.
VTX agreed to acquire another 12,000 net leasehold acres in the Permian’s southern Delaware Basin, the company announced June 5, making good on M&A hints dropped at a May Hart Energy conference by CEO Gene Shepherd.
The Delaware assets include daily net production of approximately 4,000 boe/d and associated water infrastructure.
Shepherd told Hart Energy on June 5 that the latest acquisition in Reeves County, Texas, will significantly increase the company’s inventory of undeveloped drilling locations.
“This further solidifies our desire and interest in continuing to focus on the southern Delaware, and I think the same holds for Vitol,” Shepherd said.
VTX, which is backed by Swiss energy trader Vitol, will grow its position to 47,000 net acres in the southern Delaware Basin when the deal closes. Closing is expected to occur by mid-July, Shepherd said.
The newly acquired acreage is largely contiguous with the Red Bull play VTX purchased from Delaware Basin Investment Group (DBIG) earlier this year.
VTX picked up the same Red Bull property that the late T. Boone Pickens had called the “biggest prospect” in which he’d ever invested.
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Extending inventory
Shepherd said with the previous DBIG acquisition, a large part of the deal’s value was based on the acreage’s developed oil and gas production.
The DBIG deal included production of about 32,000 boe/d when the transaction closed in March, Shepherd said during Hart Energy’s recent SUPER DUG conference in Fort Worth.
With the latest deal, VTX ascribed much of the transaction’s value to the undeveloped acreage of future drilling locations, he said.
“From that standpoint, they complemented each other,” Shepherd said.
The newly acquired acreage includes operated ownership within the DBIG block where VTX was previously a non-op partner, Shepherd said.
Most of the remaining acreage VTX picked up through the deal shared a lease line to the northwest of the DBIG block.
It’s an area that the VTX team knows well. Shepherd, formerly president and CEO of Brigham Resources LLC, said DBIG shares a lease line with the position Brigham sold to Diamondback Energy for $2.4 billion in 2017.
Compared to the Permian’s competitive Midland Basin, or even the northern part of the Delaware, the southern Delaware remains a more fragmented basin.
E&Ps such as Continental Resources and Permian Resources Corp. have been active in the region. But VTX—with the weighty financial backing of Vitol—also aims to be a buyer in the southern Delaware.
“We think we’re well positioned to continue to look for opportunities and be one of the more meaningful consolidators in the southern Delaware,” Shepherd said.
Another Vitol-backed Permian E&P, Vencer Energy LLC, made a splashy debut in 2021 by acquiring Hunt Oil Co.’s position in the Midland Basin.
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