U.S. Energy Development Corp. has acquired a 25% working interest in the Mascot Project, a stacked pay asset in core Midland Basin, for $225 million cash and other consideration, the company said on April 26.
The Mascot assets are located in Midland County, Texas, and include multiple producing properties, associated midstream assets and “upwards of 50 undeveloped locations expected to produce” about 6,500 boe/d in 2023, U.S. Energy said.
The Mascot Project is majority-owned by Midland Petro D.C. Partners LLC (MPDC), a business owned by David H. Arrington and operated by MPDC affiliate Permian Deep Rock Oil Co.
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U.S. Energy, based in Arlington, Texas, anticipates full development of the project to comprise another $130 million in capex over the next two years, bringing the total transaction value to more than $300 million.
“Midland Petro D.C. Partners have spent five years assembling a world-class project in Midland County, and we are excited to have the opportunity to be a part of it,” said U.S. Energy CEO Jordan Jayson. “Our investment in the Mascot Project deepens our ties in the Permian Basin and highlights our continued strategy to acquire high-quality assets with proven operators in the basin. Mr. Arrington has decades of experience operating quality projects in the basin, and we are pleased to partner with him in bringing this asset to full development.”
Including its Mascot Project deal, U.S. Energy has overseen an investment of $575 million over the past 24 months focused primarily on near-term drilling opportunities and actively producing assets.
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In late 2022, U.S. Energy announced a planned allocation of up to two-thirds of its operating budget for projects in the Permian over the next two to three years—$200 million to $300 million annually.
The company said it will build on its sizable footprint in the basin, expanding upon recent investments of over $400 million during the past 12 months. U.S Energy anticipates operating a one- to two-rig program in the basin during the second half of 2023 through 2024. By 2025, the company anticipates directing an additional $400 million to $600 million investment in the Permian, Powder River and Midland basins and the Haynesville Shale.
U.S. Energy, founded in 1980, is a privately held E&P that manages assets on behalf of itself and its partners. Based in the Dallas/Fort Worth Metroplex, U.S. Energy has invested in, operated and/or drilled approximately 4,000 wells in 13 states and Canada and deployed more than $2 billion on behalf of itself and its partners.